UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A10-Q
Amendment No. 1
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021March 31, 2022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-40102
| | | | |||
| BOA ACQUISITION CORP. | |||||
| (Exact name of registrant as specified in its charter) | |||||
| | | | |||
| | |
Delaware |
| 85-4252723 |
(State or other jurisdiction of | | (I.R.S. Employer |
| | |
2600 Virginia Ave NW, Suite T23 Management Office Washington, D.C. |
| 20037 |
(Address of principal executive offices) | | (Zip Code) |
|
Registrant’s telephone number, including area code: (888) 211-3261 |
|
Not Applicable |
(Former name or former address, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
| | | | |
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
Units, each consisting of one share of Class A Common Stock and one-third of one Redeemable Warrant |
| BOAS.U |
| The New York Stock Exchange |
Class A Common Stock, par value $0.0001 per share |
| BOAS |
| The New York Stock Exchange |
Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock at a price of $11.50 per share |
| BOAS WS |
| The New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ◻☒ No ⌧☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧☒ No ◻☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
| Accelerated filer |
|
Non-accelerated filer |
| Smaller reporting company | ☒ |
|
| Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ◻☐
As of July 30, 2021,May 6, 2022, there were 23,000,000 Class A common shares and 5,750,000 Class B common shares, $0.0001 par value, issued and outstanding.
EXPLANATORY NOTE
BOA Acquisition Corp. (the “Company” or “we,” “our” or “us”) is filing this Amendment No. 1 to the Quarterly Report on Form 10-Q/A (“Amendment No. 1”), which amends the Quarterly Report on Form 10-Q as of and for the period ended June 30, 2021, as originally filed with the Securities and Exchange Commission (“SEC”) on August 4, 2021 (the “Q2 Form 10-Q”).
On November 5, 2021, the Company filed its Form 10-Q for the quarterly period ended September 30, 2021 (the “Q3 Form 10-Q”), which included a Note 2, Revision of Previously Issued Financial Statements, (“Note 2”) that described a revision to the Company’s classification of its Class A common stock previously classified as permanent equity as part of the units sold in the Company’s initial public offering (“IPO”) on February 26, 2021. As described in Note 2, upon its IPO, the Company classified a portion of the Class A common stock as permanent equity to maintain net tangible assets greater than $5,000,000 on the basis that the Company will consummate its initial business combination only if the Company has net tangible assets of at least $5,000,001, as set forth in the Company’s Amended and Restated Certificate of Incorporation. The Company’s management re-evaluated the conclusion and determined that the Class A common stock included certain provisions that require the classification of the Class A common stock as temporary equity regardless of the minimum net tangible assets required to complete the Company’s initial business combination. As a result, management corrected the error by restating the classification of all Class A common stock to temporary equity. This resulted in an adjustment to the initial carrying value of the Class A common stock subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A common stock.
In connection with the change in presentation for the Class A common stock, the Company also restated its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. This presentation differs from the previously presented method of earnings per share, which was similar to the two-class method.
The Company initially determined the changes were not qualitatively material to the Company’s previously issued financial statements and did not restate its financial statements. Instead, the Company revised its previously issued financial statements, as of and for the periods ended June 30, 2021 included in the Q2 Form 10-Q, in Note 2 to its Form 10-Q for the quarterly period ended September 30, 2021. Although the qualitative factors that management assessed tended to support a conclusion that the misstatements were not material, these factors were not strong enough to overcome the significant quantitative errors in the financial statements and it was subsequently determined that the qualitative and quantitative factors support a conclusion that the misstatements are material on a quantitative basis. As a result, management concluded that the misstatement was of such magnitude that it is probable that the judgment of a reasonable person relying upon the financial statements would have been influenced by the inclusion or correction of the foregoing items. As such, upon further consideration of the change, the Company determined the change in classification of the Class A common stock previously classified within permanent equity and the change to its presentation of earnings per share is material quantitatively and it should restate its previously issued financial statements.
Therefore, on January 10, 2022, the Company’s management and the audit committee of the Company’s board of directors (the “Audit Committee”) concluded that the Company’s previously issued (i) audited balance sheet as of February 26, 2021 on Form 8-K (the “Audited Balance Sheet”), included in Form 8-K dated March 4, 2021, as previously restated in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the SEC on May 21, 2021 (the “Q1 Form 10-Q”), (ii) unaudited interim financial statements included in the Q1 Form 10-Q, (iii) unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on August 4, 2021 (the “Q2 Form 10-Q”), and (iv) unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, filed with the SEC on November 5, 2021 (the “Q3 Form 10-Q”) (collectively, the “Affected Prior Periods”), should be restated and should no longer be relied upon.
As part of the Company’s assessment of its Class A Common Stock Subject to Possible Redemption, the Company identified an error in its accounting for its Private Placement Warrants. This error was identified after the Company had issued its Form 8-K on January 13, 2022, that described the then forthcoming restatements under Item 4.02 “Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review”. The error resulted from the incorrect accounting for the excess fair value over the proceeds received from the Private Placement Warrants. This was originally accounted for within stockholders’ equity, but the excess should have been recognized as a loss on the condensed statement of operations.
i
As such, the Company is restating its unaudited interim financial statements previously included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021 in this Form 10-Q/A, Amendment No. 1. The Company is amending the other periods included in the Affected Prior Periods in separate filings.
The Company determined that none of the above changes will have any impact on its cash position and cash held in the trust account established in connection with the IPO.
After re-evaluation, the Company’s management concluded that in light of the errors described above, a material weakness existed in the Company’s internal control over financial reporting in analyzing complex financial instruments during the Affected Prior Periods and that the Company’s disclosure controls and procedures were not effective. This material weakness is additive to the material weakness previously identified and disclosed regarding the Company’s accounting for Warrants, which was disclosed in the Company’s Q1 Form 10-Q, Q2 Form 10-Q and Q3 Form 10-Q. The Company’s remediation plan with respect to such material weaknesses is described in more detail in Item 4 of Part I to this Quarterly Report on Form 10-Q/A.
The following items in this Form 10-Q/A have been amended as a result of this restatement:
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
Part. 1A. Risk Factors
ii
BOA ACQUISITION CORP.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2021MARCH 31, 2022
TABLE OF CONTENTS
iiii
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BOA ACQUISITION CORP.
CONDENSED BALANCE SHEETS
(Unaudited)
| | | | | | | ||||||
| | | | | | |
| March 31, |
| December 31, | ||
|
| June 30, 2021 |
| | | | 2022 | | 2021 | |||
| | (As Restated) | | December 31, 2020 | | (Unaudited) | | (Audited) | ||||
ASSETS | | | | | | | | | | | | |
CURRENT ASSETS | | | | | | | | | | | | |
Cash | | $ | 1,118,578 | | $ | 25,050 | | $ | 171,465 | | $ | 760,576 |
Prepaid expenses | |
| 288,505 | |
| — | |
| 326,803 | |
| 280,310 |
Total current assets | | | 1,407,083 | | | 25,050 | | | 498,268 | | | 1,040,886 |
NONCURRENT ASSETS | | | | | | | | | | | | |
Cash held in trust account | | | 230,003,473 | | | — | | | 230,015,188 | | | 230,011,790 |
Other assets | | | 160,417 | | | — | | | — | | | 22,917 |
Deferred offering costs associated with initial public offering | |
| — | |
| 8,000 | ||||||
Total noncurrent assets | |
| 230,163,890 | |
| 8,000 | | | 230,015,188 | | | 230,034,707 |
TOTAL ASSETS | | $ | 231,570,973 | | $ | 33,050 | | $ | 230,513,456 | | $ | 231,075,593 |
| | | | | | | | | | | | |
LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) | |
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LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ DEFICIT | |
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CURRENT LIABILITIES | | | | | | | | | | | | |
Accounts payable | | $ | 29,000 | | $ | 993 | | $ | 225,535 | | $ | 175,743 |
Accrued deferred offering costs | | | — | | | 8,000 | ||||||
Franchise tax payable | | | 100,000 | | | — | | | 50,000 | | | 200,050 |
Total current liabilities | | | 129,000 | | | 8,993 | | | 275,535 | | | 375,793 |
LONG-TERM LIABILITIES | | | | | | | | | | | | |
Deferred underwriting commissions | |
| 8,050,000 | |
| — | |
| 8,050,000 | |
| 8,050,000 |
Derivative warrant liabilities | | | 12,548,174 | | | — | | | 3,976,750 | | | 7,883,408 |
Total liabilities | |
| 20,727,174 | |
| 8,993 | |
| 12,302,285 | |
| 16,309,201 |
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Commitments and Contingencies (Note 9) | |
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Class A common stock subject to possible redemption; 23,000,000 and 0 shares as of June 30, 2021 and December 31, 2020, respectively, at redemption value of $10.00 per share | | | 230,000,000 | | | — | ||||||
Redeemable Class A common stock, $0.0001 par value; 23,000,000 as of March 31, 2022 and December 31, 2021, respectively, subject to possible redemption at $10.00 per share | | | 230,000,000 | | | 230,000,000 | ||||||
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STOCKHOLDERS’ EQUITY (DEFICIT) | |
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Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | |
| — | |
| — | ||||||
Class A common stock, $0.0001 par value; 380,000,000 shares authorized; 0 shares issued and outstanding (excluding 23,000,000 and 0 shares subject to possible redemption) as of June 30, 2021 and December 31, 2020, respectively | |
| — | |
| — | ||||||
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 5,750,000 shares issued and outstanding as of June 30, 2021 and December 31, 2020 | |
| 575 | |
| 575 | ||||||
STOCKHOLDERS’ DEFICIT | |
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Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | |
| — | |
| — | ||||||
Class A common stock, $0.0001 par value; 380,000,000 shares authorized; 0 shares issued and outstanding (excluding 23,000,000 subject to possible redemption) as of March 31, 2022 and December 31, 2021, respectively | |
