Notes
to Condensed Financial Statements
(Unaudited)
Note
1 — Description of Organization and Business Operations
IG
Acquisition Corp. (the “Company”) was incorporated in Delaware on July 16, 2020. The Company was formed for the purpose of
entering into 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 not limited to a specific industry or sector for purposes of consummating a Business Combination, however, the Company intends
to concentrate its efforts identifying businesses in the leisure, gaming and hospitality industry. The Company is an early stage and
emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As
of March 31, 2022 the Company had not commenced any operations. All activity for the period from July 16, 2020 (inception) through March
31, 2022 relates to the Company’s formation and the initial public offering (“IPO”), which is described below and the
initial search for a suitable acquisition target. The Company will not generate any operating revenues until after the completion of
a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds
derived from the IPO. The Company has selected December 31 as its fiscal year end.
The
registration statement for the Company’s IPO was declared effective on September 30, 2020. On October 5, 2020, the Company consummated
the IPO of 30,000,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units
sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $300,000,000, which is described in Note 3.
Simultaneously
with the closing of the IPO, the Company consummated the sale of 8,000,000 warrants (each, a “Private Placement Warrant”
and, collectively, the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement
to IG Sponsor LLC (the “Sponsor”), generating gross proceeds of $8,000,000, which is described in Note 4.
Transaction
costs amounted to $16,997,562 consisting of $6,000,000 of underwriting fees, $10,500,000 of deferred underwriting fees and $497,562 of
other offering costs. In addition, cash of $1,375,991 was held outside of the Trust Account (as defined below) for working capital purposes.
On March 31, 2022 cash held outside the Trust Account totaled $29,162 and was available for working capital purposes.
Following
the closing of the IPO on October 5, 2020, an amount of $300,000,000 ($10.00 per Unit) from the proceeds of the sale of the Units in
the IPO and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) and invested in
U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment
Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market
fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation
of a Business Combination or (ii) the distribution of the funds in the Trust Account to the Company’s stockholders, as described
below.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale
of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating
a Business Combination. Nasdaq rules provide that the Business Combination must be with one or more target businesses that together have
a fair market value equal to at least 80% of the balance in the Trust Account (less any deferred underwriting commissions and taxes payable
on interest earned on the Trust Account) at the time of the signing a definitive agreement to enter a Business Combination.
The
Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required
to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
There is no assurance that the Company will be able to successfully effect a Business Combination.
The
Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem
all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting
called to approve the Business Combination or (ii) by means of a tender offer. In connection with a proposed Business Combination, the
Company may seek stockholder approval of a Business Combination or conduct a tender offer. The Company will proceed with a Business Combination
only if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon such consummation of a Business
Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor of the Business
Combination.
If
a stockholder vote is not required by applicable law or stock exchange rules and the Company does not decide to hold a stockholder vote
for business or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended
and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities
and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination.
If, however, stockholder approval of the transaction is required by applicable law or stock exchange rules, or the Company decides to
obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation
pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with
a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 4), and any Public Shares purchased during
or after the IPO in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public
Shares irrespective of whether they vote for or against the proposed transaction or do not vote at all. Notwithstanding the above, if
the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules,
the Company’s Amended and Restated Certificate of Incorporation provides that, a public stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under
Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from seeking redemption
rights with respect to more than 15% of the Public Shares without the Company’s prior written consent.
The
public stockholders will be entitled to redeem their shares for a pro rata portion of the amount then in the Trust Account (initially
$10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company
to pay its tax obligations). The per-share amount to be distributed to stockholders who redeem their shares will not be reduced by the
deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 6). There will be no redemption rights
upon the completion of a Business Combination with respect to the Company’s warrants.
If
a stockholder vote is not required and the Company does not decide to hold a stockholder vote for business or other legal reasons, the
Company will, pursuant to its Amended and Restated Certificate of Incorporation, offer such redemption pursuant to the tender offer rules
of the Securities and Exchange Commission (the “SEC”), and file tender offer documents containing substantially the same
information as would be included in a proxy statement with the SEC prior to completing a Business Combination.
The
Sponsor has agreed (a) to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection
with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation
(i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s
initial Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with
respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless the Company
provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
If
the Company is unable to complete a Business Combination by October 5, 2022 (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 us to pay 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 liquidation distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
the remaining stockholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal
dissolution of the Company, subject in each case to its obligations under Delaware law to provide for claims of creditors and the requirements
of applicable law. The representative of the underwriters has agreed to waive its rights to the deferred underwriting commission held
in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event,
such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares.
In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be
less than the IPO price per Unit ($10.00).
