NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 — ORGANIZATION AND NATURE OF BUSINESS
OPERATIONS
Organization and General
B. Riley Principal 150 Merger
Corp. (the “Company”), a blank check corporation, was incorporated as a Delaware corporation on June 19, 2020. The Company
is an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”),
as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The Company was formed for the purpose of
effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one
or more businesses (a “Initial Business Combination”).
As
of March 31, 2021, the Company had not commenced any operations. All activity of the Company
includes the activity of the Company from inception and activity related to the initial public offering (the “Public Offering”)
described below and evaluating prospective acquisition targets. The Company will not generate any operating revenues until after completion
of its Initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on
cash and cash equivalents from the proceeds derived from the Public Offering described below. The Company has selected December 31st as
its fiscal year end.
Public Offering
The Company completed the
sale of 17,250,000 units (the “Units”), including the issuance of 2,250,000 Units as a result of the underwriters’ exercise
of their over-allotment option in full, at an offering price of $10.00 per Unit in the Public Offering on February 23, 2021. B. Riley
Principal 150 Sponsor Co., LLC (the “Sponsor”), a Delaware limited liability company and a wholly-owned indirect subsidiary
of B. Riley Financial, Inc. (“B. Riley Financial”), purchased an aggregate of 520,000 Units at a price of $10.00 per Unit
(the “Private Placement Units”) in a private placement that closed on February 23, 2021 simultaneously with the Public Offering.
The sale of the 17,250,000 Units in the Public Offering (the “Public Units”) generated gross proceeds of $172,500,000, less
underwriting commissions of $3,450,000 (2% of the gross proceeds of the Public Offering) and other offering costs of $436,189. The Private
Placement Units generated $5,200,000 of gross proceeds.
Each Unit consists of one
share of the Company’s Class A common stock, $0.0001 par value (each a “public share”), and one-third of one redeemable
warrant, with each whole warrant exercisable for one share of Class A common stock (each, a “Warrant” and, with respect
to the warrants underlying the Private Placement Units, the “Private Placement Warrants” and, collectively, the “Warrants”).
One Warrant entitles the holder thereof to purchase one whole share of Class A common stock at a price of $11.50 per share.
Sponsor and Note Payable - Related Party
The Company has a note payable
to Sponsor which allows the Company to borrow up to $300,000 without interest to be used for a portion of the expenses of this offering.
The notes payable is payable on the earlier of: (i) December 31, 2021 or (ii) the date on which the Company consummates
an initial public offering of its securities. As of February 23, 2021, the borrowings outstanding on the note payable due to related party
was $40,000. On March 1, 2021 such amount was repaid using proceeds from the Public Offering and the Private Placement.
The Trust Account
Upon completion of the Public
Offering, $172,500,000 of proceeds were held in the Company’s trust account at J.P. Morgan Chase Bank, N.A., with Continental Stock
Transfer & Trust Company acting as trustee (the “Trust Account”) and will be invested in permitted United States “government
securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, which we refer to as the
Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act that invest only in direct U.S. government treasury obligations. Unless and until the Company completes
the Initial Business Combination, it may pay its expenses only from the net proceeds of the Public Offering and the Private Placement
held outside the Trust Account, which was $353,077 on March 31, 2021.
Except with respect to interest
earned on the funds held in the Trust Account that may be released to the Company to pay its taxes, the proceeds from the Public Offering
may not be released from the Trust Account until the earliest of: (i) the completion of the Initial Business Combination; (ii) the
redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated
certificate of incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of its public shares if
it does not complete the Initial Business Combination within 24 months from the closing of the Public Offering; or (iii) the redemption
of all of the Company’s public shares if the Company is unable to complete the Initial Business Combination within 24 months from
the closing of the Public Offering (at which such time up to $100,000 of interest shall be available to the Company to pay dissolution
expenses), subject to applicable law. The proceeds deposited in the Trust Account could become subject to the claims of the Company’s
creditors, if any, which could have priority over the claims of the holders of the Company’s public shares (the “public stockholders”).
Initial Business Combination
The Company’s management
has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of
the net proceeds of the Public Offering and the Private Placement are intended to be generally applied toward consummating an Initial
Business Combination. The Initial Business Combination must occur with one or more businesses or assets with a fair market value equal
to at least 80% of the assets held in the Trust Account. There is no assurance that the Company will be able to successfully effect an
Initial Business Combination.