| — | |
| — | ||||||
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 5,750,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | |
| 575 | |
| 575 | ||||||
Additional paid-in capital | |
| — | |
| 24,425 | |
| — | |
| — |
Accumulated deficit | |
| (19,156,776) | |
| (943) | |
| (11,789,404) | |
| (15,234,183) |
Total Stockholders’ Equity (Deficit) | |
| (19,156,201) | |
| 24,057 | ||||||
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) | | $ | 231,570,973 | | $ | 33,050 | ||||||
Total Stockholders’ Deficit | |
| (11,788,829) | |
| (15,233,608) | ||||||
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ DEFICIT | | $ | 230,513,456 | | $ | 231,075,593 | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
1
BOA ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(As Restated)
| | | | | | |
| | Three Months Ended | | Six Months Ended | ||
|
| June 30, 2021 |
| June 30, 2021 | ||
OPERATING EXPENSES | | | | | | |
General and administrative expenses | | $ | 149,778 | | $ | 222,422 |
Franchise tax expense | | | 50,000 | | | 100,000 |
Total operating expenses | | | (199,778) | | | (322,422) |
| | | | | | |
OTHER INCOME (EXPENSE) | | | | | | |
Interest earned on marketable securities held in Trust Account | | | 3,473 | | | 3,473 |
Underwriting discounts and offering costs attributed to derivative warrant liability | | | — | | | (438,197) |
Change in fair value of derivative warrant liability | | | 2,666,342 | | | 1,846,825 |
Total other income | | | 2,669,815 | | | 1,412,101 |
| | | | | | |
INCOME BEFORE INCOME TAX | | | 2,470,037 | | | 1,089,679 |
Income tax expense | | | — | | | — |
NET INCOME | | $ | 2,470,037 | | $ | 1,089,679 |
| |
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| |
Basic and diluted weighted average shares outstanding, Class A common stock | |
| 23,000,000 | | | 15,883,978 |
Basic and diluted net income per share, Class A common stock | | $ | 0.09 | | $ | 0.05 |
| | | | |
| |
Basic and diluted weighted average shares outstanding, Class B common stock | |
| 5,750,000 | |
| 5,750,000 |
Basic and diluted net income per share, Class B common stock | | $ | 0.09 | | $ | 0.05 |
| | | | | | |
| | Three Months Ended March 31, | ||||
|
| 2022 |
| 2021 | ||
OPERATING EXPENSES | | | | | | |
General and administrative expenses | | $ | 415,290 | | $ | 72,644 |
Franchise tax expense | | | 50,000 | | | 50,000 |
Total operating expenses | | | (465,290) | | | (122,644) |
| | | | | | |
OTHER INCOME (EXPENSE) | | | | | | |
Interest earned on marketable securities held in Trust Account | | | 3,398 | | | — |
Interest earned on operating cash | | | 13 | | | — |
Underwriting discounts and offering costs attributed to derivative warrant liability | | | — | | | (438,197) |
Change in fair value of derivative warrant liability | | | 3,906,658 | | | (819,517) |
Total other income (expense) | | | 3,910,069 | | | (1,257,714) |
| | | | | | |
INCOME (LOSS) BEFORE INCOME TAX | | | 3,444,779 | | | (1,380,358) |
Income tax expense (benefit) | | | — | | | — |
NET INCOME (LOSS) | | $ | 3,444,779 | | $ | (1,380,358) |
| |
| | |
| |
Basic and diluted weighted average shares outstanding, Class A common stock | |
| 23,000,000 | | | 8,688,889 |
Basic and diluted net income per share, Class A common stock | | $ | 0.12 | | $ | (0.10) |
| | | | |
| |
Basic and diluted weighted average shares outstanding, Class B common stock | |
| 5,750,000 | |
| 5,750,000 |
Basic and diluted net income per share, Class B common stock | | $ | 0.12 | | $ | (0.10) |
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
BOA ACQUISITION CORP.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
| | | | | | | | | | | | | | |
| | Class B | | Additional | | | | Total | ||||||
| | Common Stock | | Paid-in | | Accumulated | | Stockholders’ | ||||||
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | ||||
Balance—December 31, 2021 | | 5,750,000 | | $ | 575 | | $ | — | | $ | (15,234,183) | | $ | (15,233,608) |
Net income | | — | | | — | | | — | | | 3,444,779 | | | 3,444,779 |
Balance—March 31, 2022 | | 5,750,000 | | $ | 575 | | $ | — | | $ | (11,789,404) | | $ | (11,788,829) |
| | | | | | | | | | | | | | |
| | Class B | | Additional | | | | | Total | |||||
| | Common Stock | | Paid-in | | Accumulated | | Stockholders’ | ||||||
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity (Deficit) | ||||
Balance—December 31, 2020 | | 5,750,000 | | $ | 575 | | $ | 24,425 | | $ | (943) | | $ | 24,057 |
Remeasurement of Class A common stock subject to possible redemption | | — | | | — | | | (24,425) | | | (20,245,512) | | | (20,269,937) |
Net loss |
| — | | | — | |
| — | |
| (1,380,358) | |
| (1,380,358) |
Balance—March 31, 2021 |
| 5,750,000 | | $ | 575 | | $ | — | | $ | (21,626,813) | | $ | (21,626,238) |
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
BOA ACQUISITION CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(As Restated)(Unaudited)
| | | | | | | | | | | | | | |
| | Class B | | Additional | | | | Total | ||||||
| | Common Stock | | Paid-in | | Accumulated | | Stockholders' | ||||||
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity (Deficit) | ||||
Balance—December 31, 2020 | | 5,750,000 | | $ | 575 | | $ | 24,425 | | $ | (943) | | $ | 24,057 |
Remeasurement of Class A common stock subject to possible redemption | | — | | | — | | | (24,425) | | | (20,245,512) | | | (20,269,937) |
Net loss | | — | | | — | | | — | | | (1,380,358) | | | (1,380,358) |
Balance—March 31, 2021 | | 5,750,000 | | $ | 575 | | $ | — | | $ | (21,626,813) | | $ | (21,626,238) |
Net income | | — | | | — | | | — | | | 2,470,037 | | | 2,470,037 |
Balance—June 30, 2021 | | 5,750,000 | | $ | 575 | | $ | — | | $ | (19,156,776) | | $ | (19,156,201) |
4 | | | | | | |
|
| Three Months Ended March 31, | ||||
| | 2022 | | 2021 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
Net income (loss) | | $ | 3,444,779 | | $ | (1,380,358) |
Adjustments to reconcile net income to net cash used in operating activities: | |
| | |
| |
Interest earned on marketable securities held in Trust Account | | | (3,398) | | | — |
Underwriting discounts and offering costs attributed to warrant liability | | | — | | | 438,197 |
Change in fair value of warrant liability | | | (3,906,658) | | | 819,517 |
Changes in operating assets and liabilities: | |
|
| |
| |
Prepaid expenses and other assets | | | (23,576) | | | (528,806) |
Accounts payable and accrued expenses | |
| 49,792 | |
| 2,314 |
Franchise tax payable | | | (150,050) | | | 50,000 |
Net cash used in operating activities | |
| (589,111) | |
| (599,136) |
| | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | |
Investment of cash in Trust Account | | | — | | | (230,000,000) |
Net cash used in investing activities | | | — | | | (230,000,000) |
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CASH FLOW FROM FINANCING ACTIVITIES | |
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| |
| |
Proceeds from sale of Units, net of underwriting discounts paid | | | — | | | 225,161,865 |
Proceeds from sale of Private Placement Warrants | | | — | | | 6,575,000 |
Net cash provided by financing activities | |
| — | |
| 231,736,865 |
| |
|
| |
| |
NET CHANGE IN CASH | |
| (589,111) | |
| 1,137,729 |
CASH, BEGINNING OF PERIOD | |
| 760,576 | |
| 25,050 |
CASH, END OF PERIOD | | $ | 171,465 | | $ | 1,162,779 |
| |
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SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES | |
| | |
| |
Initial classification of derivative warrant liability | | $ | — | | $ | 14,723,749 |
Initial classification of common stock subject to possible redemption | | $ | — | | $ | 230,000,000 |
Remeasurement of Class A common stock subject to possible redemption | | $ | — | | $ | 20,269,937 |
Deferred underwriting fees charged to additional paid in capital | | $ | — | | $ | 8,050,000 |
The accompanying notes are an integral part of these condensed financial statements.
3
BOA ACQUISITION CORP.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(As Restated)
| | | |
|
| Six Months Ended | |
| | June 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | |
Net income | | $ | 1,089,679 |
Adjustments to reconcile net income to net cash used in operating activities: | |
| |
Interest earned on marketable securities held in Trust Account | | | (3,473) |
Underwriting discounts and offering costs attributed to warrant liability | | | 438,197 |
Change in fair value of warrant liability | | | (1,846,825) |
Changes in operating assets and liabilities: | |
| |
Prepaid expenses and other assets | | | (448,922) |
Accounts payable and accrued expenses | |
| 28,007 |
Franchise tax payable | | | 100,000 |
Net cash used in operating activities | |
| (643,337) |
| | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | |
Investment of cash in Trust Account | | | (230,000,000) |
Net cash used in investing activities | | | (230,000,000) |
| |
| |
CASH FLOW FROM FINANCING ACTIVITIES | |
| |
Proceeds from sale of Units, net of underwriting discounts paid | | | 225,161,865 |
Proceeds from sale of Private Placement Warrants | | | 6,575,000 |
Net cash provided by financing activities | |
| 231,736,865 |
| |
| |
NET CHANGE IN CASH | |
| 1,093,528 |
CASH, BEGINNING OF PERIOD | |
| 25,050 |
CASH, END OF PERIOD | | $ | 1,118,578 |
| |
| |
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES | |
| |
Initial classification of derivative warrant liability | | $ | 14,723,749 |
Initial classification value of common stock subject to possible redemption | | $ | 230,000,000 |
Remeasurement of Class A common stock subject to possible redemption | | $ | 20,269,937 |
Deferred underwriting fees charged to additional paid-in capital | | $ | 8,050,000 |
The accompanying notes are an integral part of theseunaudited condensed financial statements.
4
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Organization and Operations
BOA Acquisition Corp. (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 (the “Business Combination”). The Company is an early stage and 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, and as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of June 30, 2021,March 31, 2022, the Company had not commenced any operations. All activity through June 30, 2021March 31, 2022 relates to the Company’s formation, its Initial Public Offeringinitial public offering (the “IPO”“Public Offering”) and identifying a target company for a Business Combination. 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 from the proceeds derived from the IPOPublic Offering (see below for more information on the IPO)Public Offering), and recognizes changes in the fair value of warrant liabilities as other income (expense).
Additional background on the Company and its Public Offering are available in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).
Corporate Organization and Initial Public Offering
The Company was incorporated in Delaware on October 26, 2020. The Company’s sponsor is Bet on America LLC, a Delaware limited liability company (the “Sponsor”).
On February 26, 2021, the Company consummated its IPOPublic Offering of 23,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”) at $10.00 per Unit, raising $230,000,000 of gross proceeds. Of the 23,000,000 shares issued, 20,000,000 Units were included in the Company’s initial offering, and 3,000,000 Units resulted from the underwriter fully exercising its over-allotment option. The net proceeds of the IPOPublic Offering were $217,111,865, after deducting expenses and underwriting discounts and commissions of approximately $12,888,135, which includes $8,050,000 in deferred underwriting commissions (see Note 9, Commitments and Contingencies, for more information).
