UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR

For the quarterly period ended March 31, 2022

Or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE QUARTERLY PERIOD ENDED MARCH 31, 2021SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to              

 

Commission File Number 001-40083

B. Riley PrincipalRILEY PRINCIPAL 150 Merger Corp.MERGER CORP.

(Exact nameName of registrantRegistrant as specifiedSpecified in its charter)Its Charter)

001-40083

(Commission File Number)

Delaware 85-2081659

(State or other jurisdictionOther Jurisdiction of
incorporation

Incorporation or organization)Organization) 

 

(IRSI.R.S. Employer

Identification No.)

299 Park Avenue, 21st Floor

New York, New York

10171
(Address of Principal Executive Offices)(Zip Code)

299 Park Avenue, 21st Floor(212) 457-3300

New York, New York 10171

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (212) 457-3300code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which
registered
Units, each consisting of one share of Class A common stock and one-third of one redeemable warrantBRPMUThe Nasdaq Stock Market LLC
Class A common stock, par value $0.0001 per shareBRPMBRPMUThe Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable forto purchase one share of Class A common stock, each at an exercise price of $11.50 per shareBRPMWThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrantregistrant: (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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ YesNo ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,”filer”, “accelerated filer,” “smaller reporting company,”company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes YesNo No

As of May 21, 2021,12, 2022, there were 4,312,500 shares of Class B common stock, par value $0.0001 per share, and 17,250,00017,770,000 shares of Class A common stock, par value $0.0001 per share, were issued and outstanding.

 

 

 

 

 

 

B. RILEY PRINCIPALRiley Principal 150 MERGER CORP.Merger Corp.

FORMQuarterly Report on Form 10-Q FOR THE QUARTER ENDED MARCH

For the Quarterly Period Ended March 31, 20212022

Table of Contents

 

TABLE OF CONTENTS

 Page
Part
PART I. FINANCIAL INFORMATION1
Item 1.Financial InformationStatements1
 Item 1.Financial Statements1
Condensed Balance Sheets as of March 31, 20212022 (unaudited) and December 31, 202020211
 Condensed StatementStatements of Operations for the three months ended March 31, 2022 and 2021 (unaudited)2
 Condensed StatementStatements of Changes in Stockholders’ EquityStockholder’s Deficit for the three months ended March 31, 2022 and 2021 (unaudited)3
 Condensed StatementStatements of Cash Flows for the three months ended March 31, 2022 and 2021 (unaudited)4
 Notes to Unaudited Condensed Financial Statements (unaudited)5
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations1417
Item 3.Quantitative and Qualitative Disclosures About Market Risk1721
Item 4.Controls and Procedures21
 Item 4.Controls and Procedures17
PartPART II. OTHER INFORMATIONOther Information1822
Item 1.Legal Proceedings1822
Item 1A.Risk Factors1822
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds1923
Item 3.Defaults Upon Senior Securities23
Item 4.Mine Safety Disclosures23
Item 5.Other Information23
Item 6.Exhibits24
 Item 3.SignaturesDefaults Upon Senior Securities20
Item 4.Mine Safety Disclosures20
Item 5.Other Information20
Item 6.Exhibits2125

 

i

 

 

PART I—I. FINANCIAL INFORMATION

Item 1. Financial StatementsStatements.

 

B. RILEY PRINCIPAL 150 MERGER CORP.

Condensed Balance Sheets

 

  March 31, 2021  December 31, 2021 
  

(Unaudited)

    
Assets      
Current assets:      
Cash $353,077  $25,000 
Deferred offering costs     80,000 
Prepaid expenses  896,632    
Total current assets  1,249,709   105,000 
Cash held in Trust Account  172,504,075    
Total assets $173,753,784  $105,000 
Liabilities and Stockholders’ Equity        
Current liabilities:        
Accounts payable and accrued expenses $92,450  $80,450 
Due to related party     998 
Total current liabilities  92,450   81,448 
Warrant liability  5,573,133    
Total liabilities  5,665,583   81,448 
         
Commitments        
Class A Common stock subject to possible redemption; 16,308,820 shares (at redemption value of $10.00 per share)  163,088,200    
         
Stockholders’ equity:        
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding      
Class A Common stock, $0.0001 par value; 100,000,000 shares authorized; 1,461,180 shares issued and outstanding as of March 31, 2021 and none issued and outstanding at December 31, 2020 (excluding 16,308,820 subject to redemption)  146    
Class B Common stock, $0.0001 par value; 10,000,000 shares authorized; 4,312,500 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively  431   431 
Additional paid-in capital  5,588,472   24,569 
Accumulated deficit  (589,048)  (1,448)
Total stockholders’ equity  5,000,001   23,552 
Total liabilities and stockholders’ equity $173,753,784  $105,000 
  March 31,
  2022
  December 31,
2021
 
  (Unaudited)    
Assets      
Current assets:      
Cash $85,204  $43,324 
Prepaid expenses  475,945   612,449 
Total current assets  561,149   655,773 
Investments held in Trust Account  172,532,601   172,516,200 
Total assets $173,093,750  $173,171,973 
Liabilities, Class A Common stock subject to possible redemption and Stockholders’ Deficit        
Current liabilities:        
Accounts payable and accrued expenses $3,016,831  $2,621,918 
Due to related party  647,500   191,250 
Total current liabilities  3,664,331   2,813,168 
Warrant liability  5,336,775   8,599,233 
Total liabilities  9,001,106   11,412,401 
         
Commitments        
         
Class A Common stock subject to possible redemption; 17,250,000 shares (at redemption value of $10.00 per share)  172,500,000   172,500,000 
         
Stockholders’ deficit:        
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding      
Class A Common stock, $0.0001 par value; 100,000,000 shares authorized; 520,000 shares issued and outstanding (excluding 17,250,000 subject to redemption)  52   52 
Class B Common stock, $0.0001 par value; 10,000,000 shares authorized; 4,312,500 shares issued and outstanding  431   431 
Accumulated deficit  (8,407,839)  (10,740,911)
Total stockholders’ deficit  (8,407,356)  (10,740,428)
Total liabilities, Class A Common stock subject to possible redemption, and stockholders’ deficit $173,093,750  $173,171,973 

  

The accompanying notes are an integral part of these unaudited condensed financial statements.

 


B. RILEY PRINCIPAL 150 MERGER CORP.

Condensed StatementStatements of Operations

(Unaudited)

 

  Three 
  Months Ended 
  March 31, 2021 
    
Operating costs $180,104 
Loss from operations  (180,104)
     
Other income (expense):    
Interest income  4,075 
Warrant issue costs  (115,404)
Change in fair value of warrants  (296,167)
Other expense  (407,496)
Net loss $(587,600)
     
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption  6,523,528 
Basic and diluted loss per share $0.00 
     
Basic and diluted weighted average shares outstanding, non-redeemable common stock  4,896,972 
Basic and diluted loss per non-redeemable share $(0.12)
  Three Months Ended
March 31,
 
  2022  2021 
       
Operating costs $945,787  $180,104 
Loss from operations  (945,787)  (180,104)
         
Other income (expense):        
Interest income  16,401   4,075 
Warrant issue costs     (115,404)
Change in fair value of warrant liability  3,262,458   (296,167)
Total other income (expense)  3,278,859   (407,496)
Net income (loss) $2,333,072  $(587,600)
         
Basic and diluted weighted average shares outstanding, Class A common shares  17,770,000   7,108,000 
Basic and diluted net income (loss) per share, Class A common shares $0.11  $(0.05)
         
Basic and diluted weighted average shares outstanding, Class B common shares  4,312,500   4,312,500 
Basic net income (loss) per share, Class B common shares $0.11  $(0.05)

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 


B. RILEY PRINCIPAL 150 MERGER CORP.

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)Condensed Statements of Changes in Stockholder’s Deficit

(Unaudited)

  Class A
Common Stock
  Class B
Common Stock
  Additional Paid-in  Accumulated  Total Stockholders’ 
  Shares  Amount  Shares  Amount  Capital  Deficit  Deficit 
Balance, January 1, 2021    $   4,312,500  $431  $24,569  $(1,448) $23,552 
Sale of 17,250,000 Units on February 23, 2021 through IPO  17,250,000   1,725         167,380,775      167,382,500 
Sale of 520,000 Private Placement Units on February 23, 2021  520,000   52         5,040,482      5,040,534 
Underwriting fee              (3,450,000)     (3,450,000)
Offering costs charged to stockholders equity              (436,189)     (436,189)
Reclassification of offering costs related to warrants              115,404      115,404 
Net loss for the three months ended March 31, 2021                 (587,600)  (587,600)
Change in Class A common stock subject to possible redemption  (16,308,820)  (1,631)        (163,086,569)     (163,088,200)
Balance, March 31, 2021  1,461,180  $146   4,312,500  $431  $5,588,472  $(589,048) $5,000,001 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 


B. RILEY PRINCIPAL 150 MERGER CORP.For the Three Months Ended March 31, 2022 and 2021

Condensed Statement of Cash Flows

(Unaudited)

 

Three
Months Ended
March 31, 2021
Cash flows from operating activities:
Net loss$(587,600)
Interest earned on investments held in Trust Account (4,075)
Adjustments to reconcile net loss to net cash used in operating activities:
Warrant issue costs115,404
Unrealized loss on change in fair value of warrants296,167
Decrease in deferred offering costs80,000 
Increase in prepaid expenses (896,632)
Increase in accounts payable and accrued expenses 12,000
Decrease in due to related party (998)
Net cash used in operating activities (985,734)
Cash flows from investing activities:
Proceeds deposited in Trust Account (172,500,000)
Net cash used in investing activities(172,500,000)
Cash flows from financing activities:
Proceeds from note payable – related party40,000
Repayment of note payable – related party(40,000)
Proceeds from issuance of Class A common stock172,500,000
Proceeds from issuance of private placement units5,200,000
Payment of underwriting discounts(3,450,000)
Payment of offering expenses(436,189)
Net cash provided by financing activities173,813,811
Increase in cash328,077
Cash, beginning of year25,000
Cash, end of period$353,077
Supplemental disclosures:
Interest paid$-  
Taxes paid$-  
Supplemental disclosure of noncash investing and financial activities:
Initial value of Class A ordinary shares subject to possible redemption$163,556,590
Change in value of Class A ordinary shares subject to possible redemption(468,390)
Initial classification of warrant liability5,276,966
  Class A
Common Stock
  Class B
Common Stock
  Additional
Paid-in
  Accumulated  Total Stockholders’ 
  Shares  Amount  Shares  Amount  Capital  Deficit  Deficit 
Balance, January 1, 2022  520,000  $52   4,312,500  $431  $      —  $(10,740,911) $(10,740,428)
Net income for the three months ended March 31, 2022                 2,333,072   2,333,072 
Balance, March 31, 2022  520,000  $52   4,312,500  $431  $  $(8,407,839) $(8,407,356)