The Company will provide its
public stockholders with the opportunity to redeem all or a portion of their shares upon the completion of the Initial Business Combination,
either (i) in connection with a stockholder meeting called to approve the business combination or (ii) by means of a tender
offer. However, in no event will the Company redeem its public shares in an amount that would cause its net tangible assets to be less
than $5,000,001.
If the Company holds a stockholder
meeting to approve the Initial Business Combination, a public stockholder will have the right to redeem its public shares for an amount
in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the
consummation of the Initial Business Combination, including interest but less taxes payable. As a result, such shares of Class A
common stock have been recorded at redemption amount and classified as temporary equity upon the completion of the Public Offering, in
accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480,
“Distinguishing Liabilities from Equity.”
Pursuant to the Company’s
amended and restated certificate of incorporation, if the Company is unable to complete the Initial Business Combination within 24 months
from the closing of the Public Offering, the Company will (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but no more than ten business days thereafter redeem the public shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account
and not previously released to the Company to pay franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights
as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the
Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law
to provide for claims of creditors and the requirements of other applicable law.
The Sponsor and the Company’s
officers and directors have entered into a letter agreement with the Company, pursuant to which they have agreed to waive their rights
to liquidating distributions from the Trust Account with respect to any Founder Shares and Private Placement Shares (as defined below)
held by them if the Company fails to complete the Initial Business Combination within 24 months of the closing of the Public Offering.
However, if the Sponsor or any of the Company’s directors or officers acquires shares of Class A common stock in or after the Public
Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such public shares if the Company
fails to complete the Initial Business Combination within the prescribed time period.
In the event of a
liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s remaining
stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities
and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s
stockholders have no preemptive or other subscription rights. The Company will provide its stockholders with the opportunity to
redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account,
under the circumstances, and, subject to the limitations, described herein.
NOTE 2 — RESTATEMENT OF PREVIOUSLY
ISSUED FINANCIAL STATEMENTS
On April 12, 2021, the
Staff of the Securities and Exchange Commission together issued a statement regarding the accounting and reporting considerations for
warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for
Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically,
the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a Business Combination,
which terms are similar to those contained in the Company’s warrant agreement issued in connection with the Public Offering described
above. As a result of the SEC Statement, the Company reevaluated the accounting treatment of (i) the 5,750,000 Public Warrants, and (ii)
the 173,333 Private Placement Warrants. The Company previously accounted for all Warrants as components of equity.
In further consideration
of the guidance in Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging; Contracts in Entity’s Own Equity,
the Company concluded that a provision in the Warrant Agreement related to certain tender or exchange offers precludes the Warrants from
being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants
should be recorded as derivative liabilities on the Balance Sheet and measured at fair value at inception (on the date of the IPO) and
at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the statement of operations
in the period of change.
The Company concluded
that it is appropriate to restate the Company’s previously issued audited balance sheet as of February 23, 2021 as previously reported
in its Form 8-K. The restated classification and reported values of the Warrants as accounted for under ASC 815-40 are included in the
financial statements herein.
The following tables
summarize the effect of the revision on each balance sheet line item as of the date:
|
|
As Previously
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Balance Sheet at February 23, 2021
|
|
|
|
|
|
|
|
|
|
Warrant liability
|
|
$
|
—
|
|
|
$
|
5,276,966
|
|
|
$
|
5,276,966
|
|
Class A common stock subject to possible redemption
|
|
|
168,833,560
|
|
|
|
(5,276,970
|
)
|
|
|
163,556,590
|
|
Class A common stock
|
|
|
89
|
|
|
|
52
|
|
|
|
141
|
|
Additional paid-in capital
|
|
|
5,004,730
|
|
|
|
115,356
|
|
|
|
5,120,086
|
|
Accumulated deficit
|
|
|
(5,246
|
)
|
|
|
(115,404
|
)
|
|
|
(120,650
|
)
|
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The financial statements of
the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
Section 102(b)(1) of
the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial
accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the
requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not
to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates
for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private
companies adopt the new or revised standard.