Public Warrants
Each Unit consists of 1 share of Class A common stock and one-third of one redeemable warrant (each, a “Public Warrant” and, collectively, the “Public Warrants”). Each whole Public Warrant entitles the holder to purchase 1 share of Class A common stock at a price of $11.50 per share. In addition, if (x) the Company issues additional shares of Class A common stock for capital raising purposes in connection with the closing of our Initialthe Company’s initial Business Combination at an issue or effective issue price of less than $9.20 per share (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or their affiliates, without taking into account any shares of Class B common stock 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 amount that is the total equity proceeds (and interest thereon), available for the funding of the Initialinitial Business Combination on the date of the consummation (net of redemptions) and (z) the volume-weighted average trading price of ourthe Company’s Class A common stock during the 20-trading-day period starting on the trading day prior to the date on which the Company consummates its Initialinitial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the Public Warrants will be adjusted, to the nearest cent, to 115% of the higher of the Newly Issued Price and the Market Value, and the $18.00 per share redemption trigger price described below will be adjusted, to the nearest cent, to be equal to 180% of the higher of the Newly Issued Price and the Market Value.
5
No fractional shares will be issued upon separation of the Units and only whole Public Warrants will trade. Each Public Warrant will become exercisable on the later of 30 days after the completion of the Company’s Initialinitial Business Combination or 12 months from
5
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
the closing of the Initial Public Offering and will expire five years after the completion of the Company’s Initialinitial Business Combination or earlier upon redemption or liquidation.
Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants in whole and not in part at a price of $0.01 per Public Warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last sale price of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the Public Warrant holders.
Private Placement Warrants
Simultaneously with the closing of the IPO,Public Offering, the Company consummated a private sale (the “Private Placement”) of 6,575,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to the Sponsor at a price of $1.00 per Private Placement Warrant, generating gross proceeds of approximately $6,575,000 (see Note 6, Related Party Transactions, for more information). The Private Placement Warrants are identical to the Public Warrants included in the Units sold in the IPO,Public Offering, except as otherwise disclosed in the Note 5,4, Stockholders’ Equity—Equity (Deficit)—Warrants. NaN underwriting discounts or commissions were paid with respect to such sale.
Transaction Costs
Transaction costs incurred during the Public Offering amounted to $12,888,135, consisting of $4,600,000 of underwriting fees, $8,050,000 of deferred underwriting commissions, and $238,135 of other offering costs.
The Trust Account
Following the closing of the IPO,Public Offering on February 26, 2021, $230,000,000 of the net proceeds of the sale of the Units and the Private Placement Warrants were placed in a trust account (the “Trust Account”). The funds held in the Trust Account will beare invested only in U.S. government treasury bills with a maturity of one hundred eighty (180) days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of 1940 and that invest only in direct U.S. government obligations. Funds will remain in the Trust Account until the earlier of (i) the consummation of the Initialinitial Business Combination or (ii) the distribution of the Trust Account proceeds as described below. The remaining proceeds outside the Trust Account may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.
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 IPOPublic Offering and the Private Placement will not be released from the Trust Account until the earlier of: (i) the completion of the Company’s Initialinitial Business Combination; (ii) the redemption of any shares of the Public Shares that have been properly tendered in connection with a stockholder vote to amend the Company’s amendedAmended and restated certificateRestated Certificate of incorporationIncorporation (the “Charter”) (A) to modify the substance or timing of the Company’s obligation to redeem 100% of Public Shares if the Company does not complete its Initialinitial Business Combination within 24 months from the closing of the IPOPublic Offering (or 30 months from the closing of the IPOPublic Offering if the Company has executed a letter of intent, agreement in principle or definitive agreement for the initial Business Combination within 24 months from the closing of the IPOPublic Offering but has not completed the initial Business Combination within such 24 month period) (the “Combination Period”) or (B) with respect to any other provision relating to stockholders’ right for pre-initial Business Combination activity; and (iii) the redemption of 100% of the Public Shares if the Company is unable to complete an initial Business Combination within the Combination Period, subject to the requirements of 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 Company’s public stockholders.
6
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
Initial Business Combination
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO,Public Offering, although substantially all of the net proceeds of the IPOPublic Offering are intended to be generally applied toward consummating an initial Business Combination. The initial Business Combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the amount of any deferred underwriting discount held in the trust account)Trust Account) at the time of the agreement to enter into the initial Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect an initial Business Combination.
The Company, after signing a definitive agreement for an initial Business Combination, will either (i) seek stockholder approval of the initial Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the initial Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay the Company’s taxes, or (ii) provide stockholders with the opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay the Company’s taxes. The decision as to whether the Company will seek stockholder approval of the initial Business Combination or will allow stockholders to sell their Public Shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval, unless a vote is required by law or under New York Stock Exchange rules. If the Company seeks stockholder approval, it will complete its initial Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial Business Combination. 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 upon consummation of the initial Business Combination. 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 vote 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 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 earned on the funds held in the Trust Account and not previously released to the Company to pay the Company’s taxes.
Pursuant to the Company’s amended and restated certificate of incorporation, if the Company is unable to complete the initial Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but 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 the Company’s taxes (less $100,000 to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
7
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
The Sponsor and the Company’s directors, director nominees and officers have entered into a sponsor 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 (as defined below) (seebelow in Note 6, Related Party Transactions, for more information)) held by them if the Company fails to complete an initial Business Combination within the Combination Period. However, if the Sponsor or any of the Company’s directors, officers or affiliates acquires shares of Class A common stock in or after the IPO,Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete the initial Business Combination within the Combination Period.
7
Separate tradingTrading of Class A common sharesCommon Stock and Public Warrants
On March 31, 2021, the Company announced that, commencing March 31, 2021, the holders of the Company’s Units maycould elect to separately trade the Class A common stock and Public Warrants comprising the Units. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Those units not separated will continue to trade on the New York Stock Exchange under the symbol “BOAS.U,” and each of the shares of Class A common stock and Public Warrants that are separated will trade on the New York Stock Exchange under the symbols “BOAS” and “BOAS WS,” respectively.
Risks and Uncertainties
Management is continuing to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and search for a target company, the specific impacts are not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements and the specific impact on the Company's financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.
Liquidity and Capital Resources
As of March 31, 2022, the Company had $171,465 in cash not held in the Trust Account and available for working capital purposes. The Company believes it will need to raise additional funds in order to meet the expenditures required for operating the business. If the Company’s estimate 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, the Company may have insufficient funds available to operate the business prior to the initial Business Combination. Moreover, the Company may need to obtain additional financing either to complete the initial Business Combination or to redeem a significant number of our public shares upon completion of the initial Business Combination, in which case the Company may issue additional securities or incur debt in connection with such initial Business Combination. If the Company is unable to complete the Business Combination because it does not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account.
Going Concern
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements – Going Concern, the Company has until February 26, 2023 to consummate an initial Business Combination. It is uncertain that the Company will be able to consummate an initial Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Additionally, the Company may not have sufficient liquidity to fund the working capital needs of the Company through one year from the issuance of these financial statements. Management has determined that the liquidity condition and mandatory liquidation and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after February 26, 2023. The Company’s sponsor, officers and directors may, but are not obligated to, loan the Company funds from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs.
8
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
NOTE 2 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
The Company’s management re-evaluated the Company’s application of ASC 480-10-S99 to its accounting classification of its Class A common stock subject to possible redemption issued as part of the units sold in the Company’s IPO on February 26, 2021. In accordance with ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of its Class A common stock in permanent equity, or total stockholders’ equity, due to the Company’s requirement to maintain at least $5,000,001 of tangible net assets. Pursuant to this re-evaluation, the Company’s management determined that all Class A common stock subject to redemption include provisions that require classification of the Public Shares as temporary equity. This resulted in an adjustment to the initial carrying value of the Class A common stock subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A common stock.
In connection with the change in presentation for the Class A common stock subject to redemption, the Company also restated its earnings per share calculation to allocate net income (loss) evenly to Class A and Class B common stock. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of commons stock share pro rata in the income (loss) of the Company.
The Company included Note 10, Class A Common Stock Subject to Possible Redemption, in its restated Notes to Condensed Financial Statements that describes the number of Class A shares that are subject to possible redemption, and also provides a reconciliation of the gross IPO proceeds to the Class A common stock subject to possible redemption as of the date of the condensed balance sheet.
As part of the Company’s assessment of its Class A Common Stock Subject to Possible Redemption, the Company identified an additional error in its accounting for its Private Placement Warrants. When the fair value of the warrants at the date of issuance is in excess of the proceeds received, the difference is recorded as a loss as of the date of issuance. As a result, the Company recognized a $328,750 loss during the three months ended March 31, 2021 related to the difference between the fair value of the Private Placement Warrants and the proceeds from the Private Placement Warrants. This loss is included in the accompanying condensed statement of operations for the six months ended June 30, 2021 within “Change in fair value of derivative warrant liability.”
Further, this Amendment No. 1 on Form 10-Q/A for the quarterly period ended June 30, 2021 includes minor formatting, wording and grammar changes to the condensed financial statements and Notes to Condensed Financial Statements.
Impact
In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the corrections noted above and has determined that the related impact was material to the Q2 Form 10-Q that contained the errors. Therefore, the Company, in consultation with its Audit Committee, concluded that the Q2 Form 10-Q should be restated to present (i) all Class A common stock subject to possible redemption as temporary equity, (ii) to recognize remeasurement from the initial book value to redemption value at the time of its IPO, (iii) to correct its accounting for the excess of fair value over the proceeds received for its Private Placement Warrants, and (iv) correct its earnings per share calculation. As such, the Company is reporting these restatements to those Q2 Form 10-Q in this quarterly report.