 

  Class A
Common Stock
  Class B
Common Stock
  Additional
Paid-in
  Accumulated  Total Stockholder’s 
  Shares  Amount  Shares  Amount  Capital  Deficit  Deficit 
Balance, January 1, 2021    $   4,312,500  $431  $24,569  $(1,448) $23,552 
Sale of 520,000 Private Placement Units on February 23, 2021  520,000   52         5,040,482      5,040,534 
Subsequent measurement of Class A Common Stock Subject to Redemption under ASC 480-10-S99 against additional paid-in capital and accumulated deficit              (5,065,051)  (3,823,234)  (8,888,285)
Net loss for the three months ended March 31, 2021                 (587,600)  (587,600)
Balance, March 31, 2021  520,000  $52   4,312,500  $431  $  $(4,412,282) $(4,411,799)

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

4


 

 

B. RILEY PRINCIPAL 150 MERGER CORP.

Condensed Statements of Cash Flows

(Unaudited)

  Three Months Ended
March 31,
 
  2022  2021 
Cash flows from operating activities:      
Net income (loss) $2,333,072  $(587,600)
Interest earned on investments held in Trust Account  (16,401)  (4,075)
Adjustments to reconcile net loss to net cash used in operating activities:        
Warrant issue costs     115,404 
Unrealized (gain) loss on change in fair value of warrant liability  (3,262,458)  296,167 
Changes in operation assets and liabilities:        
Decrease deferred offering costs     80,000 
Decrease (increase) in prepaid expenses  136,504   (896,632)
Increase in accounts payable and accrued expenses  394,913   12,000 
Increase (decrease) in due to related party  456,250   (998)
Net cash provided by (used in) operating activities  41,880   (985,734)
Cash flows from investing activities:        
Proceeds deposited in Trust Account     (172,500,000)
Net cash used in investing activities     (172,500,000)
Cash flows from financing activities:        
Proceeds from note payable – related party     40,000 
Repayment of note payable – related party     (40,000)
Proceeds from issuance of Class A common stock     172,500,000 
Proceeds from issuance of private placement units     5,200,000 
Payment of underwriting discounts     (3,450,000)
Payment of offering expenses     (436,189)
Net cash provided by financing activities     173,813,811 
Increase in cash  41,880   328,077 
Cash, beginning of  year  43,324   25,000 
Cash, end of period $85,204  $353,077 
         
Supplemental disclosures:        
Interest paid $  $ 
Taxes paid $  $ 
         
Supplemental disclosure of noncash investing and financial activities:        
Initial value of Class A ordinary shares subject to possible redemption $  $172,500,000 

The accompanying notes are an integral part of these unaudited condensed financial statements.


B. RILEY PRINCIPAL 150 MERGER CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 1 — ORGANIZATION AND NATURE OF BUSINESS OPERATIONS

Organization and General

 

B. Riley Principal 150 Merger Corp. (the “Company”), a blank check corporation, was incorporated as a Delaware corporation on June 19, 2020. 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”). The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (a(an “Initial Business Combination”).

 

As of March 31, 2021, 2022, the Company had not commenced any operations. All activity of the Company includes the activity of the Company from inception and activity related to the initial public offering (the “Public Offering”) described below and evaluating prospective acquisition targets. The Company will not generate any operating revenues until after completion of its Initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Public Offering described below. The Company has selected December 31st as its fiscal year end.

 

Public Offering

 

The Company completed the sale of 17,250,000 units (the “Units”), including the issuance of 2,250,000 Units as a result of the underwriters’ exercise of their over-allotment option in full, at an offering price of $10.00 per Unit in the Public Offering on February 23, 2021. B. Riley Principal 150 Sponsor Co., LLC (the “Sponsor”), a Delaware limited liability company and a wholly-owned indirect subsidiary of B. Riley Financial, Inc. (“B. Riley Financial”), purchased an aggregate of 520,000 Units at a price of $10.00 per Unit (the “Private Placement Units”) in a private placement that closed on February 23, 2021 simultaneously with the Public Offering.Offering (the “Private Placement”). The sale of the 17,250,000 Units in the Public Offering (the “Public Units”) generated gross proceeds of $172,500,000, less underwriting commissions of $3,450,000 (2% of the gross proceeds of the Public Offering) and other offering costs of $436,189.$485,257. The Private Placement Units generated $5,200,000 of gross proceeds.

 

Each Unit consists of one share of the Company’s Class A common stock, $0.0001 par value (each a “public share”), and one-third of one redeemable warrant, with each whole warrant exercisable for one share of Class A common stock (each, a “Warrant” and, with respect to the warrants underlying the Private Placement Units, the “Private Placement Warrants” and, collectively, the “Warrants”). One Warrant entitles the holder thereof to purchase one whole share of Class A common stock at a price of $11.50 per share.

 

Sponsor and Note Payable - Related Party

 

The Company hashad a promissory note (the “Note”) payable to Sponsor which allowsallowed the Company to borrow up to $300,000 without interest to be used for a portion of the expenses of this offering.Public Offering. The notes payable isNote was payable on the earlier of: (i) December 31, 2021 or (ii) the date on which the Company consummatesconsummated an initial public offering of its securities. As of February 23, 2021, the borrowings outstandingBorrowings on the note payable due to related partyNote was $40,000.$40,000 on the date of the Public Offering. On March 1, 2021, such amount was repaid using proceeds from the Public Offering and the Private Placement.

The Trust Account

Upon completion of the Public Offering, $172,500,000 of proceeds were heldplaced in the Company’s trust account at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee (the “Trust Account”) and will beare invested in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, which we refer to as the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act that invest only in direct U.S. government treasury obligations. Unless and until the Company completes the Initial Business Combination, it may pay its expenses only from the net proceeds of the Public Offering and the sale of the Private Placement Units held outside the Trust Account, which was $353,077$85,204 and $43,324 on March 31, 2021.2022 and December 31, 2021, respectively.

 


Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its taxes, the proceeds from the Public Offering may not be released from the Trust Account until the earliest of: (i) the completion of the Initial Business Combination; (ii) the redemption of any public shares properly submittedtendered in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (the “Amended Charter”) to modify the substance or timing of the Company’s obligation to redeem 100% of its public shares if it does not complete the Initial Business Combination within 24 months from the closing of the Public Offering;by February 23, 2023; or (iii) the redemption of all of the Company’s public shares if the Company is unable to complete the Initial Business Combination within 24 months from the closing of the Public Offeringby February 23, 2023 (at which such time up to $100,000 of interest shall be available to the Company to pay dissolution expenses), subject to applicable law. The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the holders of the Company’s public shares (the “public stockholders”).

 

Initial Business Combination

 

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering and the sale of Private Placement Units are intended to be generally applied toward consummating an Initial Business Combination. The Initial Business Combination must occur with one or more businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account.Account (excluding the amount of any deferred underwriting discount). There is no assurance that the Company will be able to successfully effect an Initial Business Combination.

 

The Company will provide its public stockholdersstockholders’ with the opportunity to redeem all or a portion of their public shares upon the completion of the Initial Business Combination, either (i) in connection with a stockholder meeting called to approve the business combinationInitial Business Combination or (ii) by means of a tender offer. However, in no event will the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its public shares and the related Initial Business Combination, and instead may search for an alternate Initial Business Combination.

 

If the Company holds a stockholder meeting to approve thevote or there is a tender offer for shares in connection with an Initial Business Combination, a public stockholder will have the right to redeem its public shares for an amount in cash equal to its 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 Class A common stock have been recorded at redemption amount and classified as temporary equity upon the completion of the Public Offering, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity.”

 

Pursuant to the Company’s amended and restated certificate of incorporation,Amended Charter, if the Company is unable to complete the Initial Business Combination within 24 months from the closing of the Public Offering,by February 23, 2023, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

 

The Sponsor and the Company’s officers and directors have entered into a letter agreement with the Company, pursuant to which they have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares and Private Placement Shares (as defined below) held by them if the Company fails to complete the Initial Business Combination within 24 months of the closing of the Public Offering.by February 23, 2023. However, if the Sponsor or any of the Company’s directors or officers acquires public shares of Class A common stock in or after the Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such public shares if the Company fails to complete the Initial Business Combination within the prescribed time period.

 

In the event of a liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s remaining stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s stockholders have no preemptive or other subscription rights. TheThere are no sinking fund provisions applicable to the common stock, except that the Company will provide its stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, under the circumstances, and, subject to the limitations, described herein.

 


NOTE 2 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

Going Concern Consideration

 

On April 12, 2021,The Company has principally financed its operations from inception using proceeds from the Staffpromissory note from the Sponsor prior to the Public Offering and such amount of proceeds from the Public Offering and Private Placement that were placed in a bank account outside of the Securities and Exchange Commission together issued a statement regarding the accounting and reporting considerationsTrust Account 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 Company’s warrant agreement issued inworking capital purposes. In connection with the closing of the Public Offering and the Private Placement on February 23, 2021, an amount of $172,500,000 (or $10.00 per Class A common stock sold to the public in the Public Offering included in the Public Units) was placed in the Trust Account. As of March 31, 2022, the Company had $85,204 in its operating bank account, $172,532,601 in cash and cash equivalents held in the Trust Account to be used for an Initial Business Combination or to repurchase or redeem its public shares in connection therewith and working capital deficit of $3,053,182, which excludes Delaware franchise taxes payable of $50,000 (which is included in accounts payable and accrued expenses at March 31, 2022) as franchise taxes are paid from the Trust Account from interest income earned.

If our funds are insufficient to meet the expenditures required for operating our business in the attempt to find an Initial Business Combination as more fully described above. Asabove or in the event that an Initial Business Combination is not consummated, we will likely need to raise additional funds in order to meet the expenditures required for operating our business. The Company may not be able to obtain additional financing or raise additional capital to finance its ongoing operations. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a resultpotential transaction and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through February 23, 2023, the scheduled liquidation date. These financial statements do not include any adjustments relating to the recovery of the SEC Statement,recorded assets or the classification of the liabilities that might be necessary should the Company reevaluated the accounting treatment of (i) the 5,750,000 Public Warrants,be unable to continue as a going concern.

Risks and (ii) the 173,333 Private Placement Warrants. The Company previously accounted for all Warrants as components of equity.Uncertainties

 

In further considerationManagement continues to evaluate the impact of the guidance in Accounting Standards Codification (“ASC”) 815-40, DerivativesCOVID-19 pandemic and Hedging; Contracts in Entity’s Own Equity, the Companyhas concluded that while it is reasonably possible that the virus could have a provision in the Warrant Agreement related to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants should be recorded as derivative liabilitiesnegative effect on the Balance Sheet and measured at fair value at inception (onCompany’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of the IPO) and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized infinancial statement. The financial statement does not include any adjustments that might result from the statementoutcome of operations in the period of change.this uncertainty.