This may make comparison of
the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
The Company’s unaudited
condensed interim financial statements have been prepared in accordance with U.S. GAAP and the rules and regulations of the SEC for
interim financial information and the instructions to Form 10-Q. Accordingly, the financial statements do not include all of
the information and footnotes required by U.S. GAAP. In the opinion of management, all adjustments considered for a fair presentation
have been included. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2021 or any other period. The accompanying unaudited condensed interim financial
statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s
prospectus filed with the SEC on February 19, 2021, as well as the Company’s audited balance sheet statement and notes thereto included
in the Company’s Form 8-K filed with the SEC on March 2, 2021.
Loss Per Common Share
The Company complies with
accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net loss per common share is computed by dividing
net loss by the weighted average number of common shares outstanding for the period, excluding shares of common stock subject to forfeiture.
Net loss per common share is computed by dividing net gain/(loss) applicable to common stockholders by the weighted average number of
common shares outstanding during the period, plus, to the extent dilutive, the incremental number of shares of common stock to settle
warrants, as calculated using the treasury stock method. At March 31, 2021, the Company did not have any dilutive securities and other
contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company under the
treasury stock method. As a result, diluted loss per common share is the same as basic loss per common share for the periods.
Reconciliation of Income (Loss) Per
Common Share
The
Company’s net loss is adjusted for the portion of income that is attributable to shares of common stock subject to possible redemption,
as these shares only participate in the earnings of the Trust Account and not the income or losses of the Company. Accordingly, basic
and diluted loss per share is calculated as follows:
|
|
Three
|
|
|
|
Months Ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
Common stock subject to possible redemption
|
|
|
|
Numerator: Net income allocable to Class A common stock subject to possible redemption
|
|
|
|
|
Interest income
|
|
$
|
4,075
|
|
Less: interest available to be withdrawn for payment of taxes
|
|
|
(4,075
|
)
|
Net income allocable to Class A common stock subject to possible redemption
|
|
$
|
—
|
|
Denominator: Weighted Average Redeemable Class A common stock
|
|
|
|
|
Redeemable Class A common stock, Basic and Diluted
|
|
|
6,523,528
|
|
Basic and Diluted net income per share, Redeemable Class A
|
|
$
|
0.00
|
|
|
|
|
|
|
Non-Redeemable Common Stock
|
|
|
|
|
Numerator: Net income minus redeemable Net Earnings
|
|
|
|
|
Net loss
|
|
$
|
(587,600
|
)
|
Redeemable Net Earnings
|
|
|
—
|
|
Non-Redeemable Net Loss
|
|
$
|
(587,600
|
)
|
Denominator: Weighted Average Non-Redeemable Common Stock
|
|
|
|
|
Weighted average shares outstanding, basic and diluted (1)
|
|
|
4,896,872
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.12
|
)
|
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity date of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of March 31, 2021 and December 31, 2020.
Concentration of Credit Risk
Financial instruments that
potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times,
may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on these accounts and management
believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of the Company’s
assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates
the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
Use of Estimates
The preparation of financial
statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Deferred Offering Costs
The Company complies with
the requirements of the FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — “Expenses of Offering.”
Deferred offering costs of $80,000 as of December 31, 2020, consisted principally of costs incurred in connection with preparation for
the Public Offering. The total offering costs incurred by the Company in connection with the Public Offering was $436,189. These costs
and the underwriter discount, of $3,450,000, were charged to capital upon completion of the Public Offering on February 23, 2021 and
$115,404 was reclassified to warrant issue costs and charged to expense in the statement of operations for the three months ended March
31, 2021.
Income Taxes
The Company is included in
the consolidated tax return of B. Riley Financial (the “Parent”). The Company calculates the provision for income taxes
by using a “separate return” method. Under this method the Company is assumed to file a separate return with the tax
authority, thereby reporting its taxable income or loss and paying the applicable tax to, or receiving the appropriate refund from, the
Parent. The Company’s current provision is the amount of tax payable or refundable on the basis of a hypothetical, current
year, separate return.
Any difference between the
tax provision (or benefit) allocated to the Company under the separate return method and payments to be made by (or received from) the
Parent for tax expense are treated as either dividends or capital contribution. Accordingly, the amount by which the Company’s
tax liability under the separate return method exceeds the amount of tax liability ultimately settled as a result of using incremental
expenses of the Parent is periodically settled as a capital contribution from the Parent to the Company.
The Company complies with
the accounting and reporting requirements of ASC Topic 740 “Income Taxes,” which requires an asset and liability approach
to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between
the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted
tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes
a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained
upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as
income tax expense. As of March 31, 2021, there were no unrecognized tax benefits and no amounts accrued for interest and penalties.