9
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
The impact of the restatements on the financial statements for the Q2 Form 10-Q are presented below.
| | | | | | | | | |
| | | | | Adjustments for Class A | | | | |
| | | | | common stock | | | | |
| | | | | subject to possible | | | | |
| | | | | Redemption and Private | | | | |
Balance Sheet as of June 30, 2021 (unaudited) | | As previously reported | | Placement Warrants | | As Restated | |||
Class A common stock subject to redemption | | $ | 205,843,790 | | $ | 24,156,210 | | $ | 230,000,000 |
Class A Common stock | | $ | 242 | | $ | (242) | | $ | — |
Additional paid-in capital | | $ | 3,581,706 | | $ | (3,581,706) | | $ | — |
Retained Earnings (Accumulated deficit) | | $ | 1,417,486 | | $ | (20,574,262) | | $ | (19,156,776) |
Total Stockholders' Equity (Deficit) | | $ | 5,000,009 | | $ | (24,156,210) | | $ | (19,156,201) |
Shares of Class A common stock subject to redemption | |
| 20,584,379 | |
| 2,415,621 | |
| 23,000,000 |
Shares of Class A common stock | |
| 2,415,621 | |
| (2,415,621) | |
| — |
| | | | | | | | | |
| | | | | Adjustments for Class A |
| | | |
| | | | | common stock | | | | |
| | | | | subject to possible | | | | |
| | | | | Redemption and Private | | | | |
Statement of Operations for the three months ended June 30, 2021 (unaudited) | | As previously reported | | Placement Warrants | | As Restated | |||
Basic and diluted Class A weighted-average shares outstanding |
| | 20,340,090 |
| | 2,659,910 |
| | 23,000,000 |
Basic and diluted Class A net income (loss) per share | | $ | — | | $ | 0.09 | | $ | 0.09 |
Basic and diluted Class B weighted-average shares outstanding | |
| 8,409,910 | |
| (2,659,910) | |
| 5,750,000 |
Basic and diluted Class B net income (loss) per share | | $ | 0.29 | | $ | (0.20) | | $ | 0.09 |
| | | | | | | | | |
|
| | |
| Adjustments for Class A |
| | | |
| | | | | common stock | | | | |
| | | | | subject to possible | | | | |
| | | | | Redemption and Private | | | | |
Statement of Operations for the six months ended June 30, 2021 (unaudited) | | As previously reported | | Placement Warrants | | As Restated | |||
Change in fair value of derivative warrant liability | | $ | 2,175,575 | | $ | (328,750) | | $ | 1,846,825 |
Total other income | | $ | 1,740,851 | | $ | (328,750) | | $ | 1,412,101 |
Income before income tax | | $ | 1,418,429 | | $ | (328,750) | | $ | 1,089,679 |
Net income | | $ | 1,418,429 | | $ | (328,750) | | $ | 1,089,679 |
Basic and diluted Class A weighted-average shares outstanding |
| | 20,355,735 |
| | (4,471,757) |
| | 15,883,978 |
Basic and diluted Class A net income (loss) per share | | $ | — | | $ | 0.05 | | $ | 0.05 |
Basic and diluted Class B weighted-average shares outstanding | |
| 7,575,901 | |
| (1,825,901) | |
| 5,750,000 |
Basic and diluted Class B net income (loss) per share | | $ | 0.19 | | $ | (0.14) | | $ | 0.05 |
10
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
| | | | | | | | | |
|
| | |
| Adjustments for Class A |
| | | |
| | | | | common stock | | | | |
| | | | | subject to possible | | | | |
| | | | | Redemption and Private | | | | |
Statement of Changes in Stockholders’ Equity (Deficit) (unaudited) | | As previously reported | | Placement Warrants | | As Restated | |||
For the three months ended March 31, 2021 | | | | | | | | | |
Sale of units in initial public offering, net of allocation to warrant liability, underwriting discounts and other offering costs | | $ | 217,550,062 | | $ | (217,550,062) | | $ | — |
Sale of Private Placement Warrants | | $ | 6,575,000 | | $ | (6,575,000) | | $ | — |
Initial classification of common stock subject to possible redemption | | $ | (204,007,980) | | $ | 204,007,980 | | $ | — |
Change in common stock subject to possible redemption | | $ | 634,220 | | $ | (634,220) | | $ | — |
Remeasurement of Class A common stock subject to possible redemption | | $ | — | | $ | (20,269,937) | | $ | (20,269,937) |
Net loss | | $ | (1,051,608) | | $ | (328,750) | | $ | (1,380,358) |
For the three months ended June 30, 2021 | | | | | | | | | |
Change in common stock subject to possible redemption | | $ | (2,470,030) | | $ | 2,470,030 | | $ | — |
| | | | | | | | | |
|
| | |
| Adjustments for Class A |
| | | |
| | | | | common stock | | | | |
| | | | | subject to possible | | | | |
| | | | | Redemption and Private | | | | |
Statement of Cash Flows for the six months ended June 30, 2021 (unaudited) | | As previously reported | | Placement Warrants | | As Restated | |||
Net income | | $ | 1,418,429 | | $ | (328,750) | | $ | 1,089,679 |
Change in fair value of warrant liability | | $ | (2,175,575) | | $ | 328,750 | | $ | (1,846,825) |
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES |
| |
|
| |
|
| |
|
Initial value of common stock subject to redemption | | $ | 204,007,980 | | $ | 25,992,020 | | $ | 230,000,000 |
Change in value of common stock subject to possible redemption | | $ | 1,835,810 | | $ | (1,835,810) | | $ | — |
Remeasurement of Class A common stock subject to possible redemption | | $ | — | | $ | 20,269,937 | | $ | 20,269,937 |
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and should be read in conjunction with the Company’s final prospectusaudited financial statements as filed withof and for the SEC on February 17, 2021.year ended December 31, 2021 included in the Company's 2021 Form 10-K. Accordingly, certain disclosures required by GAAP and normally included in Annual Reports on Form 10-K have been condensed or omitted from this report; however, except as disclosed herein, there has been no material change in the information disclosed in the notes to condensed financial statements included in the Company’s 2020 financial statements.2021 Form 10-K.
It is the opinion of management that all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation of interim financial information, have been included. The Company has no items of other comprehensive income or loss; therefore, its net income or loss is identical to its comprehensive income or loss. Operating results for the periods presented are not necessarily indicative of expected results for the full year or for any future interim periods.
Use of Estimates
In the course of preparing the condensed financial statements, management makes various assumptions, judgments and estimates to determine the reported amounts of assets, liabilities, income and expenses, and in the disclosures of commitments and
11
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
contingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events. Although management believes these estimates are reasonable, actual results could differ from these estimates.
Estimates made in preparing these condensed financial statements include, among other things, (1) the measurement of derivative warrant liabilities and (2) accrued expenses. Changes in these estimates and assumptions could have a significant impact on results in future periods.
Emerging Growth Company
The Company is an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies.
The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards based on public company effective dates.
The Company will remain an emerging growth company until the earliest of (i) the last day of the first fiscal year (a) following the fifth anniversary of the completion of the Public Offering, (b) in which the Company’s total annual gross revenue is at least $1.07 billion or (c) when the Company is deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th and (ii) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
9
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2021March 31, 2022 and December 31, 2020.2021. The Company's cash balances held at commercial banks may at times exceed the Federal Deposit Insurance Corporation limit. The Company has not experienced any credit losses to date.
Cash Heldheld in Trust Account
At June 30,March 31, 2022 and December 31, 2021, the Company had $230,003,473$230,015,188 and $230,011,790, respectively, in cash held in the Trust Account that were held in U.S. Treasury Bills.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash held in Trust Account. The Company’s Trust Account is maintained with a high-quality financial institution, with the compositions and maturities of the Trust Account’s investments are regularly monitored by management.
Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Certain financial assets and liabilities, such as the derivative warrant liability, are measured at fair value on a recurring basis. Nonfinancial assets and liabilities, if any, are recognized at fair value on a nonrecurring basis.
The Company categorizes the inputs to the fair value of its financial assets and liabilities using a three-tier fair value hierarchy, established by the Financial Accounting Standards Board (“FASB”),FASB, that prioritizes the significant inputs used in measuring fair value. These levels are:
Level 1—inputs are based on unadjusted quoted prices that are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Examples of Level 1 inputs include financial instruments such as exchange-traded derivatives, listed securities and U.S. government treasury securities.
Level 2— inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit spreads, foreign exchange rates, and forward and spot prices for currencies. Examples of Level 2 inputs include nonexchange-traded derivatives such as over-the-counter forwards, swaps and options.
Level 3—inputs that are generally unobservable from objective sources and typically reflect management’s estimates and assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.
1210
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash held in Trust Account. The Company’s Trust Account is maintained with a high-quality financial institution, with the compositions and maturities of the Trust Account’s investments are regularly monitored by management.
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing liabilities from equity ("ASC 480") and ASC 815.815, Derivatives and hedging ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterlyreporting period end date while the warrants are outstanding.
The Company further evaluated the Public Warrants and the Private Placement Warrants (collectively, the “Warrants”, which are discussed in Note 3, Fair Value Measurements, Note 4, Note 5,Stockholders' Equity (Deficit), and Note 6)6, Related Party Transactions) in accordance with ASC 815-40 , Contracts in an entity's own equity ("ASC 815-40"), and concluded that a provision in the Warrant Agreementwarrant agreement related to certain tender or exchange offers precludes the Warrants from being accounted for as a component of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants were measured at fair value at inception (on the date of the IPO)Public Offering) and recorded as derivative warrant liabilities on the condensed balance sheets. The Warrants are subject to remeasurement at each reporting date until exercised or expiration in accordance with ASC 820, Fair Value Measurement ("ASC 820"), with changes in fair value recognized on the statements of operations in the period of change. TheSubsequent to becoming publicly traded on March 31, 2021, the fair value of the Public Warrants was determined based on their quoted trading price. Prior to being publicly traded, the fair value of the Public Warrants was estimated using a Monte Carlo simulation approach, while the fair value of the Private Placement Warrants was estimated using a Black-Scholes option pricing model (seemodel. See Note 4,3, Fair Value Measurements, for more information).information regarding the methods used to fair value the Warrants.
Allocation of Issuance Costs
The Company accounts for the allocation of its issuance costs to its Warrants using the guidance in ASC 470-20,Debt with conversion and other options ("ASC 470-20"), applied by analogy. Under this guidance, if debt or stock is issued with detachable warrants, the proceeds need to be allocated to the two instruments using either the fair value method, the relative fair value method, or the residual value method. The guidance also requires companies to use a consistent approach in allocating issuance costs between the instruments. Accordingly, the Company allocated its issuance costs of $12,888,135—consisting of $4,600,000 of underwriting fees, $8,050,000 of deferred underwriting commissions, and $238,135 of other offering costs—to the issuance of its Class A sharescommon stock and Public Warrants in the amount of $12,449,938 and $438,197, respectively. Issuance costs attributed to the Public Warrants were expensed during the three months ended March 31, 2021, to the condensed statements of operations. Issuance costs associated with the issuance of Class A common stock were charged against the carrying value of the Class A common stock subject to possible redemption upon the completion of the IPO.Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
11
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC 480. Shares of Class A common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain
13
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
future events. Accordingly, at June 30,March 31, 2022 and December 31, 2021, 23,000,000 shares of Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s condensed balance sheets. Immediately upon the closing of the IPO,Public Offering, the Company recognized the remeasurement from initial book value to redemption amount, which approximates fair value. The change in the carrying value of Class A common stock subject to possible redemption resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit and Class A common stock.
Net Income (Loss) Per Common Share
The Company has two classes of shares, Class A common stock and Class B common stock. Net income (loss) per common share is computed by dividing net income (loss), on a pro rata basis, by the weighted average number of common shares outstanding for the period. The Company applies the two-class method in calculating earnings per share. Remeasurement associated with the redeemable Class A common stock is excluded from net income (loss) per common share as the redemption value approximates fair value.