 

The Company concluded that it is appropriate to restate the Company’s previously issued audited balance sheet as of February 23, 2021 as previously reported in its Form 8-K. The restated classification and reported values of the Warrants as accounted for under ASC 815-40 are included in the financial statements herein.

The following tables summarize the effect of the revision on each balance sheet line item as of the date:

  As Previously       
  Reported  Adjustment  As Restated 
Balance Sheet at February 23, 2021         
Warrant liability $  $5,276,966  $5,276,966 
Class A common stock subject to possible redemption  168,833,560   (5,276,970)  163,556,590 
Class A common stock  89   52   141 
Additional paid-in capital  5,004,730   115,356   5,120,086 
Accumulated deficit  (5,246)  (115,404)  (120,650)

NOTE 32 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

 

The financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

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 Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

The Company’s unaudited condensed interim financial statements have been prepared in accordance with U.S. GAAP and the rules and regulations of the SEC for interim financial information and the instructions to Form 10-Q. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management, all adjustments considered for a fair presentation have been included. Operating results for the three months ended March 31, 20212022 are not necessarily indicative of the results that may be expected for the year ending December 31, 20212022 or any other period. The accompanying unaudited condensed interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s prospectus filed with the SEC on February 19, 2021, as well as the Company’s audited balance sheet statement and notes thereto included in the Company’s Form 8-K10-K filed with the SEC on March 2, 2021.7, 2022.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statement(s) with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

  


Loss Per Common Share

Use of Estimates

 

The Company compliespreparation of the financial statements in conformity with accountingGAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net loss per common sharecontingent assets and liabilities at the date of the financial statement. Estimates are used when accounting for certain items such as valuation of investments held in Trust Account, derivative and warrant liabilities, and accounting for income tax valuation allowances. Making estimates requires management to exercise significant judgment. It is computed by dividing net loss byat least reasonably possible that the weighted average numberestimate of common shares outstanding for the period, excluding shareseffect of common stock subject to forfeiture. Net loss per common share is computed by dividing net gain/(loss) applicable to common stockholders bya condition, situation or set of circumstances that existed at the weighted average numberdate of common shares outstanding during the period, plus, to the extent dilutive, the incremental number of shares of common stock to settle warrants, as calculated using the treasury stock method. At March 31, 2021, the Company did not have any dilutive securities and other contracts thatfinancial statement, which management considered in formulating its estimate, could potentially, be exercised or converted into common stock and then sharechange in the earnings ofnear term due to one or more future confirming events. Accordingly, the Company under the treasury stock method. As a result, diluted loss per common share is the same as basic loss per common share for the periods.actual results could differ significantly from those estimates.

 

Reconciliation of Income (Loss) Per Common Share

The Company’s net loss is adjusted for the portion of income that is attributable to shares of common stock subject to possible redemption, as these shares only participate in the earnings of the Trust Account and not the income or losses of the Company. Accordingly, basic and diluted loss per share is calculated as follows:

  Three 
  Months Ended 
  March 31, 
  2021 
Common stock subject to possible redemption   
Numerator: Net income allocable to Class A common stock subject to possible redemption    
Interest income $4,075 
Less: interest available to be withdrawn for payment of taxes  (4,075)
Net income allocable to Class A common stock subject to possible redemption $ 
Denominator: Weighted Average Redeemable Class A common stock    
Redeemable Class A common stock, Basic and Diluted  6,523,528 
Basic and Diluted net income per share, Redeemable Class A $0.00 
     
Non-Redeemable Common Stock    
Numerator: Net income minus redeemable Net Earnings    
Net loss $(587,600)
Redeemable Net Earnings   
Non-Redeemable Net Loss $(587,600)
Denominator: Weighted Average Non-Redeemable Common Stock    
Weighted average shares outstanding, basic and diluted (1)  4,896,872 
Basic and diluted net loss per common share $(0.12)

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity date of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of March 31, 20212022 and December 31, 2020.

Concentration of Credit Risk2021.

 

Financial instruments that potentially subjectInvestments Held in Trust Account

As of March 31, 2022 and December 31, 2021, the Company to concentrations of credit risk consist of cash accountshad $172,532,601 and $172,516,200, respectively, in investments held in the Trust Account. The assets held in the Trust Account were held in a financial institution,mutual fund that invests in U.S. Treasury securities.

Class A Common Stock Subject to Possible Redemption

All of the 17,250,000 shares of Class A common stock sold as part of the Public Units in the Public Offering contain a redemption feature which at times, may exceedallows for the Federal Depository Insurance Coverageredemption of $250,000. such public shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Initial Business Combination and in connection with certain amendments to the Company’s Amended Charter. In accordance with the Securities and Exchange Commission (“SEC”) and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require shares of common stock subject to redemption to be classified outside of permanent equity. Therefore, all of the shares of Class A common stock sold in the Public Offering has been classified outside of permanent equity.

The Company has not experienced losses on these accountsrecognizes changes in redemption value immediately as they occur and management believesadjusts the Company is not exposedcarrying value of redeemable common stock to significant risks on such accounts.equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.

 

Fair ValueAs of Financial Instruments

The fair valueMarch 31, 2022 and December 31, 2021, the shares of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts representedClass A common stock reflected in the balance sheet primarily due to their short-term nature.are reconciled in the following table:

 

Gross proceeds $172,500,000 
Less:    
Proceeds allocated to Public Warrants  (5,117,500)
Issuance costs allocated to Class A common stock  (3,819,853)
Plus:    
Remeasurement of carrying value to redemption value  8,937,353 
Class A common stock subject to possible redemption $172,500,000 

Use

The remeasurement adjustment in the table above of Estimates$8,937,353 to adjust Class A common stock subject to possible redemption is comprised of $8,888,285 recorded in the three months ended March 31, 2021 and a $49,068 adjustment recorded in the three months ended June 30, 2021.

 

The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Warrant Liability

 

8

Deferred Offering Costs

The Company complies with the requirementsaccounts for warrants to purchase for shares of the FASBCompany’s common stock that are not indexed to its own stock as liabilities at fair value on the balance sheet in accordance with subtopic ASC 340-10-S99-1815-40-15, “Derivatives and SEC Staff Accounting Bulletin Topic 5A — “ExpensesHedging - Contract’s in Entity’s Own Equity”. The warrants are re-evaluated for the proper accounting treatment at each reporting period and are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of Offering.” Deferred offering costsother income (expense), net on the statement of $80,000 asoperations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the Warrants. At that time, the portion of the liability related to the Warrants will be reclassified to additional paid-in capital. At March 31, 2022 and December 31, 2020, consisted principally of costs incurred in connection with preparation for the Public Offering. The total offering costs incurred by the Company2021, there were 5,923,333 Warrants issued in connection with the Public Offering was $436,189. These costs(the 5,750,000 public Warrants and the underwriter discount, of $3,450,000, were charged173,333 Private Placement Warrants).


Income Taxes

Prior to capital upon completionthe change in ownership on February 23, 2021 as a result of the Public Offering, on February 23, 2021 and $115,404the Company was reclassified to warrant issue costs and charged to expense in the statement of operations for the three months ended March 31, 2021.

Income Taxes

The Company is included in the consolidated tax return of B. Riley Financial (the “Parent”). TheDuring this period, the Company calculatescalculated the provision for income taxes by using a “separate return” method. Under this method the Company is assumed to file a separate return with the tax authority, thereby reporting its taxable income or loss and paying the applicable tax to, or receiving the appropriate refund from, the Parent. The Company’s current provision iswas the amount of tax payable or refundable on the basis of a hypothetical, current year, separate return. Following changes in ownership on February 23, 2021, the Company deconsolidated from the Parent for tax purposes. Beginning February 23, 2021, the Company files separate corporate federal and state and local income tax returns.

 

Any difference between the tax provision (or benefit) allocated to the Company under the separate return method and payments to be made by (or received from) the Parent for tax expense are treated as either dividends or capital contribution. Accordingly, the amount by which the Company’s tax liability under the separate return method exceeds the amount of tax liability ultimately settled as a result of using incremental expenses of the Parent is periodically settled as a capital contribution from the Parent to the Company.

 

The Company complies with the accounting and reporting requirements of ASC Topic 740 “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of March 31, 2022 and December 31, 2021, there were no unrecognized tax benefits and no amounts accrued for interest and penalties. 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 may be subject to potential examination by federal, state and city 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, state and city 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.

The provision for income taxes was deemed to be immaterial.

Unrecognized Tax Benefits

The Company recognizes tax positions in its financial statements only when it is more likely than not that the position will be sustained on examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. A liability is established for differences between positions taken in a tax return and amounts recognized in the financial statements. There were no unrecognized tax benefits as of March 31, 2022 and December 31, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for interest expense and penalties related to income tax matters as of March 31, 2022 and December 31, 2021. The Company is subject to income tax examinations by major taxing authorities since inception.

 

Warrant Liability


 

Earnings (Loss) Per Common Share

The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock (the “Founder Shares”). Earnings and losses are shared pro rata between the two classes of shares. Private and public Warrants to purchase 5,923,333 shares of Class A common stock at $11.50 per share were issued on February 23, 2021 in connection with the IPO. As of March 31, 2022, no Warrants have been exercised. The 5,923,333 potential shares of Class A common shares for outstanding Warrants to purchase the Company’s stock were excluded from diluted earnings per share for the three months ended March 31, 2022 because the Warrants are contingently exercisable, and the contingencies have not yet been met. Basic and diluted earnings per share for the three months ended March 31, 2021 gives effect retroactively to the redeemable Class B shares that were outstanding as a result of the Initial Public Offering. The table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share for each class of common stock:

  Three Months Ended March 31, 
  2022  2021 
  Class A  Class B  Class A  Class B 
Basic and diluted net income per share:            
Numerator:            
Allocation of net income (loss) $1,877,445  $455,627  $(365,716) $(221,884)
Denominator:                
Weighted average shares outstanding  17,770,000   4,312,500   7,108,000   4,312,500 
Basic and diluted net income (loss) per share $0.11  $0.11  $(0.05) $(0.05)

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts for warrants for sharesin a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on these accounts.

Fair Value of Financial Instruments

The fair value of the Company’s common stockassets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.

The Company follows the guidance in ASC Topic 820 for its financial assets and liabilities that are not indexed to its own stock as liabilitiesre-measured and reported at fair value on the balance sheet. The warrants will be re-evaluated for the proper accounting treatment at each reporting period, and non-financial assets and liabilities that are subjectre-measured and reported at fair value at least annually.