The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation
from its position.
The Company may be subject
to potential examination by federal, state and city taxing authorities in the areas of income taxes. These potential examinations may
include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal,
state and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially
change over the next twelve months.
The provision for income taxes
was deemed to be immaterial.
Unrecognized Tax Benefits
The Company recognizes tax
positions in its financial statements only when it is more likely than not that the position will be sustained on examination by the relevant
taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount
of benefit that will more likely than not be realized on settlement. A liability is established for differences between positions
taken in a tax return and amounts recognized in the financial statements. There were no unrecognized tax benefits as of March 31,
2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts
were accrued for interest expense and penalties related to income tax matters as of March 31, 2021. The Company is subject to income
tax examinations by major taxing authorities since inception.
Warrant Liability
The Company accounts for warrants
for shares of the Company’s common stock that are not indexed to its own stock as liabilities at fair value on the balance sheet.
The warrants will be re-evaluated for the proper accounting treatment at each reporting period and are subject to remeasurement at
each balance sheet date and any change in fair value is recognized as a component of other income (expense), net on the statement of operations.
The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the common
stock warrants. At that time, the portion of the liability related to the common stock warrants will be reclassified to additional paid-in capital.
At March 31, 2021, there were 5,923,333 Warrants issued in connection with the Public Offering (the 5,750,000 public Warrants and the
173,333 Private Placement Warrants).
Recent Accounting Pronouncements
Management does not believe
that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the
Company’s financial statements.
NOTE 4 — RELATED PARTY TRANSACTIONS
Founder Shares
On June 19, 2020,
4,312,500 shares of our Class B common stock were issued to B. Riley Principal Investments, LLC (the “Founder
Shares”). All of the Founder Shares were contributed to the Sponsor in June 2020. As used herein, unless the context
otherwise requires, Founder Shares shall be deemed to include the shares of Class A common stock issuable upon conversion
thereof. The Founder Shares are identical to the Class A common stock included in the Units being sold in the Proposed
Offering, except that the Founder Shares automatically convert into shares of Class A common stock at the time of the Initial
Business Combination and are subject to certain transfer restrictions, as described in more detail below, and the holders of the
Founder Shares, as described in more detail below, have agreed to certain restrictions and will have certain registration rights
with respect thereto. The number of Founder Shares issued was determined based on the expectation that the Founder Shares would
represent 20% of the outstanding shares of common stock upon completion of the Proposed Offering excluding the shares underlying the
Private Placement Units (the “Private Placement Shares”).
The Company’s initial
stockholders, officers and directors have agreed, subject to limited exceptions, not to transfer, assign or sell any Founder Shares held
by them until the earlier to occur of: (i) one year after the completion of the Initial Business Combination, (ii) the last sale price
of Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Initial Business Combination,
or (iii) the date following the completion of the Initial Business Combination on which the Company completes a liquidation, merger, stock
exchange, reorganization or other similar transaction that results in all of the public stockholders having the right to exchange their
shares of common stock for cash, securities or other property.
Business Combination Marketing Agreement
Pursuant to a business combination
marketing agreement, the Company engaged B. Riley Securities, Inc. as advisors in connection with its Initial Business Combination to assist
it in arranging meetings with its stockholders to discuss a potential business combination and the target business’ attributes,
introduce it to potential investors that may be interested in purchasing its securities, assist it in obtaining stockholder approval for
its Initial Business Combination and assist it with the preparation of press releases and public filings in connection with the Initial
Business Combination. The Company will pay B. Riley Securities, Inc. for such services upon the consummation of the Initial Business Combination
a cash fee in an amount equal to 3.5% of the gross proceeds of the Public Offering (exclusive of any applicable finders’ fees which
might become payable) ($6,037,500 since the underwriters’ over-allotment option was exercised in full). Pursuant to the terms
of the business combination marketing agreement, no fee will be due if the Company does not complete an Initial Business Combination.
Administrative Fees
Commencing on February 19,
2021, the Company agreed to pay an affiliate of the Sponsor a total of $3,750 per month for office space, utilities and secretarial and
administrative support. Upon completion of the Initial Business Combination or the Company’s liquidation, it will cease paying these
monthly fees.