The Company has not considered the effect of the Warrants sold in the Public Offering and Private Placement to purchase 14,241,666 shares of Class A common stock in the calculation of diluted income (loss) per share, since the exercise of the Warrants is contingent upon the occurrence of future events. As of March 31, 2022 and 2021, the Company did not have any other dilutive securities or other contracts that could, potentially, be exercised or converted into shares of common stock and then share in earnings of the Company.
Recently Issued Accounting Standards
In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, Debt --Debt–Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging –Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity'sEntity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The new standard is effective for the Company on January 1, 2024, although early adoption is permitted. The ASU allows the use of the modified retrospective method or the fully retrospective method. The Company is still in the process of evaluating the impact of this new standard; however, the Company does not believe the initial impact of adopting the standard will result in any changes to the Company’s statements of financial position, operations or cash flows.
NOTE 43 — FAIR VALUE MEASUREMENTS
Financial Assets and Liabilities Measured on a Recurring Basis
Certain assets and liabilities are reported at fair value on a recurring basis. These assets and liabilities include the investments held in Trust Account, and derivative warrant liabilities.
12
The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis and where they are classified within the fair value hierarchy at June 30, 2021. The Company did not have any assets or liabilities that were measured at fair value on a recurring basis atMarch 31, 2022 and December 31, 2020.2021.
| | | | | | | | | | | | | | | | | | |
| | Fair Value Measured as of June 30, 2021 | | Fair Value Measured as of March 31, 2022 | ||||||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Level 1 |
| Level 2 |
| Level 3 | ||||||
Assets: | | | | | | | | | | | | | | | | | | |
Investments held in Trust Account (1) |
| |
|
| |
| | |
|
| |
|
| |
| | |
|
| | $ | 230,003,473 | | $ | — | | $ | — | | $ | 230,015,188 | | $ | — | | $ | — |
Liabilities: | | | | | | | | | | | | | | | | | | |
Derivative warrant liabilities - Public Warrants (2) | | $ | 6,439,999 | | $ | — | | $ | — | | $ | 2,070,000 | | $ | — | | $ | — |
Derivative warrant liabilities - Private Placement Warrants (3) | | $ | — | | $ | — | | $ | 6,108,175 | | $ | — | | $ | — | | $ | 1,906,750 |
| | | | | | | | | |
|
| Fair Value Measured as of December 31, 2021 | |||||||
|
| Level 1 |
| Level 2 |
| Level 3 | |||
Assets: | | |
|
| |
|
| |
|
Investments held in Trust Account (1) | | |
|
| |
|
| |
|
| | $ | 230,011,790 | | $ | — | | $ | — |
Liabilities: | |
|
| |
|
| |
|
|
Derivative warrant liabilities - Public Warrants (2) | | $ | 4,063,333 | | $ | — | | $ | — |
Derivative warrant liabilities - Private Placement Warrants (3) | | $ | — | | $ | — | | $ | 3,820,075 |
| (1) | The fair value of |
| (2) | The fair value of |
| (3) | The fair value of |
Investments heldHeld in Trust Account. At June 30,March 31, 2022 and December 31, 2021, the investments held in Trust Account were entirely comprised of U.S. Treasury Bills. During the three and six months ended June 30,March 31, 2022 and 2021, the Company did not withdraw any interest income from the Trust Account.
Derivative Warrant Liabilities. The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within derivative warrant liabilities on the condensed balance sheets. The derivative warrant liabilities were measured at fair value at
14
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the condensed statements of operations.
Initial Measurement
The estimated fair value of the Public Warrants and the Private Placement Warrants on February 26, 2021 and March 31, 2021 was estimated using a Monte Carlo simulation and a Black-Scholes option pricing model, respectively. At their initial measurement, the Warrants were classified as Level 3 inputs due to the use of unobservable inputs.
The following table presents information and assumptions used to determine the estimated fair values of the Warrants using the pricing models:
| | | | | | | |
| | | | | As of |
| |
|
| Initial Measurement |
| March 31, 2021 | | ||
Strike price | | $ | 11.50 | | $ | 11.50 | |
Term (in years) | | | 6.0 | | | 5.9 | |
Risk-free rate | | | 0.9 | % | | 1.1 | % |
Volatility | | | 17.0 | % | | 17.0 | % |
Dividend yield | | | 0.0 | % | | 0.0 | % |
Fair value of Public Warrants | | $ | 1.02 | | $ | 1.06 | |
Fair value of Private Placement Warrants | | $ | 1.05 | | $ | 1.08 | |
Subsequent Measurement
The Warrants are measured at fair value on a recurring basis. The subsequent measurement of the Public Warrants as of June 30,March 31, 2022 and December 31, 2021 iswas classified as Level 1 due to the use of an observable market quote in an active market under the ticker BOAS WS. The fair value of the Private Warrants continues to be estimated using a Black-Scholes option pricing model and iswas classified as Level 3 due to the use of unobservable inputs.
13
The following table presents information and assumptions used in the Black-Scholes option pricing model to determine the estimated fair value of the Private Placement Warrants as of June 30, 2021:the following dates:
| | | | | | | | | | | |
| | As of |
| | | | |
| |||
|
| June 30, 2021 |
|
| March 31, 2022 |
| December 31, 2021 |
| |||
Strike price | | $ | 11.50 | | | $ | 11.50 | | $ | 11.50 | |
Term (in years) | | | 5.7 | | | | 5.25 | | | 5.5 | |
Risk-free rate | | | 1.0 | % | | | 2.39 | % | | 1.3 | % |
Volatility | | | 17.6 | % | | | 6.2 | % | | 10.0 | % |
Dividend yield | | | 0.0 | % | | | 0.0 | % | | 0.0 | % |
Fair value of Public Warrants | | $ | 0.84 | | |||||||
Fair value of Private Placement Warrants | | $ | 0.93 | | | $ | 0.29 | | $ | 0.58 | |
The following contains additional information regarding the inputs used in the pricing models:model:
| ● | Term – the expected life of the warrants was assumed to be equivalent to their remaining contractual term. |
| ● | Risk-free rate – the risk-free interest rate is based on the U.S. Treasury yield curve in effect on the date of valuation equal to the remaining expected life of the |
15
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
| ● | Volatility – the Company estimated the volatility of its common stock warrants based on implied volatility and actual historical volatility of a group of comparable publicly traded companies observed over a historical period equal to the expected remaining life of the Warrants. |
| ● | Dividend yield – the dividend yield percentage is zero because the Company does not currently pay dividends, nor does it intend to do so during the expected term of |
Due to the use of quoted prices in an active market (Level 1) to measure the fair values of the Public Warrants subsequent to March 31, 2021, the Company had transfers out of Level 3 totaling $6,439,999 during the period from March 31, 2021 through June 30, 2021.
The change in fair value of the derivative warrant liabilities net of expense related to the initial fair value of the Private Warrants in excess of proceeds received, through June 30, 2021March 31, 2022 is as follows:
| | | | | | | | | | | | | | | | | | |
| | | | | Private Placement | | Total Derivative | | | | | Private Placement | | Total Derivative | ||||
|
| Public Warrants |
| Warrants |
| Warrant Liability |
| Public Warrants |
| Warrants |
| Warrant Liability | ||||||
Derivative warrant liabilities at December 31, 2020 | | $ | 0 | | $ | 0 | | $ | 0 | |||||||||
Issuance of Public and Private Warrants | |
| 7,819,999 | |
| 6,903,750 | |
| 14,723,749 | |||||||||
Derivative warrant liabilities at December 31, 2021 | | $ | 4,063,333 | | $ | 3,820,075 | | $ | 7,883,408 | |||||||||
Change in fair value of warrant liabilities | | | 306,667 | | | 184,100 | | | 490,767 | | | (1,993,333) | | | (1,913,325) | | | (3,906,658) |
Derivative warrant liabilities at March 31, 2021 | | $ | 8,126,666 | | $ | 7,087,850 | | $ | 15,214,516 | |||||||||
Issuance of Public and Private Warrants | | | — | | | — | | | — | |||||||||
Change in fair value of warrant liabilities | | | (1,686,667) | | | (979,675) | | | (2,666,342) | |||||||||
Derivative warrant liabilities at June 30, 2021 | | $ | 6,439,999 | | $ | 6,108,175 | | $ | 12,548,174 | |||||||||
Derivative warrant liabilities at March 31, 2022 | | $ | 2,070,000 | | $ | 1,906,750 | | $ | 3,976,750 | |||||||||
Fair Value of Other Financial Instruments
The carrying value of cash and accounts payable are considered to be representative of their respective fair values due to the nature of and short-term maturities of those instruments.
NOTE 54 — STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors. At June 30, 2021March 31, 2022 and December 31, 2020,2021, there were 0 shares of preferred stock issued or outstanding.
Class A Common Stock — The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to 1 vote for each share. As of June 30,March 31, 2022 and December 31, 2021, there were 0 shares of Class A common stock issued and outstanding (excluding 23,000,000 shares of Class A common stock subject to possible redemption).
14
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.
In addition, 23,000,000 shares of Class A common stock are redeemable upon the consummation of the Company’s initial Business Combination, subject to limitation described in Note 1.the requirements of law. In addition, if the Company is unable to complete the initial Business Combination within the Combination Period, the Company will cease all operations except for the purpose of winding up and redeem the shares of Class A common stock at a per-share price equal to the aggregate amount then on deposit in the Trust Account, divided by
16
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
the number of then outstanding Public Shares (see Note 1, Description of Organization and Business Operations, for more information). The Company classified the shares of Class A common stock subject to redemption rights as temporary equity inas the event of the consummation of the Company’s initial Business Combination is not solely within the control of the Company.
Class B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. At March 31, 2022 and December 31, 2020,2021, 5,750,000 shares of Class B common stock were issued and outstanding, of which 750,000 shares were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised.outstanding. These amounts have been retroactively adjusted to reflect the February 24, 2021 stock dividend of 0.14 shares, described in Note 6, Related Party Transactions.
Holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of the stockholders, except as required by law.
The Sponsor, the Company’s officers and directors entered into a sponsor letter agreement with the Company, pursuant to which they agreed (i) to waive their redemption rights with respect to their Founder Shares (as defined below in Note 6, Related Party Transactions) and Public Shares in connection with the completion of the initial Business Combination, (ii) to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with a stockholder vote to approve an amendment to the Company’s certificate of incorporation and (iii) to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if the Company fails to complete the initial Business Combination within the Combination Period, although they will be entitled to liquidating distributions from the Trust Account with respect to their Public Shares if the Company fails to complete the initial Business Combination within such time period.