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to remeasurementmaximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

The Company’s Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the condensed balance sheet. The warrant liabilities are measured at each balance sheet datefair value at inception and anyon a recurring basis, with changes in fair value presented within change in fair value is recognized as a component of other income (expense), net onwarrant liabilities in the statementcondensed statements of operations. The Company will continue to adjust the liability

See Note 4 for changes inadditional information on assets and liabilities measured at fair value until the earlier of the exercise or expiration of the common stock warrants. At that time, the portion of the liability related to the common stock warrants will be reclassified to additional paid-in capital. At March 31, 2021, there were 5,923,333 Warrants issued in connection with the Public Offering (the 5,750,000 public Warrants and the 173,333 Private Placement Warrants).value.

Recent Accounting Pronouncements

Management does not believeIn August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that any recently issued, but not yetrequire separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective accounting pronouncements, if currentlyJanuary 1, 2022 and was adopted would have a material effectby the Company on January 1, 2022 and the Company’simpact of adopting this ASU is immaterial to the financial statements.


 


NOTE 43 — RELATED PARTY TRANSACTIONS

 

Founder Shares

On June 19, 2020, 4,312,500 shares of our Class B common stockFounder Shares were issued to B. Riley Principal Investments, LLC (the “Founder Shares”).LLC. All of the Founder Shares were contributed to the Sponsor in June 2020. As used herein, unless the context otherwise requires, Founder Shares shall be deemed to include the shares of Class A common stock issuable upon conversion thereof. The Founder Shares are identical to the Class A common stock included in the Units being sold in the ProposedPublic Offering, except that the Founder Shares automatically convert into shares of Class A common stock at the time of the Initial Business Combination and are subject to certain transfer restrictions, as described in more detail below, and the holders of the Founder Shares, as described in more detail below, have agreed to certain restrictions and will have certain registration rights with respect thereto. The number of Founder Shares issued was determined based on the expectation that the Founder Shares would represent 20% of the outstanding shares of common stock upon completion of the ProposedPublic Offering excluding the shares underlying the Private Placement Units (the “Private Placement Shares”).

The Company’s initial stockholders,Sponsor, officers and directors have agreed, subject to limited exceptions, not to transfer, assign or sell any Founder Shares held by them until the earlier to occur of: (i) one year after the completion of the Initial Business Combination, (ii) the last sale price of Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Initial Business Combination, or (iii) the date following the completion of the Initial Business Combination on which the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the public stockholders having the right to exchange their shares of common stock for cash, securities or other property.

Business Combination Marketing Agreement

Pursuant to a business combination marketing agreement, the Company engaged B. Riley Securities, Inc. as advisors in connection with its Initial Business Combination to assist it in arranging meetings with its stockholders to discuss a potential business combination and the target business’ attributes, introduce it to potential investors that may be interested in purchasing its securities, assist it in obtaining stockholder approval for its Initial Business Combination and assist it with the preparation of press releases and public filings in connection with the Initial Business Combination. The Company will pay B. Riley Securities, Inc. for such services upon the consummation of the Initial Business Combination a cash fee in an amount equal to 3.5% of the gross proceeds of the Public Offering (exclusive of any applicable finders’ fees which might become payable) ($6,037,500 since the underwriters’ over-allotment option was exercised in full). Pursuant to the terms of the business combination marketing agreement, no fee will be due if the Company does not complete an Initial Business Combination.

Administrative Fees

Commencing on February 19,23, 2021, the Company agreed to pay an affiliate of the Sponsor a total of $3,750 per month for office space, utilities and secretarial and administrative support. Upon completion of the Initial Business Combination or the Company’s liquidation, it will cease paying these monthly fees. At March 31, 2022 and December 31, 2021, amounts due to related party includes $52,400 and $41,150, respectively, for administrative fees payable to the Sponsor.

Note Payable — Related Party

The Company had a Note to the Sponsor which allowed the Company to borrow up to $300,000 without interest to be used for a portion of the expenses associated with the Public Offering. The Note was payable on the earlier of: (i) December 31, 2021 or (ii) the date on which the Company consummated an initial public offering of its securities. At February 23, 2021, the Note’s balance was $40,000. The Note was paid in full using proceeds from the Public Offering and the Private Placement on March 1, 2021.

B. Riley Loan to FaZe

On March 10, 2022, the B. Riley Lender, an affiliate of the Sponsor, entered into a Bridge Loan Agreement with FaZe pursuant to which the B. Riley Lender agreed (i) to issue the Initial Term Loan in the amount of $10 million and (ii) upon receipt of a borrowing notice from FaZe, to issue the Final Term Loan in the amount of $10 million. In connection with the Term Loan, on March 10, 2022, FaZe waived the Minimum Proceeds Condition under the Merger Agreement.

The Term Loan is evidenced by a term promissory note and accrues interest at a rate of 7% per year, compounded quarterly. The Term Loan is secured by all assets of FaZe, other than the Excluded Collateral (as defined in the Pledge and Security Agreement), subject to Intercreditor Agreements entered into between the B. Riley Lender and FaZe’s senior lienholders, CPH and Cox. The Term Loan will be repaid in full in cash on the Closing Date. In the event the Merger Agreement is terminated without completion of the Business Combination, the Term Loan will become a secured convertible promissory note of FaZe, on substantially the same terms as the existing senior secured convertible promissory notes of Faze, in an aggregate principal amount equal to the outstanding principal balance, including capitalized interest, of the Term Loan and the unpaid accrued interest on the Term Loan as of such date. As of March 10, 2022, an aggregate principal amount of $10 million was outstanding under the Term Loan.

Due to Related Party

Amounts owed to Sponsor for advances of operating expenses were $647,500 and $191,250 at March 31, 2022 and December 31, 2021, respectively. The advances as of March 31, 2022 include cash advances of $445,000 for working capital purposes and also includes administrative fees of $11,250.

Any amounts payable to our Sponsor or in the event there may be a future working capital loan from our Sponsor these amounts would be repaid from funds held outside the Trust Account or from funds released to the Company upon completion of the Initial Business Combination. Up to $1,500,000 of such working capital loans, in the event there are any outstanding amounts at the time of the completion of the Initial Business Combination, may be convertible into private placement-equivalent units at a price of $10.00 per unit at the option of the lender. None of our Sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds for working capital loans.


NOTE 4 — RECURRING FAIR VALUE MEASUREMENTS

 

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

     Quoted       
     Prices In  Other  Significant 
     Active  Observable  Unobservable 
  March 31,  Markets  Inputs  Inputs 
  2022  (Level 1)  (Level 2)  (Level 3) 
Assets:            
Investments held in Trust Account (1) $172,532,601  $172,532,601  $  $ 
   172,532,601   172,532,601       
                 
Liabilities:                
Public Warrants $5,175,575  $5,175,575  $  $ 
Private Placement Warrants  161,200         161,200 
Warrant Liability $5,336,775  $5,175,575  $  $161,200 

     Quoted       
     Prices In  Other  Significant 
     Active  Observable  Unobservable 
  December 31,  Markets  Inputs  Inputs 
  2021  (Level 1)  (Level 2)  (Level 3) 
Assets:            
Investments held in Trust Account (1) $172,516,200  $172,516,200  $  $ 
   172,516,200   172,516,200       
                 
Liabilities:                  
Public Warrants $8,337,500  $8,337,500  $  $ 
Private Placement Warrants  261,733         261,733 
Warrant Liability $8,599,233  $8,337,500  $  $261,733 

(1)The fair value of the investments held in the Trust Account approximates the carrying amounts primarily due to the short-term nature.

Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting periods. The change in Level 3 measurements of $(100,533) was attributable to the decrease in the fair value of the Private Placement Warrants.

Warrant Liability

The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the Balance Sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the Statement of Operations.

The Company values the public Warrants at the closing trading price at the end of the reporting period. A Modified Black-Scholes model is used to value the Private Placement Warrants at each reporting period. The changes in fair value of Warrants is recognized as part of other income (expense) in the statement of operations. Inherent in a binomial options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the Warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the Warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.


The key inputs into the Black-Scholes Model in determining the fair value of the Private Placement Warrants were as follows at March 31, 2022 and December 31, 2021:

  March 31,  December 31, 
Input 2022  2021 
Risk-free interest rate  2.40%  1.30%
Expected term (years)  5.30   5.50 
Expected volatility  11.3%  18.5%
Exercise price $11.50  $11.50 
Dividend yield  0.0%  0.0%

The change in Level 3 measurements during the three months ended March 31, 2022 is as follows:

Private warrant liability at January 1, 2022 $261,733 
Change in fair value of private warrant liability    (100,533)
Private warrant liability at March 31, 2022   $161,200 

NOTE 5 — COMMITMENTS

Registration Rights

 

The holders of Founder Shares (and any shares of Class A common stock issuable upon conversion of the Founder Shares), Private Placement Units, Private Placement Shares, Private Placement Warrants (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants) and any securities that may be issued upon conversion of working capital loans, if any, have registration rights to require the Company to register the resale of any of its securities held by them (in the case of the Founder Shares, only after conversion of such shares to shares of Class A common stock) pursuant to a registration rights agreement. These holders are also entitled to certain piggyback registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements. The Forward Purchase Units and securities underlying the Forward Purchase Units have substantially similar registration rights.

 

Note Payable — Related Party

The Company had a Note Payable to the Sponsor which allowed the Company to borrow up to $300,000 without interest to be used for a portion of the expenses associated with the Public Offering. The Note Payable was payable on the earlier of: (i) December 31, 2021 or (ii) the date on which the Company consummated an initial public offering of its securities. At February 23, 2021, the Note Payable balance was $40,000. The Note Payable was paid in full using proceeds from the Public Offering and the Private Placement on March 1, 2021.

10

NOTE 5 — RECURRING FAIR VALUE MEASUREMENTS

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2021, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

     Quoted  Significant  Significant 
     Prices In  Other  Other 
     Active  Observable  Observable 
  March 31,  Markets  Inputs  Inputs 
  2021  (Level 1)  (Level 2)  (Level 3) 
Assets:            
Cash held in Trust Account $172,504,075  $172,504,075  $  $ 
   172,504,075   172,504,075       
                 
Liabilities:                
Private Placement Warrants $5,405,000  $  $  $5,405,000 
Public Warrants  168,133         168,133 
Warrant Liability $5,573,133  $  $  $5,573,133 

Warrants

The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the Balance Sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the Statement of Operations.

Initial Measurement

The Company established the initial fair value for the Warrants on February 23, 2021, the date of the Company’s Initial Public Offering, using a Monte Carlo simulation model for the Public Warrants, and the Black-Sholes Model for Private Placement Warrants and Forward Purchase Warrants based on their relative fair values at the initial measurement date. The Warrants were classified as Level 3 at the initial measurement date due to the use of unobservable inputs.