The
Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products
sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce
the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share
held in the Trust Account as of the day of liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value
of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target
business who executed a waiver of any and all rights to monies held in the Trust Account (whether or not such waiver is enforceable)
nor will it apply to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed
waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such
third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to
claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting
firm), prospective target businesses and other entities with which the Company does business, execute agreements with the Company waiving
any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Going
Concern and Liquidity
As
of March 31, 2022, the Company had $29,162 in its operating bank accounts, $300,019,704 in investments held in the Trust Account
to be used for a Business Combination or to repurchase or redeem its common stock in connection therewith and a working capital deficit
of $1,451,763 which includes $50,000 of franchise taxes payable and legal fees of $1,329,792. As of March 31, 2022, the Company
has used $25,015 of the accrued interest in the Trust Account that represented interest income to pay a portion of the Company’s
tax obligations.
If
the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could
include, but not necessarily be limited to, suspending the pursuit of a Business Combination. The Company cannot provide any assurance
that new financing will be available to it on commercially acceptable terms, if at all.
As a result of the above, in connection with the Company’s
assessment of going concern considerations in accordance ASC Topic 205-40 Presentation of Financial Statements – Going Concern,
management has determined that the liquidity condition and date for mandatory liquidation and dissolution raise substantial doubt about
the Company’s ability to continue as a going concern through October 5, 2022, the scheduled liquidation date of the Company if it
does not complete a Business Combination prior to such date. These financial statements do not include any adjustments relating to the
recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue
as a going concern.
Risks
and Uncertainties
Management
continues 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 operations or search for a target company, the specific
impact is not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Note
2 — Summary of Significant Accounting Policies
Basis
of Presentation
Our
accompanying financial statements include the accounts of the Company and have been prepared in conformity with accounting principles
generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The interim
financial information provided is unaudited but includes all adjustments which management considers necessary for the fair presentation
of the results for these periods. Operating results for interim periods are not necessarily indicative of the results that may be expected
for the full year period and should be read in conjunction with the Company’s audited financial statements and notes thereto included
in the Company’s Form 10- K filed with the SEC on March 25, 2022.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised
financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial
accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the
requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not
to opt out of such extended transition period which means that when a standard is issued or revised and it has different application
dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time
private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements 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.
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 expenses during the reporting period.
Making estimates requires management
to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set
of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could
change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from
those estimates. One of the more significant accounting estimates included in these financial statements is the determination of the
fair value of the warrant liability. Such estimates may be subject to change as more current information becomes available and accordingly
the actual results could differ significantly from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of March 31, 2022.
Marketable
Securities Held in Trust Account
At
March 31, 2022, substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills.
Class
A Common Stock Subject to Possible Redemption
The
Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to
mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including
common stock that features redemption rights that is 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 future events. Accordingly, Class A
common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’
deficit section of the Company’s balance sheet.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to
equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock
are affected by charges against additional paid-in capital and accumulated deficit.
At
March 31, 2022, the common stock reflected in the balance sheet is reconciled in the following table:
Gross proceeds | |
$ | 300,000,000 | |
Less: | |
| | |
Proceeds allocated to Public Warrants | |
$ | (13,623,723 | ) |
Class A common stock issuance costs | |
$ | (16,214,290 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
$ | 29,838,013 | |
| |
| | |
Class A common stock subject to possible redemption | |
$ | 300,000,000 | |
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax
assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included
the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be
realized.
ASC
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. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2022.
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 is subject to income tax examinations by major taxing authorities since inception.
Fair
Value of Financial Instruments
The
Company classifies financial instruments under FASB ASC 820, “Fair Value Measurement,” for its financial assets and liabilities
that are reported at fair value at each reporting period.
The carrying value of the Company’s cash and
accrued liabilities, approximates their fair value due to the short-term nature of such instruments.
Our
financial instruments that are subject to fair value measurements consist of our warrant derivative liability. Fair value is measured
based on an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. As such, fair value is a market-based measurement that should be determined based
on assumptions market participants would use in pricing an asset or liability. Assets and liabilities measured at fair value are
based on a market valuation approach using prices and other relevant information generated by market transactions involving identical
or comparable assets or liabilities. As a basis for considering such assumptions, a three-tiered fair value hierarchy is established,
which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets;
(Level 2) inputs, other than the quoted prices in active markets that are observable, either directly or indirectly; and (Level 3) unobservable
inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. See Note 9 for
further information.
Accounts
Payable and Accrued Liabilities
Accounts
payable and accrued liabilities were $1,500,629 and $1,547,835 as of March 31, 2022, and December 31, 2021, respectfully, and primarily
consist of Delaware franchise tax expenses and costs incurred in pursuit of our initial business combination.