Registration Rights
The holders of Founder Shares
(and any shares of Class A common stock issuable upon conversion of the Founder Shares), Private Placement Units, Private Placement Shares,
Private Placement Warrants (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants) and any
securities that may be issued upon conversion of working capital loans, if any, have registration rights to require the Company to register
the resale of any of its securities held by them (in the case of the Founder Shares, only after conversion of such shares to shares of
Class A common stock) pursuant to a registration rights agreement. These holders are also entitled to certain piggyback registration
rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the
Securities Act to become effective until termination of the applicable lock-up period for the securities to be registered. The Company
will bear the expenses incurred in connection with the filing of any such registration statements. The Forward Purchase Units and securities
underlying the Forward Purchase Units have substantially similar registration rights.
Note Payable — Related Party
The Company had a Note Payable
to the Sponsor which allowed the Company to borrow up to $300,000 without interest to be used for a portion of the expenses associated
with the Public Offering. The Note Payable was payable on the earlier of: (i) December 31, 2021 or (ii) the date on which the Company
consummated an initial public offering of its securities. At February 23, 2021, the Note Payable balance was $40,000. The Note Payable
was paid in full using proceeds from the Public Offering and the Private Placement on March 1, 2021.
NOTE 5 — RECURRING FAIR VALUE MEASUREMENTS
The
following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring
basis as of March 31, 2021, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such
fair value.
|
|
|
|
|
Quoted
|
|
|
Significant
|
|
|
Significant
|
|
|
|
|
|
|
Prices In
|
|
|
Other
|
|
|
Other
|
|
|
|
|
|
|
Active
|
|
|
Observable
|
|
|
Observable
|
|
|
|
March 31,
|
|
|
Markets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
2021
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash held in Trust Account
|
|
$
|
172,504,075
|
|
|
$
|
172,504,075
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
172,504,075
|
|
|
|
172,504,075
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Placement Warrants
|
|
$
|
5,405,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,405,000
|
|
Public Warrants
|
|
|
168,133
|
|
|
|
—
|
|
|
|
—
|
|
|
|
168,133
|
|
Warrant Liability
|
|
$
|
5,573,133
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,573,133
|
|
Warrants
The
Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the Balance Sheet.
The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within
change in fair value of warrant liabilities in the Statement of Operations.
Initial Measurement
The
Company established the initial fair value for the Warrants on February 23, 2021, the date of the Company’s Initial Public Offering,
using a Monte Carlo simulation model for the Public Warrants, and the Black-Sholes Model for Private Placement Warrants and Forward Purchase
Warrants based on their relative fair values at the initial measurement date. The Warrants were classified as Level 3 at the initial measurement
date due to the use of unobservable inputs.
The
key inputs into the Monte Carlo simulation model and Black-Scholes Model were as follows at initial measurement:
|
|
February 23,
|
|
|
|
2021
|
|
|
|
(Initial
|
|
Input
|
|
Measurement)
|
|
Risk-free interest rate
|
|
|
0.9
|
%
|
Expected term (years)
|
|
|
6.4
|
|
Expected volatility
|
|
|
14.0
|
%
|
Exercise price
|
|
$
|
9.69
|
|
|
|
March 31,
|
|
|
|
2021
|
|
Input
|
|
Measurement
|
|
Risk-free interest rate
|
|
|
1.2
|
%
|
Expected term (years)
|
|
|
6.3
|
|
Expected volatility
|
|
|
14.0
|
%
|
Exercise price
|
|
$
|
9.67
|
|
Subsequent Measurement
At March 31, 2021, the
same valuation methodology as indicated above was used to measure the warrant liabilities.
NOTE 6 — STOCKHOLDER’S EQUITY
Common Stock
The authorized common stock
of the Company includes up to 100,000,000 shares of Class A common stock and 25,000,000 shares of Class B common stock. If the
Company enters into an Initial Business Combination, it may (depending on the terms of such an Initial Business Combination) be required
to increase the number of shares of Class A common stock which the Company is authorized to issue at the same time as the Company’s
stockholders vote on the Initial Business Combination, to the extent the Company seeks stockholder approval in connection with the Initial
Business Combination. Holders of the Company’s common stock are entitled to one vote for each share of common stock.
Preferred Stock
The Company is authorized
to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from
time to time by the Company’s board of directors. At March 31, 2021 and December 31, 2020, there were no shares of preferred stock
issued or outstanding.