The key inputs into the Monte Carlo simulation model and Black-Scholes Model were as follows at initial measurement:

  February 23, 
  2021 
  (Initial 
Input Measurement) 
Risk-free interest rate  0.9%
Expected term (years)  6.4 
Expected volatility  14.0%
Exercise price $9.69 

  March 31, 
  2021 
Input Measurement 
Risk-free interest rate  1.2%
Expected term (years)  6.3 
Expected volatility  14.0%
Exercise price $9.67 

Subsequent Measurement

At March 31, 2021, the same valuation methodology as indicated above was used to measure the warrant liabilities.

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NOTE 6 — STOCKHOLDER’S EQUITYWARRANTS

 

Common Stock

The authorized common stock of the Company includes up to 100,000,000 shares of Class A common stock and 25,000,000 shares of Class B common stock. If the Company enters into an Initial Business Combination, it may (depending on the terms of such an Initial Business Combination) be required to increase the number of shares of Class A common stock which the Company is authorized to issue at the same time as the Company’s stockholders vote on the Initial Business Combination, to the extent the Company seeks stockholder approval in connection with the Initial Business Combination. Holders of the Company’s common stock are entitled to one vote for each share of common stock.

Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At March 31, 2021 and December 31, 2020, there were no shares of preferred stock issued or outstanding.

Warrants

Warrants may only be exercised for a whole number of shares. No fractional Warrants will be issued upon separation of the Units and only whole Warrants will trade. The Warrants will become exercisable on the later of (a) 30 days after the completion of the Initial Business Combination or (b) 12 months from the closing of the Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company will as soon as practicable, but in no event later than 15 business days, after the closing of the Initial Business Combination, use its best efforts to file with the Securities and Exchange Commission (“SEC”) aSEC registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the Warrants, to cause such registration statement to become effective within 60 business days after the closing of the Initial Business Combination and to maintain a current prospectus relating to those shares of Class A common stock until the Warrants expire or are redeemed, as specified in the Company’s warrant agreement. If the shares issuable upon exercise of the Warrants are not registered under the Securities Act by the 60th business day after the closing of the Initial Business Combination, the Company will be required to permit holders to exercise their Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Company’s Class A common stock is at the time of any exercise of a Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Warrants who exercise their Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company elects, the Company will not be required to file or maintain in effect a registration statement, but the Company will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

 


The Warrants will expire at 5:00 p.m., New York City time, five years after the completion of aan Initial Business Combination or earlier upon redemption or liquidation.

 

The Private Placement Warrants are identical to the Warrants underlying the Units sold in the Public Offering, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of the Initial Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Warrants.

 

The Company may call the Warrants for redemption (except with respect to the Private Placement Warrants):

 

in whole and not in part;

 

at a price of $0.01 per Warrant;warrant;

 

upon a minimum of 30 days’ prior written notice of redemption (the “30-day redemption period”); and

 

if, and only if, the last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

 


If the Company calls the Warrants for redemption, management will have the option to require all holders that wish to exercise the Warrants to do so on a “cashless basis,” as described in the warrant agreement.

 

The exercise price and number of shares of Class A common stock issuable upon exercise of the Warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. In addition, if (x) the Company issues additional shares of Class A common stock or securities convertible into or exercisable or exchangeable for shares of Class A common stock for capital raising purposes in connection with the closing of the Initial Business Combination, (excluding any issuance of securities under the forward purchase agreement), at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance (the “Newly Issued Price”)), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for funding the Initial Business Combination, and (z) the volume weighted average trading price of the 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 Initial Business Combination (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. Additionally, 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. There will be no redemption rights or liquidating distributions with respect to the Warrants, which will expire worthless if the Company fails to complete an Initial Business Combination within the 24-month time period.by February 23, 2023.

 

As more fully described in Note 2, the Company accounts for the warrants for shares of the Company’s common stock as a liability since they are not indexed to the Company’s stock.

NOTE 7 — SUBSEQUENT EVENTSSTOCKHOLDERS’ EQUITY

 

Common Stock

The authorized common stock of the Company includes up to 100,000,000 shares of Class A common stock with a par value of $0.0001 per share and 10,000,000 shares of Class B common stock with a par value of $0.0001. If the Company enters into an Initial Business Combination, it may (depending on the terms of such an Initial Business Combination) be required to increase the number of shares of Class A common stock which the Company is authorized to issue at the same time as the Company’s stockholders vote on the Initial Business Combination, to the extent the Company seeks stockholder approval in connection with the Initial Business Combination. Holders of the Company’s common stock are entitled to one vote for each share of common stock. At March 31, 2022 and December 31, 2021, there were 17,770,000 shares of Class A common stock issued and outstanding. Of the 17,770,000 shares of Class A common stock, 17,250,000 shares of Class A common stock issued in the Public Offering are classified as temporary equity at March 31, 2022 and December 31, 2021 since they are subject to possible redemption as more fully described in Notes 1 and 2. The remaining 520,000 shares of Class A common stock and 4,312,500 shares of Class B common stock issued and outstanding at March 31, 2022 and December 31, 2021 are classified as permanent equity since the Sponsor and the Company’s officers and directors have entered into a letter agreement with the Company, pursuant to which they have agreed to waive their rights to liquidating distributions from the Trust Account as more fully described in Note 1.


Preferred Stock

The Company evaluatesis authorized to issue 1,000,000 shares of preferred stock, par value of $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At March 31, 2022 and December 31, 2021, there were no shares of preferred stock issued or outstanding. 

NOTE 8 — PROPOSED BUSINESS COMBINATION

On October 24, 2021, the Company, entered into an Agreement and Plan of Merger (as amended on December 29, 2021 the “Merger Agreement”) with BRPM Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), and FaZe Clan Inc., a Delaware Corporation (“FaZe”), pursuant to which, subject to the satisfaction or waiver of certain conditions set forth therein, Merger Sub will merge with and into FaZe (the “Merger”), with FaZe surviving the merger in accordance with the Delaware General Corporation Law as a wholly owned subsidiary of the Company (the transactions contemplated by the Merger Agreement and the related ancillary agreements, the “Business Combination”). At the closing of the Business Combination (the “Closing”), the Company will change its name to “FaZe Holdings Inc.” (the “Pubco”).

Concurrently with the execution of the Merger Agreement, the Company entered into subscription agreements with investors (including investors related to or affiliated with the Sponsor and an investor related to or affiliated with existing FaZe stockholders) for an aggregate investment $118,000,000 (the “PIPE Investment”). The closing of the PIPE Investment is conditioned upon, among other things, (i) the satisfaction or waiver of all conditions precedent to the Business Combination and the substantially concurrent consummation of the Business Combination, (ii) the accuracy of all representations and warranties of the Company and the PIPE Investors in the subscription agreements, subject to certain bring-down standards, and (iii) the satisfaction of all covenants, agreements, and conditions required to be performed by the Company and the PIPE Investors pursuant to the subscription agreements. The subscription agreements provide for certain customary registration rights for the PIPE Investors. Affiliates of the Sponsor have subscribed to purchase 2,200,000 shares of Class A common stock at $10.00 per share in the PIPE Investment, for an aggregate purchase price of $22,000,000.

The parties have ascribed an equity value of the combined company, following the consummation of the Business Combination, of $987 million, assuming none of the Company’s public stockholders seek to redeem their public shares for a pro rata portion of the funds in the Trust Account.

Merger Agreement

Consideration

In accordance with the terms and subject to the conditions of the Merger Agreement, at the Closing, the Company has agreed to issue to stockholders of FaZe approximately 67,023,763 shares of Pubco common stock at a deemed per share price of $10.00 (“Aggregate Equity Value Consideration”), plus earnout consideration of 6% of the total number of shares of Pubco common stock that are issued and outstanding as of immediately after the Closing (which earnout consideration is subject to forfeiture following Closing if certain price-based vesting conditions are not met during the five years following Closing) (“Aggregate Earnout Consideration”).

Immediately prior to the effective time of the Merger (the “Effective Time”), each outstanding common stock purchase warrant and preferred stock purchase warrant of FaZe will be exercised in full in accordance with its terms, each outstanding share of Series A preferred stock of FaZe will be automatically converted into common stock of FaZe (“FaZe common stock”), and the outstanding principal and accrued interest upon certain convertible promissory notes of FaZe (“FaZe Notes”) shall be converted into FaZe common stock (such exercises and conversions, collectively, the “Company Conversion”). The outstanding principal and accrued interests upon any FaZe Notes that do not convert will be paid in full prior to the Effective Time.


At the Effective Time, each outstanding share of FaZe common stock (including shares of FaZe common stock issued as a result of the Company Conversion) will be automatically converted into the right to receive such number of shares of New FaZe common stock of equal to the Exchange Ratio and such number of shares of New FaZe common stock equal to the Earn-Out Exchange Ratio (which earn-out shares are subject to forfeiture following the completion of the Business Combination if certain price-based vesting conditions are not met during the five-year period beginning on the date that is 90 days after the Closing and ending on the fifth anniversary of the Closing Date) (the “Per Share Merger Consideration”). The “Exchange Ratio” is the quotient obtained by dividing 65,000,000 shares by the fully-diluted number of shares of FaZe common stock outstanding immediately prior to the Effective Time (excluding certain shares, as determined in accordance with the Merger Agreement). BRPM presently estimates that the Exchange Ratio will be approximately 2.30. The “Earn-Out Exchange Ratio” is the quotient obtained by dividing (x) 6% of the total number of shares of New FaZe common stock that are issued and outstanding as of immediately after the Closing by (y)the fully-diluted number of shares of FaZe common stock outstanding immediately prior to the Effective Time (as determined in accordance with the Merger Agreement). BRPM presently estimates that the Earn-Out Exchange Ratio will be approximately 0.23, assuming no redemptions by Public Stockholders. The actual Exchange Ratio and Earn-Out Exchange Ratio will be determined at the Closing pursuant to the formula and terms set forth in the Merger Agreement, and may be different from the estimated exchange ratios set forth in this paragraph because the fully-diluted number of shares of FaZe common stock outstanding immediately prior to Closing is subject to change, as additional FaZe Options may vest over time and/or additional FaZe securities may be issued.

At the Effective Time, each restricted share subject to a restricted stock award outstanding under FaZe’s existing incentive plans that is outstanding immediately prior to the Effective Time, will be converted into the right to receive a number of shares of Pubco common stock having the same terms and conditions as were applicable to such restricted stock award immediately prior to the Effective Time (each, a “Pubco Restricted Stock Award”), except that each Pubco Restricted Stock Award shall relate to a number of shares of Pubco common stock equal to the Per Share Merger Consideration. In addition, each FaZe restricted stock award will have the right to receive a portion of the Aggregate Earn-Out Consideration.