Warrant Liabilities — Public Warrants may only be exercised for a whole number of shares. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the IPO;Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available. The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file with the SECU.S. Securities and Exchange Commission a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. Notwithstanding the foregoing, if a registration statement covering the shares of Class A common stock issuable upon exercise of the Public Warrants is not effective within a specified period following the consummation of Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
15
The Private Placement Warrants are identical to the Public Warrants underlying the Units being sold in the IPO,Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
The Company may redeem the Public Warrants (except with respect to the Private Placement Warrants):
| ● | in whole and not in part; |
| ● | at a price of $0.01 per warrant; |
17
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
| ● | at any time during the exercise period; |
| ● | upon a minimum of 30 days’ prior written notice of redemption; and |
| ● | if, and only if, the last sale price of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. |
| ● | If, and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying such warrants. |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
NOTE 5 — CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION
The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events. As of March 31, 2022 and December 31, 2021, there were 23,000,000 shares of Class A common stock outstanding, all of which were subject to possible redemption.
Class A common stock subject to possible redemption reflected on the condensed balance sheets is reconciled on the following table:
| | | |
Gross proceeds |
| $ | 230,000,000 |
Less: | |
|
|
Offering costs and underwriting fees allocated to Class A common stock subject to possible redemption | |
| (12,449,938) |
Proceeds allocated to Public Warrants at issuance | | | (7,819,999) |
Plus: | |
|
|
Remeasurement to Class A common stock subject to possible redemption | |
| 20,269,937 |
Class A common stock subject to possible redemption | | $ | 230,000,000 |
16
NOTE 6 — RELATED PARTY TRANSACTIONS
Founder Shares
On December 31, 2020, the Sponsor purchased 5,031,250 shares of Class B common stock (the “Founder Shares”) for an aggregate price of $25,000, or approximately $0.005 per share. The Sponsor agreed to forfeit up to 656,250 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters. On February 24, 2021, the Company effected a stock dividend of 0.14 shares of Class B common stock, resulting in the Sponsor holding an aggregate of 5,750,000 Founder Shares (up to 750,000 Founder Shares of which were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised), representing an adjusted purchase price of approximately $0.004 per share. The financial statements have been retroactively restated to reflect the stock dividend. The underwriters exercised the over-allotment option in full; thus, the Founder Shares are no longer subject to forfeiture.
The Founder Shares are identical to the Class A common stock included in the Units being sold in the IPOPublic Offering except that the Founder Shares automatically convert into shares of Class A common stock at the time of the Company’s initial Business Combination, on a one-for-one basis, subject to adjustments pursuant to certain anti-dilution rights, and the Founder Shares are subject to certain transfer restrictions.
The Company’s initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the last sale price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading30-trading day period commencing at least 180 days after the initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Private Placement
As described in Note 1, Description of Organization and Business Operations, the Company sold Private Placement Warrants simultaneously with the closing of the IPO.Public Offering. Each whole Private Placement Warrant is exercisable for 1 whole share of the Company’s
18
BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants were added to the proceeds from the IPOPublic Offering to be held in the Trust Account. If the initial Business Combination is not completed within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.
The Private Placement Warrants are non-redeemable and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees. The Private Placement Warrants are not transferrable, assignable or salable until 30 days after the completion of the initial Business Combination.
The excess fair value over the proceeds received for the Private Placement Warrants iswas recorded as a loss in the accompanying condensed statementstatements of operations for the sixthree months ended June 30,March 31, 2021 within “Change in fair value of derivative warrant liability.”
Related Party Loan
The Company’s Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the IPOPublic Offering pursuant to a promissory note (the “Note”). This Note was non-interest bearing and payable on the earlier of May 31, 2021 or the completion of the IPO.Public Offering. The Company did not borrow any amount under the Note prior to the IPO.Public Offering.
17
In order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. In the event that a Business Combination does not close, the Company may use a portion of the proceeds held outside the Trust Account to repay the Working Capital LoansLoan but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants at a price of $1.00 per warrant. These warrants would be identical to the Private Placement Warrants. To date, the Company has had 0 Working Capital Loans outstanding.
NOTE 7 — INCOME TAXES
The Company’s provision for income taxes for the three and six months ended June 30,March 31, 2022 and 2021 is based on the estimated annual effective tax rate, in addition to discrete items. As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company has provided a valuation allowance against its net deferred tax assets that it believes, based on the weight of available evidence, are not more likely than not to be realized. Therefore, no material current tax liability or expense has been recorded in the condensed financial statements.
NOTE 8 — NET INCOME (LOSS) PER COMMON SHARE (As Restated)
The Company has two classes of shares, Class A common stock and Class B common stock. Net income (loss) per common share is computed by dividing net income (loss), on a pro rata basis, by the weighted average number of common shares outstanding for the period. Remeasurement associated with the redeemable shares of Class A common stock is excluded from net income (loss) per common share as the redemption value approximates fair value.
The Company has not considered the effect of the warrants sold in the IPOPublic Offering and Private Placement to purchase 14,241,666 shares of Class A common stock in the calculation of diluted income (loss) per share, since the exercise of the warrants is contingent upon the occurrence of future events. As of June 30,March 31, 2022 and 2021, the Company did not have any other dilutive securities or other contracts that could, potentially, be exercised or converted into shares of common stock and then share in earnings of the Company. As a result, diluted net income (loss) per common share is the same as basic net income per common share for the periods presented.
Reconciliation of Net Income (Loss) per Common Share
The following table reflects the calculation of basic and diluted net income (loss) per common share:
| | | | | | | | | | | | |
|
| Three Months Ended |
| Three Months Ended | ||||||||
| | March 31, 2022 | | March 31, 2021 | ||||||||
| | Class A | | Class B | | Class A | | Class B | ||||
Basic and diluted net income (loss) per share | | | | | | | | | | | | |
Numerator | | | | | | | | | | | | |
Allocation of net income (loss) | | $ | 2,755,823 | | $ | 688,956 | | $ | (830,658) | | $ | (549,700) |
Denominator | | | | | | | | | | | | |
Weighted-average shares outstanding | | | 23,000,000 | | | 5,750,000 | | | 8,688,889 | | | 5,750,000 |
Basic and diluted net income (loss) per share | | $ | 0.12 | | $ | 0.12 | | $ | (0.10) | | $ | (0.10) |
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BOA ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(As Restated)
Reconciliation of Net Income per Common Share
The following table reflects the calculation of basic and diluted net income per common share:
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, 2021 | | June 30, 2021 | ||||||||
|
| Class A |
| Class B |
| Class A |
| Class B | ||||
Basic and diluted net income per share |
| |
|
| |
|
| |
|
| |
|
Numerator |
| |
|
| |
|
| |
|
| |
|
Allocation of net income | | $ | 1,976,030 | | $ | 494,007 | | $ | 800,058 | | $ | 289,621 |
Denominator | |
|
| |
|
| |
|
| |
|
|
Weighted-average shares outstanding | |
| 23,000,000 | |
| 5,750,000 | |
| 15,883,978 | |
| 5,750,000 |
Basic and diluted net income per share | | $ | 0.09 | | $ | 0.09 | | $ | 0.05 | | $ | 0.05 |
NOTE 9 — COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant to a registration rights agreement, dated February 23, 2021, the holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants or warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to Class A common stock). The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company's securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters were paid a cash underwriting discount of 2.0% of the gross proceeds of the IPO,Public Offering, or $4,600,000, with an additional fee (the “Deferred Discount”) of 3.5% of the gross offering proceeds payable upon the Company’s completion of an initial Business Combination. This Deferred Discount of $8,050,000 was recorded as Deferred Underwriting Commissions indeferred underwriting commissions on the balance sheetsheets as of June 30,March 31, 2022 and December 31, 2021. The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its initial Business Combination.
Business Combination Agreement
NOTE 10 — CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION (As Restated)
The Company’s Class A common stock feature certain redemption rights that are considered to be outsideOn December 2, 2021, the Company entered into a Business Combination Agreement (the “Business Combination Agreement”) with Selina Holding Company, UK Societas (“Selina”) and Samba Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company’s controlCompany (“Merger Sub”), which provides for, among other things, the merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving as a wholly-owned subsidiary of Selina (the “Business Combination”). At the closing of the Business Combination and the effective time (the “Effective Time”) of the Merger, the stockholders of the Company will receive certain of the ordinary shares of Selina (“Selina Ordinary Shares”), and Selina will list as a publicly traded company.
Consummation of the transactions contemplated by the Business Combination Agreement are subject to customary conditions of the occurrencerespective parties, including receipt of future events. Asapproval from our stockholders and Selina’s shareholders for consummation of June 30, 2021, there were 23,000,000 sharesthe transactions and certain other actions related thereto by our stockholders.
Subscription Agreement
Concurrently with and following the execution of Class A common stock outstanding, allthe Business Combination Agreement, the Company, Selina and certain accredited investors (collectively, the “PIPE Investors”) entered into the Subscription Agreements, which provide for the purchase by the PIPE Investors at the effective time of the Merger (the “Effective Time”) of (i) 5,500,000 Selina Ordinary Shares at a price per share of $10.00, for an aggregate purchase price of $55,000,000 (the “PIPE Investment”), which were subjectprice per share and aggregate purchase price assumes that Selina has effected the Capital Restructuring prior to possible redemption.the Effective Time, and (ii) Bet on America Holdings LLC, an affiliate of our Sponsor in its capacity as one of the PIPE Investors, agreed to a conditional backstop obligation for an additional commitment to purchase up to an aggregate of 1,500,000 Selina Ordinary Shares at a price per share of $10.00 in the event that the cash proceeds condition in the Business Combination Agreement is not satisfied at the closing of the Business Combination. The closing of the PIPE Investment is conditioned upon the consummation of the Business Combination.
2019
(As Restated)Vendor Agreements
AsOn February 4, 2021, the Company entered into an agreement with a vendor for consulting services around IT infrastructure, media relations, and investor relations services. Under the agreement, the vendor receives $20,000 per month, pro-rated for any partial month, from the date of June 30,the announcement of the Business Combination until the closing date of the Business Combination. Upon completion of the Business Combination, the vendor will receive $250,000, which only becomes due and payable upon the consummation of a Business Combination.
On July 28, 2021, Class A common stock subjectthe Company entered into an advisory agreement for the proposed business combination with Selina. This advisory agreement is for the advisor’s role as a financial and capital markets advisor to possible redemption reflected on the condensed balance sheetCompany for the proposed business combination. The advisor is reconciled onentitled a transaction fee amounting to $5,000,000 that is payable at the following table:
| | | |
Gross Proceeds |
| $ | 230,000,000 |
Less: | |
|
|
Offering costs and underwriting fees allocated to Class A common stock subject to possible redemption | |
| (12,439,938) |
Proceeds allocated to Public Warrants at issuance | | | (7,819,999) |
Plus: | |
|
|
Remeasurement of Class A common stock subject to possible redemption | |
| 20,269,937 |
Class A common stock subject to possible redemption | | $ | 230,000,000 |
closing of the proposed business combination. This fee is contingent upon the successful closing of the proposed business combination; and as such, no amounts have been recorded within the Company’s financial statements as of December 31, 2021.