Warrants
Warrants may only be exercised
for a whole number of shares. No fractional Warrants will be issued upon separation of the Units and only whole Warrants will trade. The
Warrants will become exercisable on the later of (a) 30 days after the completion of the Initial Business Combination or (b) 12 months
from the closing of the Public Offering; provided in each case that the Company has an effective registration statement under the Securities
Act covering the shares of Class A common stock issuable upon exercise of the Warrants and a current prospectus relating to them is available
(or the Company permits holders to exercise their Warrants on a cashless basis and such cashless exercise is exempt from registration
under the Securities Act). The Company will as soon as practicable, but in no event later than 15 business days, after the closing of
the Initial Business Combination, use its best efforts to file with the Securities and Exchange Commission (“SEC”) a registration
statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the Warrants,
to cause such registration statement to become effective within 60 business days after the closing of the Initial Business Combination
and to maintain a current prospectus relating to those shares of Class A common stock until the Warrants expire or are redeemed, as specified
in the Company’s warrant agreement. If the shares issuable upon exercise of the Warrants are not registered under the Securities
Act by the 60th business day after the closing of the Initial Business Combination, the Company will be required to permit
holders to exercise their Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another
exemption. Notwithstanding the above, if the Company’s Class A common stock is at the time of any exercise of a Warrant not listed
on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of
the Securities Act, the Company may, at its option, require holders of Warrants who exercise their Warrants to do so on a “cashless
basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company elects, the Company will not be required
to file or maintain in effect a registration statement, but the Company will use its best efforts to register or qualify the shares under
applicable blue sky laws to the extent an exemption is not available.
The Warrants will expire at
5:00 p.m., New York City time, five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The Private Placement Warrants
are identical to the Warrants underlying the Units sold in the Public Offering, except that the Private Placement Warrants and the shares
of Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until
30 days after the completion of the Initial Business Combination, subject to certain limited exceptions. Additionally, the Private Placement
Warrants will be non-redeemable so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants
are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company
and exercisable by such holders on the same basis as the Warrants.
The Company may call the Warrants
for redemption (except with respect to the Private Placement Warrants):
|
●
|
in whole and not in part;
|
|
●
|
at a price of $0.01 per Warrant;
|
|
●
|
upon a minimum of 30 days’ prior written notice of redemption (the “30-day redemption period”); and
|
|
●
|
if, and only if, the last sale price of the Class
A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and
the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company
sends the notice of redemption to the warrant holders.
|
If the Company calls the Warrants
for redemption, management will have the option to require all holders that wish to exercise the Warrants to do so on a “cashless
basis,” as described in the warrant agreement.
The exercise price and number
of shares of Class A common stock issuable upon exercise of the Warrants may be adjusted in certain circumstances including in the event
of a share dividend, or recapitalization, reorganization, merger or consolidation. In addition, if (x) the Company issues additional shares
of Class A common stock or securities convertible into or exercisable or exchangeable for shares of Class A common stock for capital raising
purposes in connection with the closing of the Initial Business Combination (excluding any issuance of securities under the forward purchase
agreement), at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or
effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to
the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior
to such issuance (the “Newly Issued Price”)), (y) the aggregate gross proceeds from such issuances represent more than 60%
of the total equity proceeds, and interest thereon, available for funding the Initial Business Combination, and (z) the volume weighted
average trading price of the Class A common stock during the 20 trading day period starting on the trading day prior to the day on which
the Company consummates the Initial Business Combination (the “Market Value”) is below $9.20 per share, the exercise price
of the Warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price,
and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the higher
of the Market Value and the Newly Issued Price. Additionally, in no event will the Company be required to net cash settle any Warrant.
In the event that a registration statement is not effective for the exercised Warrants, the purchaser of a Unit containing such Warrant
will have paid the full purchase price for the Unit solely for the share of Class A common stock underlying such Unit. There will be no
redemption rights or liquidating distributions with respect to the Warrants, which will expire worthless if the Company fails to complete
an Initial Business Combination within the 24-month time period.
NOTE 7 — SUBSEQUENT EVENTS
The Company evaluates subsequent
events and transactions that occurred after the balance sheet date up to the date the financial statement was issued. Based upon this
review, other than disclosed, the Company did not identify any subsequent events that would have required adjustment or disclosure in
the financial statements.