Immediately prior to the Effective Time, seventy-five percent (75%) of each discrete individual grant of the options outstanding under FaZe’s existing incentive plans that remain unvested as of the Effective Time will, automatically and without any required action on the part of the holder thereof, become vested as of the Effective Time (the “Accelerated FaZe Options”). The Accelerated FaZe Options, together with each option outstanding under FaZe’s existing incentive plans that is vested in accordance with its terms as of the Effective Time (including each option that vests or is deemed vested in accordance with its terms in connection with the transactions contemplated by the Merger Agreement) will be referred to collectively as the “Vested FaZe Options.”

At the Effective Time, each option outstanding under FaZe’s existing incentive plans shall be assumed by New FaZe and converted into an option to purchase a number of shares of Pubco common stock equal to the number of shares of FaZe common stock subject to such option immediately prior to the Effective Time multiplied by the Exchange Ratio, and having an exercise price equal to the exercise price immediately prior to the Effective Time divided by the Exchange Ratio. Holders of Vested FaZe Options will also be entitled to receive a number of earn-out shares equal to the number of Net Vested Company Option Shares (as defined in the Company’s Registration Statement on Form S-4/A filed with the SEC on April 29, 2022) underlying such Vested FaZe Options multiplied by the Earn-Out Exchange Ratio..

The parties to the Merger Agreement have made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants with respect to the conduct of FaZe and the Company and its subsidiaries prior to the Closing. The Closing is subject to certain customary conditions.

For more information about the Merger Agreement and the Proposed Transaction, see our Registration Statement on Form S-4 filed with the SEC on January 7, 2022 (File No. 333-262047). Unless specifically stated, this Quarterly Report on Form 10-Q (“Quarterly Report”) does not give effect to the Proposed Transaction and does not contain the risks associated with the Proposed Transaction. Such risks and effects relating to the Proposed Transaction are included in the Registration Statement, which includes a preliminary proxy statement/prospectus relating to the Proposed Transaction.

The Closing is expected to occur in the first half of 2022, following the receipt of required approval by the stockholders of the Company and FaZe, required regulatory approvals and the fulfilment of other conditions set forth in the Merger Agreement, and the effectiveness of the registration statement to be filed with the SEC in connection with the proposed Business Combination.

NOTE 9 — SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up toand through the date that the financial statement wasstatements were issued. Based upon this review, other than disclosed, theThe Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis of the Company’s financial condition and results of operations of B. Riley Principal 150 Merger Corp. (the “Company”) should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this report (the “Quarterly Report”). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

 

Cautionary Note Regarding Forward-Looking Statements

 

This Quarterly Report includes forward-looking statements. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. We have based these forward-looking statements on our current expectations and projections about future events. Forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in the Risk Factors section of our final prospectusAnnual Report on Form 10-K for our Public Offering (as defined below)the year ended December 31, 2021 and in our other Securities and Exchange Commission (“SEC”) filings. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

 

Overview

 

We are a blank check company incorporated as a Delaware corporation and formed for thewhose business purpose of effectingis to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businessesbusinesses. Our Sponsor is B. Riley Principal 150 Sponsor Co., LLC, a Delaware limited liability company (the “Initial Business Combination”“Sponsor”).

 

We intend to effectuate an Initial Business Combination using cash from the proceeds ofThe registration statement for our initial public offering (the “Public Offering”) that closedwas declared effective on February 18, 2021. On February 23, 2021, (the “Closing Date”)we consummated our Public Offering of 17,250,000 Units, including 2,250,000 over-allotment Units, at $10.00 per Unit, generating gross proceeds of $172.5 million.

Simultaneously with the closing of the Public Offering, we consummated the sale of 520,000 Private Placement Units, at a price of $10.00 per Private Placement Unit to the Sponsor, generating proceeds of $5.2 million.

Upon the closing of the Public Offering and the private placement, units sold$172.5 million ($10.00 per Unit) of the net proceeds of the Public Offering and certain of the proceeds of the private placement was placed in a private placementtrust account located in the United States with Continental Stock Transfer & Trust Company acting as Trustee (the “Private Placement Units”“Trust Account”) that closed, and will be invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a business combination and (ii) the distribution of the Trust Account as described below.

If we are unable to complete a business combination by February 23, 2023, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the Closing Datefunds held in the Trust Account and from additional issuancesnot previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any,any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, liquidate and dissolve, subject in each case to our capital stockobligations under Delaware law to provide for claims of creditors and our debt, or a combinationthe requirements of cash, stock and debt.other applicable law.

 

On October 24, 2021, the Company, entered into an Agreement and Plan of Merger (as amended on December 29, 2021 and March 10, 2022 the “Merger Agreement”) with BRPM Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), and FaZe Clan Inc., a Delaware Corporation (“FaZe”), pursuant to which, subject to the satisfaction or waiver of certain conditions set forth therein, Merger Sub will merge with and into FaZe (the “Merger”), with FaZe surviving the merger in accordance with the Delaware General Corporation Law as a wholly owned subsidiary of the Company (the transactions contemplated by the Merger Agreement and the related ancillary agreements, the “Business Combination”). At the closing of the Business Combination (the “Closing”), the Company will change its name to “FaZe Holdings Inc.” (the “Pubco”).


Concurrently with the execution of the Merger Agreement, the Company entered into subscription agreements with investors (including investors related to or affiliated with the Sponsor and an investor related to or affiliated with existing FaZe stockholders) for an aggregate investment $118.0 million (the “PIPE Investment”). On January 12, 2022, Cox Investment Holdings, Inc. assigned all of its investments in FaZe, including its FaZe securities and its rights and obligations under the subscription agreement, to its affiliate, AEV Esports, LLC (the “FaZe PIPE Investor”). The closing of the PIPE Investment is conditioned upon, among other things, (i) the satisfaction or waiver of all conditions precedent to the Business Combination and the substantially concurrent consummation of the Business Combination, (ii) the accuracy of all representations and warranties of the Company and the PIPE Investors in the Subscription Agreements, subject to certain bring-down standards, and (iii) the satisfaction of all covenants, agreements, and conditions required to be performed by the Company and the PIPE Investors pursuant to the Subscription Agreements. The Subscription Agreements provide for certain customary registration rights for the PIPE Investors. Affiliates of the Sponsor have subscribed to purchase 2,200,000 shares of Class A common stock at $10.00 per share in the PIPE Investment, for an aggregate purchase price of $22.0 million.

The parties have ascribed an equity value of the combined company, following the consummation of the Business Combination, of $987.0 million, assuming none of the Company’s public stockholders seek to redeem their public shares for a pro rata portion of the funds in the Trust Account.

Results of Operations

Our business activities from inception to March 31, 20212022 consisted primarily of our preparation for our Public Offering that was completed on February 23, 2021 and, since2021. Since the offeringPublic Offering on February 23, 2021, our business activities have consisted primarily of identification and evaluation of prospective acquisition targets for an initial business combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our Initial Business Combination. We will generate non-operating income in the form of net gain from investments held in Trust Account. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

 

AtFor the three months ended March 31, 2021,2022, we had cashnet income of $353,077$2,333,072. Our net income for the three months ended March 31, 2022, consisted of interest income earned in the amount of $16,401 on funds held in the Trust Account, loss from operations in the amount of $945,787, and current liabilitiesan unrealized gain on change in fair value of $92,450 and a warrant liability of $5,573,133. Further, we expect to continue to incur significant costs in the pursuitamount of our acquisition plans. We cannot assure you that our plans to complete an Initial Business Combination will be successful.

Results of Operations

$3,262,458. For the three months ended March 31, 2021, we had a net loss of $587,600. Our net loss for the three months ended March 31, 2021, consisted of interest income earned in the amount of $4,075 on funds held in the Trust Account, loss from operations in the amount of $180,104, warrant issue costs of $115,404, and an unrealized loss on change in fair value of warrantswarrant liability in the amount of $296,167.

 

14Liquidity, Capital Resources and Going Concern Consideration

 

Liquidity and Capital Resources

Until the closing of the Public Offering, our only source of liquidity was an initial sale of shares (the “Founder Shares”) of Class B common stock, par value $0.0001 per share (the “Founder Shares”), to our sponsor, B. Riley Principal 150 Sponsor, Co., LLC, a Delaware limited liability company (the “Sponsor”), and the proceeds of a promissory note (the “Note”) from the Sponsor, in the amount of $300,000. TheWe had an outstanding balance on the Note of $100,000 at the time of the Public Offering and the Note was repaid in full uponon May 17, 2021 with proceeds raised from the closing of the Public Offering.  

 

AtOur registration statement for our Public Offering was declared effective on February 18, 2021. On February 23, 2021, we consummated our Public Offering of 17,250,000 Units, including 2,250,000 over-allotment Units, at $10.00 per Unit, generating gross proceeds of $172.5 million. Simultaneously with the closing of the Public Offering, we consummated the sale of 520,000 Private Placement Units, at a price of $10.00 per Private Placement Unit to the Sponsor, generating proceeds of $5.2 million.

Upon the closing of the Public Offering and the Private Placement, $172.5 million ($10.00 per Unit) of the net proceeds of the Public Offering and certain of the proceeds of the private placement was placed in a Trust Account located in the United States with Continental Stock Transfer & Trust Company acting as Trustee, and will be invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a business combination and (ii) the distribution of the Trust Account as described below.

As of March 31, 2021 we2022, the Company had $85,204 in its operating bank account, $172,532,601 in cash of $353,077and cash equivalents held in the Trust Account to be used for an Initial Business Combination or to repurchase or redeem its public shares in connection therewith and working capital deficit of $1,207,259. The working capital of $1,207,259$3,053,182, which excludes Delaware franchise taxes payable of $50,000 (which is included in accounts payable and accrued expenses at March 31, 2021)2022) as franchise taxes are paid from the Trust accountAccount from interest income earned.

 


We completed the sale of 17,500,000 units (the “Public Units”) at an offering price of $10.00 per unit in the Public Offering including 2,250,000 additional units at the initial public offering price less the underwriting discounts and commissions pursuant to the full exercise of the underwriters’ over-allotment option. The Sponsor subscribed to purchase an aggregate of 520,000 Private Placement Units at a price of $10.00 per unit in a private placement that closed on February 23, 2021 simultaneously with the Public Offering. The sale of the Public Units generated gross proceeds of $172,500,000, less underwriting commissions of $3,450,000 (2% of gross proceeds) and other offering costs of $436,189. The Private Placement Units generated $5,200,000 of proceeds.

Each Public Unit consists of one share of our Class A common stock, $0.0001 par value (each a “Public Share”), and one-third of one redeemable warrant, with each whole warrant exercisable for one share of Class A common stock (each, a “Warrant” and, collectively, the “Warrants” and, with respect to the warrants underlying the Private Placement Units, the “Private Placement Warrants”). One Warrant entitles the holder thereof to purchase one whole share of Class A common stock at a price of $11.50 per share.

Income on the funds held in the Trust Account may be released to us to pay our franchise and income taxes.