NOTE 1110 — SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions through the date these financial statements were issued. The Company determined there were no events other than those described in Note 2, that required disclosure or recognition in these condensed financial statements.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to BOA Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, references to the “Sponsor” refer to Bet on America LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
In this Amendment No. 1 (“Amendment No. 1”) to the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2021, we are restating our unaudited interim financial statements as of June 30, 2021. See Note 2 for additional information.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this 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. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering2021 Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated as a Delaware corporation and formed for theon October 26, 2021. Our business purpose of effectingis to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We intendbusinesses, which we refer to effectuatethroughout this Quarterly Report as our initial business combination usingcombination. On February 26, 2021, we consummated an initial public offering.
Recent Developments
Proposed Business Combination
Under the Business Combination Agreement, immediately prior to the Effective Time, (a) each outstanding series A voting ordinary share of $0.01 each in the capital of Selina, outstanding series B voting ordinary share of $0.01 each in the capital of Selina, and outstanding series C voting ordinary share of $0.01 each in the capital of Selina (each, a “Selina Preferred Share”) shall become and be redesignated as a Selina Ordinary Share in accordance with the governing documents of Selina (the “Selina Preferred Share Redesignation”); (b) Selina’s convertible loan notes, the put and call options, the term loan, the 2018 warrant instruments, and the 2020 warrant instrument (collectively, the “Selina Convertible Instruments”) may be converted into Selina Ordinary Shares in accordance with the terms of the Selina Convertible Instruments and the terms of the Business Combination Agreement (the “Selina Convertible Instrument Conversion”); and (c) immediately following the Selina Preferred Share Redesignation and the Selina Convertible Instrument Conversion, Selina shall effect a share subdivision, whereby each Selina Ordinary Share will be subdivided into such number of Selina Ordinary Shares calculated in accordance with Section 2.1(c) of the Business Combination Agreement to cause the value of the outstanding Selina Ordinary Shares immediately prior to the Effective Time to equal $10.00 per share (the “Share Subdivision” and, together with the Selina Preferred Share Redesignation and the Selina Convertible Instrument Conversion, the “Capital Restructuring”).
In addition, immediately prior to the Effective Time, (i) each issued and outstanding share of our Class B common stock, will be automatically converted into one (1) share of our Class A common stock in accordance with the terms of our Charter (such conversion, the “Class B Conversion”), (ii) in accordance with and as required by the Charter, we will provide an opportunity for our stockholders
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to redeem all or a portion of their outstanding shares of Class A common stock as set forth therein (the “Stockholder Redemption”) and (iii) each issued and outstanding Unit will be automatically separated and the holder thereof will be deemed to hold one share of Class A common stock and one-third of one Public Warrant (the “Unit Separation”).
Pursuant to the Business Combination Agreement, after giving effect to the Capital Restructuring, the Class B Conversion, Stockholder Redemption, and the Unit Separation, at the Effective Time, (i) each issued and outstanding share of our Class A common stock will automatically be converted into the right of the holder thereof to receive one (1) Selina Ordinary Share and (ii) each Warrant outstanding immediately prior to the Effective Time will automatically and irrevocably be assumed by and assigned to Selina and converted into a corresponding warrant to purchase a Selina Ordinary Share (each, a “Selina Warrant”).
Concurrently with and following the execution of the Business Combination Agreement, the Company, Selina, and the PIPE Investors entered into a series of subscription agreements (collectively, the “Subscription Agreements”), which provide for the PIPE Investment, and (ii) Bet on America Holdings LLC, an affiliate of our Sponsor in its capacity as one of the PIPE Investors, agreed to a conditional backstop obligation for an additional commitment to purchase up to an aggregate of 1,500,000 Selina Ordinary Shares at a price per share of $10.00 in the event that the cash proceeds condition in the Business Combination Agreement is not satisfied at Closing. The closing of the PIPE Investment is conditioned upon the consummation of the Business Combination.
Consummation of the transactions contemplated by the Business Combination Agreement are subject to customary conditions of the respective parties, including receipt of approval from our stockholders and Selina’s shareholders for consummation of the transactions and certain other actions related thereto by our stockholders.
Other than as specifically discussed, this Quarterly Report does not assume the closing of the transactions contemplated by the Business Combination Agreement.
Note Subscription Agreements, Indenture and Amended and Restated Warrant Agreement
In connection with the Business Combination, on April 22, 2022, Selina entered into convertible note subscription agreements (the “Note Subscription Agreements”) with certain institutional investors (the “Investors”), pursuant to which Selina agreed to issue and sell, in private placements expected to close concurrently with the closing of the Business Combination, $147,500,000 aggregate principal amount of unsecured convertible notes (the “Notes”) for an aggregate purchase price equal to 80.00% of the principal amount of the Notes (“Purchase Price”). The Notes will mature four years after their issuance.
As additional consideration for the Purchase Price, the Note Subscription Agreements provide that each Investor will receive a warrant to purchase a number of Selina Ordinary Shares equal to approximately one-third of the number of Selina Ordinary Shares into which the principal amount of such Investor’s Note converts (the “Investor Warrants”). The Investor Warrants will be issued pursuant to the terms of an Amended and Restated Warrant Agreement, to be entered into by the Company, Selina and Continental Stock Transfer & Trust Company concurrently with the closing of the Business Combination (the “A/R Warrant Agreement”). The Investor Warrants have an exercise price of $11.50 per share, subject to adjustment and are identical to our Public Warrants in all other material respects, except (i) the Investor Warrants are not subject to redemption and (ii) a holder of an Investor Warrant may exercise such Investor Warrant on a cashless basis under the circumstances described in the A/R Warrant Agreement. Upon transfer of the Investor Warrant, such Investor Warrant will thereafter be redeemable by Selina and the holder of the Investor Warrant may no longer exercise such Investor Warrant on a cashless basis.
Sponsor Letter Agreement
In connection with the execution of the Subscription Agreements, certain Investors who subscribed for over $4,000,000 in principal amount of Notes also entered into letter agreements (the “Sponsor Agreements”) with the Sponsor, pursuant to which the Sponsor agreed to transfer, at the closing of the Business Combination, shares of our Class B common stock owned by the Sponsor (or Selina Ordinary Shares exchange therefor) to such Investors (the “Sponsor Shares”). The number of Sponsor Shares to be transferred to such Investors was determined by multiplying an Investor’s aggregate principal investment in the Notes by a percent ranging from 2.5% to 7.5% based on the principal amount of the Notes for which such Investor subscribed. The Sponsor Shares will be transferred from the proceeds of this offering25% sponsor share pool established pursuant to the Sponsor Letter Agreement that was entered into by the Company, the Sponsor, and the private placement of the private placement warrants, the proceeds of the sale of our sharesSelina in connection with our initial business combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of this offering or otherwise), shares issued to the ownersexecution of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.Agreement.
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date. All activity from our inception through the date of our IPO,Public Offering, February 26, 2021, was in preparation for our IPO.Public Offering. Since our IPO,Public Offering, our activity has been limited to the evaluation of Business Combination candidates. We do not expect to generate any operating revenues until the closing and completion of our Business Combination. We expect to generate non-operating income in the form of interest income on marketable securities held after the Initial Public Offering. We 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.
22
TableComparison of Contentsthe three months ended March 31, 2022 versus the three months ended March 31, 2021
For the three months ended June 30, 2021,March 31, 2022, we had a net income of $2,470,037,$3,444,779, which was primarily due to a gain from the change in fair value of the derivative warrant liabilities of $2,666,342.$3,906,658. This was partially offset by $149,778$415,290 in general and administrative expensesoperating costs and $50,000 of franchise tax expense.
For the sixthree months ended June 30,March 31, 2021, we had a net incomeloss of $1,089,679,approximately $1,380,358, which was primarily driven by a gain from the changeconsisted of $72,644 in fair valueoperating costs, $50,000 of the derivative warrant liabilities of $1,846,825. This was partially offset by $438,197 offranchise tax expense, issuance costs attributed to the warrant liability $222,422of $438,197, and a $819,517 loss from changes in operating costs and $100,000fair value of franchise tax expense.derivative warrant liabilities.
As described in Note 3,2, Summary of Significant Accounting Policies, in “Part 1. Financial Information – Item 1. Financial Statements,” we classifyaccount for the warrantsWarrants issued in connection with our IPOPublic Offering and Private Placement as liabilitiesderivative instruments which were initially recorded at their fair value, and adjust thevalue. These derivative warrant liabilities to fair value at each reporting period. These liabilitiesinstruments are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations.
Liquidity and Capital Resources
PriorAs of March 31, 2022, we had cash of $171,465 held outside the Trust Account. We intend to use the funds held outside the Trust Account primarily for due diligence fees and other expenses related to the completion of the IPO, our liquidity needs were satisfied through receipt of $25,000 from the sale of Founder Shares to Bet on America LLC, or the “Sponsor”.
On February 26, 2021, we consummated the IPO of 23,000,000 Units at a price of $10.00 per Unit generating net proceeds of $217,111,865. Transaction costs were $12,888,135, including $4,600,000 of underwriting fees, $8,050,000 of deferred underwriting fees and $238,135 of other offering costs in connection with the IPO. Simultaneously with the closing of the IPO, we consummated the sale of 6,575,000 Private Placement Warrants to our Sponsor at a price of $1.00 per warrant, generating gross proceeds of $6,575,000. Following the IPO and the sale of the Private Placement Warrants, a total of $230,000,000 was placed in a Trust Account.
For the six months ended June 30, 2021, cash used in operating activities was $643,337. Net income of $1,089,679 was adjusted for the interest earned on marketable securities held in Trust Account of $3,473, the issuance costs attributed to the warrant liabilities of $438,197, and the non-cash change in fair value of the derivative warrant liabilities of $1,846,825. Additionally, changes in operating assets and liabilities provided $320,915 of cash used in operating activities.Business Combination.
As of June 30, 2021,March 31, 2022, we had cash and marketable securities in the Trust Account of $230,003,473.$230,015,188. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less deferred underwriting commissions) to complete our initial Business Combination. We may withdraw interest
Material cash requirements
As of March 31, 2022, we do not have any debt, lease obligations or other capital commitments.
The underwriters are entitled to deferred fee of 3.5% of the gross proceeds of the Public Offering, or $8,050,000. The deferred fee will become payable to the underwriters from the amounts held in the trust account to pay franchise and income taxes. Tosolely in the extentevent that our capital stock or debt is used, in whole or in part, as consideration towe complete our initial Business Combination,business combination.