We do not believe we will likely need to raise additional funds other than the funds raised in the Public Offering on February 23, 2021 in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an Initial Business Combination are less than the actual amount necessary to do so, weWe may have insufficient funds available to operate our business prior to our Initial Business Combination. Moreover, we may neednot be able to obtain additional financing eitheror raise additional capital to completefinance its ongoing operations. If we are unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction and reducing overhead expenses. We cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about our Initial Business Combination or because we become obligatedability to redeemcontinue as a significant number of our shares of Class A common stock upon completion of our Initial Business Combination, in which case we may issue additional securities or incur debt in connection with such business combination (including from our affiliates or affiliates of our Sponsor).going concern through February 23, 2023, the scheduled liquidation date.

 

Off-Balance Sheet ArrangementsAdministrative Services Agreement

 

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purposeAs of facilitating off-balance sheet arrangements.

We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial agreements involving assets.

Contractual Obligations

At March 31, 2021,2022, we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. On February 18, 2021, we entered into an administrative support agreement pursuant to which we have agreed to pay an affiliate of the Sponsor a total of $3,750 per month for office space, administrative and support services. Upon the earlier of the completion of the Proposed Transaction or another Initial Business Combination and the Company’s liquidation, we will cease paying these monthly fees.


Business Combination Marketing Agreement

We have engaged B. Riley Securities, Inc. as advisors in connection with the Initial Business Combination to assist us in arranging meetings with stockholders to discuss athe potential business combinationInitial Business Combination and the target business’ attributes, introduce us to potential investors that may be interested in purchasing our securities, assist us in obtaining stockholder approval for our Initial Business Combination and assist us with the preparation of press releases and public filings in connection with the Initial Business Combination. We will pay B. Riley Securities, Inc. for such services upon the consummation of the Initial Business Combination a cash fee in an amount equal to 3.5% of the gross proceeds of the Public Offering (exclusive of any applicable finders’ fees which might become payable). Pursuant to the terms of the business combination marketing agreement, no fee will be due if we do not complete an Initial Business Combination.

 

Additionally, we engaged B. Riley Securities as the placement agent for the PIPE Investment. Pursuant to this engagement, at the closing of the Proposed Transaction, we will pay B. Riley Securities a fee of $3,471,625. If the Proposed Transaction is not consummated, B. Riley Securities Inc. will not receive such fee.

Registration Rights Agreement

The holders of Founder Shares, Private Placement Units and warrants that may be issued upon conversion of working capital loans, if any, (and any shares of Class A common stock issuable upon the exercise of the Private Placement Units, underlying Private Placement Warrants or working capital warrants) are entitled to registration rights pursuant to a registration rights agreement signed upon the consummation of the Public Offering. These holders are entitled to certain demand and “piggyback” registration rights. We will bear the expenses incurred in connection with the filing of any such registration statements.

Critical Accounting Policies

 

Our financial statements and the notes thereto contain information that is pertinent to management’s discussion and analysis. The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities disclosureand disclosures of contingent assets and liabilities. Estimates are used when accounting for certain items such as valuation of investments held in Trust Account, derivative and warrant liabilities, atand accounting for income tax valuation allowances. Estimates are based on historical experience, where applicable, and assumptions that management believes are reasonable under the datecircumstances. Due to the inherent uncertainty involved with estimates, actual results may differ. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. On a continual basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, management’s estimates are adjusted accordingly. Actual results may vary from these estimates and assumptions under different and/or future circumstances. Management considers an accounting estimate to be critical if:

it requires assumptions to be made that were uncertain at the time the estimate was made; and

changes in the estimate, or the use of different estimating methods that could have been selected, could have a material impact on results of operations or financial condition.


On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”).  In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.  The full impact of the condensedCOVID-19 outbreak continued to evolve, with the emergence of variant strains and breakthrough infections becoming prevalent both in the U.S. and worldwide. As the U.S. economy recovers, aided by stimulus packages and fiscal and monetary policies, inflation has been rising at historically high rates, and the Federal Reserve has signaled that it will begin increasing the target federal funds effective rate. The impact of the COVID-19 outbreak and these related matters on our results of operations, financial statements,position and incomecash flows will depend on future developments, including the duration and expenses duringspread of the periods reported. Actualoutbreak and related advisories and restrictions and the success of vaccines and natural immunity in controlling the pandemic. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy continue to be highly uncertain and cannot be predicted. If the financial markets and/or the overall economy continue to be impacted, our results couldof operations, financial position and cash flows may be materially differ from those estimates. adversely affected. 

We have identified the following as our critical accounting policies:

Warrant Derivative Liability

In accordance with FASB ASC 815-40, Derivatives“Derivatives and Hedging: Contracts in an Entities Own Equity, entitiesEquity”, an entity must consider whether to classify contracts that may be settled in its own stock, such as warrants, as equity of the entity or as an asset or liability. If an event that is not within the entity’s control could require net cash settlement, then the contract should be classified as an asset or a liability rather than as equity. We have determined because the terms of Public Warrants include a provision that entitles all warrantholderswarrant holders to cash for their warrantsPublic Warrants in the event of a qualifying cash tender offer, while only certain of the holders of the underlying shares of common stock would be entitled to cash, our warrantsPublic Warrants should be classified as derivative liability measured at fair value, with changes in fair value each period reported in earnings. Further if our Private Placement Warrants are held by someone other than initial purchasers of the Private Placement Warrants or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. Because the terms of the Private Placement Warrants and Public Warrants are so similar, we classified both types of warrantsWarrants as a derivative liability measured at fair value. Volatility in our Common StockPublic Shares and Public Warrants may result in significant changes in the value of the derivatives and resulting gains and losses on our statement of operations.

LossEarnings (Loss) per Common Share

Basic lossearnings (loss) per common share is computed by dividing net income applicable to common stockholders by the weighted average number of common shares outstanding during the period. All shares of Class B common stock are assumed to convert to shares of Class A common stock on a one-for-one basis. Consistent with FASB ASC 480, shares of Class A common stock subject to possible redemption, as well as theirEarnings and losses are shared pro rata sharebetween the two classes of undistributed trust earnings consistent withshares. Potential common shares for outstanding warrants to purchase the two-class method, have beenCompany’s stock were excluded from the calculation of lossdiluted earnings per common share for the three months ended March 31, 2021. Such shares, if redeemed, only participate in their pro rata share of trust earnings. Diluted loss per share includes2022 and 2021 because the incremental number of shares of common stock to be issued in connection withWarrants are contingently exercisable, and the conversion of Class B common stock or to settle warrants, as calculated using the treasury stock method. For the three months ending March 31, 2021, the Company didcontingencies have not have any dilutive warrants, securities or other contracts that could, potentially, be exercised or converted into common stock.yet been met. As a result, diluted lossearnings (loss) per common share is the same as basic lossearnings per common share for all periods presented. For the three months ended March 31, 2021, the Company reported loss available to common shareholders of $0.11.

16

 

Redeemable Shares

 

All of the 17,250,000 Public Shares sold as part of the Public Offering contain a redemption feature as described in the Prospectus.final prospectus filed in connection with our 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 Company’s amended and restated certificate of incorporation 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 to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount ofConditionally redeemable shares will be affected by charges against additional paid-in capital. At March 31, 2021, there were 17,250,000 Public Shares, of which 16,308,820 were recorded as redeemable shares, classified outside of permanent equity, and 1,461,180 were classified as Class A common stock.stock (including shares of 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 our control) is classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, as of March 31, 2022 and December 31, 2021, 17,250,000 shares of Class A common stock subject to possible redemption at the redemption amount were presented at redemption value as temporary equity, outside of stockholders’ equity on our Condensed Balance Sheet. 

 


Recent Accounting PronouncementsStandards

 

Management does not believeIn August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that any recently issued, but not yetrequire separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective accounting standards, if currentlyJanuary 1, 2022 and was adopted would have a material effectby the Company on January 1, 2022 and the accompanyingimpact of adopting this ASU is immaterial to the financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

As of March 31, 2021,2022, we were not subject to any market or interest rate risk.

 

We have not engaged in any hedging activities since our inception. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.

Item 4. Controls and Procedures.

 

Evaluation of Disclosure 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.

 

OurAs required by Rules 13a-15 and 15d-15 under the Exchange Act, our management evaluated, withcarried out an evaluation of the participationeffectiveness of our principal executive officerthe design and principal financial and accounting officer (our “Certifying Officers”), the effectivenessoperation of our disclosure controls and procedures under the supervision of our Chief Executive Officer and our Chief Financial Officer and concluded that our disclosure controls and procedures are not effective as of March 31, 2021, pursuant to Rule 13a-15(b) under2022 because of the Exchange Act and determined that, due solely to theidentification of a material weakness in our internal control over financial reporting our disclosure controls and procedures wererelating to the accounting treatment for complex financial instruments. A material weakness, as defined in the SEC regulations, is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not effective as of March 31, 2021.be prevented or detected on a timely basis. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles.

Management has implementedenhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our updated processes include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation steps to addressplan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the material weakness and to improve our internal control over financial reporting. Specifically, we expanded and improved our review process for complex securities and related accounting standards.intended effects.

Changes in Internal Control Overover Financial Reporting

 

During the quarter ended March 31, 2021, there has beenThere was no change in our internal control over financial reporting that occurred during the fiscal quarter of 2022 covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. In light of the material weakness, we have enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.

 

17


 

 

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

 

None.

Item 1A. Risk Factors

 

FactorsThere are certain risks and uncertainties in our business that could cause our actual results to differ materially from those anticipated. A detailed discussion of our risk factors was included in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 7, 2022. These risk factors should be read carefully in connection with evaluating our business and in connection with the forward-looking statements and other information contained in this Quarterly Report are anyReport. Any of the risks described in the Risk Factors sectionAnnual Report on Form 10-K for the year ended December 31, 2021, could materially affect our business, financial condition or future results and the actual outcome of matters as to which forward-looking statements are made. There have been no material changes to the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2021 except for the following:

Our search for an Initial Business Combination, and any target business, including FaZe, with which we ultimately consummate an Initial Business Combination, may be materially adversely affected by the recent coronavirus (COVID-19) outbreak, the geopolitical conditions resulting from the recent invasion of Ukraine by Russia and subsequent sanctions against Russia, Belarus and related individuals and entities and the status of debt and equity markets, as well as protectionist legislation in our Prospectus filed withtarget markets.

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout the SECworld. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on February 19, 2021 and those forth below. AnyMarch 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”. This outbreak of these factors could resultCOVID-19 has resulted in a significant or material adverse effect on our results of operations orwidespread health crisis that has and may continue to adversely affect the economies and 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.

Our warrants are accounted for as liabilitiesmarkets worldwide, and the changes in valuebusiness of our warrants could have a material effect on our financial results.

On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Staff Statement”). Specifically, the SEC Staff Statement focused on certain settlement terms and provisions related to certain tender offers following aFaZe or any potential target business combination,with which terms are similar to those contained in the warrant agreement governing our warrants. As a result of the SEC Staff Statement, we reevaluated the accounting treatment of our 5,750,000 public warrants and 173,333 private placement warrants, and determined to classify the warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.

As a result, included on our condensed balance sheet as of March 31, 2021 contained elsewhere in this Quarterly Report are derivative liabilities related to embedded features contained within our warrants. Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of operations. As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly, based on factors, which are outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants each reporting period and that the amount of such gains or losses could be material.

We have identified a material weakness in our internal control over financial reporting as of March 31, 2021. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may notconsummate an Initial Business Combination could be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.

Following this issuance of the SEC Staff Statement, after consultation with our independent registered public accounting firm, our management and our audit committee concluded that, in light of the SEC Staff Statement, it was appropriate to restate our previously issued audited balance sheet as of February 23, 2021. See “—Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.” As part of such process, we identified a material weakness in our internal controls over financial reporting.


A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects. If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case,affected. Furthermore, we may be unable to maintain compliancecomplete the Proposed Transaction or another Initial Business Combination if continued concerns relating to COVID-19 restrict travel, limit the ability to have meetings with securities law requirements regardingpotential investors or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely filing of periodic reports inmanner. In addition, to applicable stock exchange listing requirements, investors may lose confidencecountries or supranational organizations in our financial reportingtarget markets may develop and implement legislation that makes it more difficult or impossible for entities outside such countries or target markets to acquire or otherwise invest in companies or businesses deemed essential or otherwise vital. The extent to which COVID-19 impacts our stock pricesearch for and ability to consummate the Proposed Transaction or another Initial Business Combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may decline as a result. We cannot assure you thatemerge concerning the measures we have takenseverity of COVID-19 and the actions to date,contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, and result in protectionist sentiments and legislation in our target markets, our ability to consummate the Proposed Transaction or another Initial Business Combination, or the operations of FaZe or any other target business with which we ultimately consummate an Initial Business Combination, may be materially adversely affected. In addition, our ability to consummate a transaction, including the Proposed Transaction, may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events.

United States and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the recent invasion of Ukraine by Russia in February 2022. In response to such invasion, the North Atlantic Treaty Organization (“NATO”) deployed additional military forces to eastern Europe, and the United States, the United Kingdom, the European Union and other countries have announced various sanctions and restrictive actions against Russia, Belarus and related individuals and entities, including the removal of certain financial institutions from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system. Certain countries, including the United States, have also provided and may continue to provide military aid or other assistance to Ukraine during the ongoing military conflict, increasing geopolitical tensions with Russia. The invasion of Ukraine by Russia and the resulting measures we may takethat have been taken, and could be taken in the future, will be sufficient to avoid potential future material weaknesses.

We may face litigationby NATO, the United States, the United Kingdom, the European Union and other risks as a result of the material weakness in our internal control over financial reporting.

Following the issuance of the SEC Staff Statement, after consultation with our independent registered public accounting firm, our management and our audit committee concludedcountries have created global security concerns that it was appropriate to restate our previously issued audited balance sheet as of February 23, 2021. See “—Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effectlasting impact on our financial results.” As partregional and global economies. Although the length and impact of the restatement,ongoing military conflict in Ukraine is highly unpredictable, the conflict could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. Additionally, Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets.


Any of the abovementioned factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting from the Russian invasion of Ukraine and subsequent sanctions, could adversely affect our search for a business combination and any target business with which we identifiedultimately consummate a material weaknessbusiness combination. The extent and duration of the Russian invasion of Ukraine, resulting sanctions and any related market disruptions are impossible to predict, but could be substantial, particularly if current or new sanctions continue for an extended period of time or if geopolitical tensions result in our internal controls over financial reporting.

Asexpanded military operations on a resultglobal scale. Any such disruptions may also have the effect of such material weakness,heightening many of the restatement, the change in accounting for the warrants, and other matters raised or that mayrisks described in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the restatement and material weaknesses in our internal control over financial reporting and the preparation“Risk Factors” section of our financial statements. As ofAnnual Report on Form 10-K, such as those related to the date of this Quarterly Report, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect onmarket for our business, results of operations and financial conditionsecurities, cross-border transactions or our ability to completeraise equity or debt financing in connection with any particular business combination. If these disruptions or other matters of global concern continue for an initialextensive period of time, our ability to consummate a business combination.combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected.

In addition, the recent invasion of Ukraine by Russia, and the impact of sanctions against Russia and the potential for retaliatory acts from Russia, could result in increased cyber-attacks against U.S. companies

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Unregistered Sales of Equity Securities

On February 23, 2021, simultaneously with the closing of the Public Offering, we completed the private sale of 520,000 Private Placement Units at a purchase price of $10.00 per Private Placement Unit, to the Sponsor, generating gross proceeds to us of $5,200,000. The Private Placement Units are substantially identical to the units sold as part of the units in the Public Offering (as described below), except that our Sponsor has agreed not to transfer, assign or sell any of the Private Placement Units (except to certain permitted transferees) until 30 days after the completion of our Initial Business Combination. The Private Placement Units are also not redeemable by us so long as they are held by our Sponsor or its permitted transferees, and they may be exercised by our Sponsor and its permitted transferees on a cashless basis. The Private Placement Units were issued in connection with our incorporation pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

Use of Proceeds

 

On February 23, 2021, we consummated the Public Offering of 17,250,000 Public Units. Each Public Unit consists of one share of Class A common stock of the Company, par value $0.0001 per share,Public Share and one-third of one redeemable warrant of the Company.Public Warrant. Each whole warrantPublic Warrant entitles the holder thereof to purchase one share of Class A Common Stockcommon stock for $11.50 per share, and only whole warrantsWarrants are exercisable. The warrantsPublic Warrants will become exercisable on the later of 30 days after the completion of our Initial Business Combination and 12 months from the closing of the Public Offering and will expire five years after the completion of our Initial Business Combination or earlier upon redemption or liquidation. Subject to certain terms and conditions, we may redeem the warrants either for cash once the warrants become exercisable or for shares of our Class A Common Stock commencing 90 days after the warrants become exercisable.


The unitsPublic Units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $172,500,000. B. Riley Securities, Inc. served as the sole book-running manager for the offering.Public Offering. The securities sold in the Public Offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-251955). The SEC declared the registration statements effective on February 18, 2021.

 

We paid a total of $3,450,000 in underwriting discounts and commissions and $43,495$485,257 for other costs and expenses related to the Public Offering. B. Riley Securities, Inc., an underwriter in the Public Offering, and an affiliate of us and our Sponsor (which Sponsor beneficially owns more than 10% of our common stock) received a portion of the underwriting discounts and commissions related to the Public Offering. After deducting the underwriting discounts and commissions and incurred offering costs, the total net proceeds from our Public Offering and the sale of the Private Placement WarrantsUnits was approximately $173,813,811,$173,764,743, of which $172,500,000 (or $10.00 per unitPublic Unit sold in the Public Offering) was placed in the Trust Account. We also repaid $40,000 in noninterest bearing loans made to us by our Sponsor to cover expenses related to the Public Offering. Other than as described above, no payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates, or to our affiliates. 

Item 3. Defaults Upon Senior Securities

 

None.

Item 4. Mine Safety Disclosures

 

None.

Item 5. Other Information

None.

 

20None.


 

Item 6. Exhibits.

 

The exhibits filed as part of this Quarterly Report are listed in the index to exhibits immediately preceding such exhibits, which index to exhibits is incorporated herein by reference.

Exhibit Index

Exhibit No. Description
1.1
2.1 UnderwritingAmendment No. 2, dated March 10, 2022, to the Agreement and Plan of Merger, dated February 18,as of October 24, 2021 by and between the Company andamong B. Riley Securities,Principal 150 Merger Corp., BRPM Merger Sub, Inc., as representative and FaZe Clan, Inc. (incorporated by reference to Exhibit 2.1 of the several underwriters. (1)Company’s Current Report on Form 8-K (File No. 001-40083) filed with the SEC on March 10, 2022.
   
1.231.1* Business Combination Marketing Agreement, dated February 18, 2021, byCertification of Chief Executive Officer pursuant to Rules 13a-14 and between15d-14 promulgated under the Company and B. Riley Securities Inc.(1)Exchange Act of 1934
   
3.1*31.2* AmendedCertification of Chief Financial Officer and Restated CertificateChief Operating Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of Incorporation, as corrected.1934
   
3.232.1** By-laws (2)Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   
4.132.2** Warrant Agreement, dated FebruaryCertification of Chief Financial Officer and Chief Operating Officer pursuant to 18 2021, by and betweenU.S.C. Section 1350, as adopted pursuant to Section 906 of the Company and Continental Stock Transfer & Trust Company, as warrant agent. (1)Sarbanes-Oxley Act of 2002
   
10.1101.INS Insider Letter, dated February 18, 2021, by and among the Company, its officers, its directors and B. Riley Principal 150 Sponsor Co., LLC. (1)Inline XBRL Instance Document.
101.SCH 
10.2Investment Management Trust Agreement, dated February 18, 2021, by and between the Company and Continental Stock Transfer & Trust Company, as trustee. (1)
10.3Registration Rights Agreement, dated February 18, 2021, by and between the Company and B. Riley Principal 150 Sponsor Co., LLC. (1)
10.4Private Placement Units Purchase Agreement, dated February 18, 2021, by and between the Company and B. Riley Principal 150 Sponsor Co., LLC (1)
10.5Administrative Support Agreement, dated February 18, 2021, by and among the Company and B. Riley Corporate Services, Inc. (1)
31.1*Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2*Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1**Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
32.2**Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
101.INS*XBRL Instance Document
101.SCH*Inline XBRL Taxonomy Extension Schema DocumentDocument.
101.CAL 
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase DocumentDocument.
101.DEF 
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase DocumentDocument.
101.LAB 
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase DocumentDocument.
101.PRE 
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase DocumentDocument.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

*Filed herewith.

**Furnished.Furnished herewith.

(1)

Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on February 23, 2021 and incorporated by reference herein.
(2)Previously filed as an exhibit to The Registration Statement on Form S-1 filed with the SEC on January 8, 2021 and incorporated by reference herein.

 

21


 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

B. RILEY PRINCIPAL 150 MERGER CORP.
By:/s/ Daniel Shribman
Name:  Daniel Shribman
Title:Chief Executive Officer and Chief Financial Officer (principal executive officer, principal financial officer and principal accounting officer)  
   
Dated:Date: May 24, 202116, 2022By:/s/ DANIEL SHRIBMAN
Name:Daniel Shribman
Title:

Chief Executive Officer and
Chief Financial Officer

(Principal Executive Officer,
Principal Financial
  Officer and Principal Accounting Officer)

 

 

2225

 

 

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