Sources of cash
Prior to the remainingcompletion of the Public Offering, our liquidity needs were satisfied through receipt of $25,000 from the sale of founder shares to Bet on America LLC, or the “Sponsor.”
On February 26, 2021, we consummated the Public Offering of 23,000,000 Units at a price of $10.00 per unit generating net proceeds of $217,111,865. Transaction costs were $12,888,135, including $4,600,000 of underwriting fees, $8,050,000 of deferred underwriting fees and $238,135 of other offering costs in connection with the Public Offering. Simultaneously with the closing of the Public Offering, we consummated the sale of 6,575,000 Private Placement Warrants to our Sponsor at a price of $1.00 per warrant, generating gross proceeds of $6,575,000. Following the closing of the Public Offering and the sale of the Private Placement Warrants, a total of $230,000,000 was placed in a Trust Account and following the payment of certain transaction expenses.
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Uses of cash
| | | | | | | | | |
| | Three Months Ended March 31, | | | | ||||
|
| 2022 |
| 2021 |
| Change | |||
Net cash used in operating activities | | $ | (589,111) | | $ | (599,136) | | $ | 10,025 |
Net cash used in investing activities | | $ | — | | $ | (230,000,000) | | $ | 230,000,000 |
Net cash provided by financing activities | | $ | — | | $ | 231,736,865 | | $ | (231,736,865) |
For the three months ended March 31, 2022, cash used in operating activities was $589,111. Net income of $3,444,779 was impacted by the non-cash changes in fair value of the derivative warrant liability of $3,906,658. Additionally, changes in operating assets and liabilities used $123,834 of cash used in operating activities, and interest earned on marketable securities held in the Trust Account will beof $3,398.
For the three months ended March 31, 2021, cash used as working capitalin operating activities was $599,136. Net loss of $1,380,358 was reduced by the issuance costs attributed to finance the operationswarrant liabilities of $438,197, and the non-cash change in fair value of the target business or businesses, make other acquisitionsderivative warrant liabilities of $819,517. Additionally, changes in operating assets and pursue our growth strategies.
Asliabilities used $476,492 of June 30, 2021, we had cash used in operating activities. Cash used in investing activities was impacted by $230,000,000 of $1,118,578 held outsidecash invested in the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to andtrust account. Cash provided by financing activities was impacted by $225,161,865 of proceeds from the offices, plants or similar locationssale of prospective target businesses or their representatives or owners, review corporate documentsthe Units, net of underwriting discounts paid, and material agreements$6,575,000 of prospective target businesses, and structure, negotiate and complete a Business Combination.proceeds from the sale of Private Placement Warrants.
In order to fund working capital deficiencies and/or finance transaction costs in connection with an initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial Business Combination, we would repay such loaned amounts. In the event that our initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period.
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We doMarch 31, 2022 and December 31, 2021, the Company had $171,465 and $760,576 in cash not believe we willheld in the Trust Account and available for working capital purposes, respectively. The Company believes it may need to raise additional funds in order to meet the expenditures required for operating ourthe business. However, if our estimatesIf the Company’s estimate 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, wethe Company may have insufficient funds available to operate ourthe business prior to ourthe initial Business Combination. Moreover, wethe Company may need to obtain additional financing either to complete ourthe initial Business Combination or because we become obligated to redeem a significant number of our public shares upon completion of ourthe initial Business Combination, in which case wethe Company may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of ourinitial Business Combination. If we arethe Company is unable to complete our initialthe Business Combination because we doit does not have sufficient funds available, to us, wethe Company will be forced to cease operations and liquidate the Trust Account.
In addition, following ourconnection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements—Going Concern, the Company has until February 26, 2023, to consummate an initial Business Combination, if cash on handbusiness combination. It is insufficient, weuncertain that the Company will be able to consummate an initial business combination by this time. If an initial business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Additionally, the Company may neednot have sufficient liquidity to obtain additional financingfund the working capital needs of the Company through one year from the issuance of these financial statements. Management has determined that the liquidity condition and mandatory liquidation and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after February 26, 2023. The Company’s sponsor, officers and directors may, but are not obligated to, loan the Company funds from time to time or at any time, in orderwhatever amount they deem reasonable in their sole discretion, to meet our obligations.the Company’s working capital needs.
Critical Accounting Policies
Our management makes a number of significant estimates, assumptions and judgments in the preparation of our financial statements. See Note 3,2, Summary of Significant AccountAccounting Policies, in Part“Part I. Financial Information – Item 1.Financial Statements 1. Financial Statements”
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for a discussion of the estimates and judgments necessary in our accounting for derivative warrant liabilities, common stock subject to possible redemption, and net income (loss) per common share. Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been included in the notes to our condensed financial statements contained in this Amendment No. 1Quarterly Report on Form 10-Q/A.10-Q. The application of our critical accounting policies may require management to make judgments and estimates about the amounts reflected in the condensed financial statements. Management uses historical experience and all available information to make these estimates and judgments. Different amounts could be reported using different assumptions and estimates.
Recent Accounting Pronouncements
Please refer to Note 3,2, Summary of Significant Accounting Policies, in “Part 1. Financial Information – Item 1. Financial Statements” for a discussion of recent accounting pronouncements and their anticipated effect on our business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of June 30, 2021, we were not subject to any market or interest rate risk. Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in certain U.S. government securities with a maturity of 180 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.Not required for smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2021.March 31, 2022. Based upon their evaluation, and in light of the material weakness identified related to accounting for complex financial instruments, asin internal controls described below, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were not effective as of June 30, 2021.March 31, 2022.
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March 31, 2022 related to the appropriate accounting for complex financial instruments. The Company’s management concluded that our control around the interpretation and accounting for certain complex features of the Class A common stockCommon Stock subject to redemption and warrants issued by the Company was not effectively designed or maintained. This material weakness resulted in the restatementa material error in our accounting for these complex financial instruments and restatements of each of the Company’s interim financial statements foron Form 10-Q/A during the quarteryear ended June 30,December 31, 2021. Additionally, this material weakness could result in a misstatement of complex accounting transactions, and related accounts and disclosures that would result in a material misstatement of the financial statements that would not be prevented or detected on a timely basis.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Remediation Plan
After identifying the material weakness, we have commenced our remediation efforts by taking the following steps:
| ● | We have expanded and improved our review process for complex securities and related accounting standards. |
| ● | We have increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. |
| ● | We have also retained the services of a valuation expert to assist in valuation analysis of the Warrants on a quarterly basis. |
| ● | We are establishing additional monitoring and oversight controls designed to ensure the accuracy and completeness of our financial statements and related disclosures. |
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While we took considerable action to remediate the material weakness, such remediation has not been fully evidenced. We have expended, and will continue to expend, a substantial amount of effort and resources for the remediation and improvement of our internal control over financial reporting. While we have processes to properly identify and evaluate the appropriate accounting technical pronouncements and other literature for all significant or unusual transactions, we have expanded and will continue to improve these processes to ensure that the nuances of such transactions are effectively evaluated in the context of the increasingly complex accounting standards.
Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. reporting. In light of the material weakness discussed above, we plan to continue to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand complex accounting standards that apply to our financial statements.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our final prospectus filed with the SEC on February 25, 2021.2021 Form 10-K. As of the date of this Report, there have been no material changes to the risk factors disclosed in our final prospectus filed with the SEC, except for the below.
Our warrants are accounted for as liabilities and the changes in value 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 Statement”). Specifically, the SEC Statement focused on warrants that have certain settlement terms and provisions related to certain tender offers or warrants which do not meet the criteria to be considered indexed to an entity’s own stock, which terms are similar to those contained in the warrant agreement governing our Warrants. As a result of the SEC Statement, we evaluated the accounting treatment of our Public Warrants and Private Placement Warrants and determined that the Warrants should be recorded as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
As a result, included on our balance sheet as of June 30, 2021 contained elsewhere in this Form 10-Q are derivative liabilities related to embedded features contained within our Warrants. Accounting Standards Codification 815-40, Derivatives and Hedging — Contracts on an Entity's Own Equity, 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 condensed statements 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 June 30, 2021. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
Following this issuance of the SEC Statement, after consultation with our independent registered public accounting firm, our management concluded that, in light of that correction of accounting for our warrants and our Class A common stock subject to possible redemption resulted in a material weakness in our internal controls over financial reporting relating to accounting for complex financial instruments.
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.
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If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
We may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.
As a result of such material weakness, the change in accounting for the Warrants and Class A common stock subject to possible redemption, and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the material weakness in our internal control over financial reporting and the preparation of our financial statements. As of the date of this Form 10-Q, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability to complete a Business Combination.10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On February 26, 2021, we consummated our Initial Public Offering of 23,000,000 Units, inclusive of 3,000,000 Units sold to the underwriters upon the election to fully exercise their over-allotment option, at a price of $10.00 per Unit, generating total gross proceeds of $230,000,000. Each Unit consists of one Class A ordinary share of the Company, par value $0.0001 per share, and one-third of one redeemable warrant of the Company. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share Ordinary Share for $11.50 per share. The securities sold in the offering were registered under the Securities Act on registration statements on Form S-1 (No. 333-252739). The registration statements became effective on February 23, 2021.
Simultaneously with the consummation of the Initial Public Offering, we consummated the sale of 6,575,000 Private Placement Warrants to our Sponsor at a price of $1.00 per Private Placement Warrant, generating total proceeds of $6,575,000. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
The Private Placement Warrants are identical to the warrants sold as part of the Units in the Initial Public Offering except that, so long as they are held by the Sponsor or its permitted transferees: (1) they will not be redeemable by us (except in certain redemption scenarios when the price per Class A ordinary share equals or exceeds $10.00 (as adjusted)); (2) they (including the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of our Business Combination; (3) they may be exercised by the holders on a cashless basis; and (4) they (including the Class A common stock issuable upon exercise of these warrants) are entitled to registration rights.None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
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ITEM 6. EXHIBITS.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q/A.10-Q.
No. |
| Description of Exhibit |
|
| |
31.1* |
| |
31.2* |
| |
32.1** |
| |
32.2** |
| |
101.INS* |
| Inline XBRL Instance Document |
101.CAL* |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.SCH* |
| Inline XBRL Taxonomy Extension Schema Document |
101.DEF* |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* |
| Inline XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE* |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104* | | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* Filed herewith.
** Furnished.
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| BOA ACQUISITION CORP. | |
|
|
|
Date: |
| /s/ Brian Friedman |
| Name: | Brian Friedman |
| Title: | Chief Executive Officer |
|
| (Principal Executive Officer) |
|
|
|
Date: |
| /s/ Benjamin A. Friedman |
| Name: | Benjamin A. Friedman |
| Title: | Chief Financial Officer |
|
| (Principal Financial and Accounting Officer) |
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