Warrant
Liabilities
In
accordance with ASC 815-40, Derivatives and Hedging: Contracts in an Entities Own Equity, entities must consider whether to classify
contracts that may be settled in its own stock, such as warrants, as equity of the entity or as an asset or liability. If an event that
is not within the entity’s control could require net cash settlement, then the contract should be classified as an asset or a liability
rather than as equity. We have determined because the terms of Public Warrants include a provision that entitles all warrant holders
to receive cash for their warrants in the event of a qualifying cash tender offer, while only certain of the holders of the underlying
shares of common stock would be entitled to receive cash, our warrants should be classified as liability measured at fair value, with
changes in fair value each period reported in earnings. Volatility in our Common Stock and Public Warrants may result in significant
changes in the value of the derivatives and resulting gains and losses on our statement of operations.
Earnings
Per Share of Common Stock
The
Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income per
share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding for
the period. The Company applies the two-class method in calculating net income per common share. Accretion associated with the
redeemable shares of Class A common stock is excluded from 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 an aggregate of 23,000,000
shares in the calculation of diluted net loss per share, since the exercise of the warrants is contingent upon the occurrence of future
events. As of March 31, 2022, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised
or converted into common stock and then share in the earnings of the Company. As a result, diluted net income per common share is the
same as basic net income per share of common stock for the periods presented.
| |
For the three months ended | | |
For the three months ended | |
| |
March 31, 2022 | | |
March 31, 2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income per share of common stock | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income, as adjusted | |
$ | 8,555,330 | | |
$ | 2,138,832 | | |
$ | 12,782,137 | | |
$ | 3,195,534 | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 30,000,000 | | |
| 7,500,000 | | |
| 30,000,000 | | |
| 7,500,000 | |
Basic and diluted net income per share of common stock | |
| 0.29 | | |
| 0.29 | | |
| 0.43 | | |
| 0.43 | |
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution,
which, at times, may exceed the Federal Deposit Insurance Corporation maximum coverage of $250,000. At March 31, 2022, the Company has
not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value
Measurements” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term
nature.
Recent
Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”)
issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20)
and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting
for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash
conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification
of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding
instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance,
including the requirement to use the if-converted method for all convertible instruments. As we are a smaller reporting company, adoption
of ASU 2020-06 will be required for fiscal years beginning after December 15, 2023, including interim periods with those fiscal years.
The Company is still evaluating the impact of ASU 2020-06 and will adopt as required.
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
3 — Initial Public Offering
Pursuant
to the IPO, the Company sold 30,000,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A
common stock and one-half of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to
purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 6).
Note
4 — Private Placement
Simultaneously
with the closing of the IPO, the Sponsor purchased an aggregate of 8,000,000 Private Placement Warrants at a price of $1.00 per Private
Placement Warrant, or $8,000,000 in the aggregate. Each Private Placement Warrant is exercisable to purchase one share of Class A common
stock at a price of $11.50 per share. A portion of the proceeds from the sale of Private Placement Warrants were added to the net proceeds
from the IPO held in the Trust Account. If the Company does not complete a Business Combination 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.
Note
5 — Related Party Transactions
Founder
Shares
On
July 21, 2020, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration of 8,625,000 shares of the Company’s
Class B common stock (the “Founder Shares”). The Founder Shares included an aggregate of up to 1,125,000 shares subject to
forfeiture by the Sponsor to the extent that the underwriters’ over-allotment was not exercised in full, so that the number of
Founder Shares will collectively represent approximately 20% of the Company’s issued and outstanding shares after the IPO. The
underwriters did not exercise their over-allotment option, and therefore the Sponsor forfeited 1,125,000 shares, resulting in 7,500,000
Founder Shares outstanding. The Sponsor has agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the
Founder Shares until the earlier of (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination,
(x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days
after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, stock exchange, reorganization or
other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Class
A common stock for cash, securities or other property.
Related
Party Loans
In
addition, 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 or their affiliates may, but are not obligated to, loan the Company funds as
may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working
Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid
only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion
of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used
to repay the Working Capital Loans. 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 of the
post Business Combination entity. The warrants would be identical to the Private Placement Warrants. 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. As of March
31, 2022, there was one Working Capital Loan outstanding, as described below.
On
March 21, 2022, we issued an amended and restated promissory note (the “Note”) in the principal amount of up to $1,000,000
to the Sponsor. The Note was issued to replace the promissory note issued on November 11, 2021, to (i) increase the principal amount
to up to $1,000,000 and (ii) eliminate the conversion rights from the Note. The Note was issued in connection with advances the Sponsor
has made, and may make in the future, to us for working capital expenses. The Note bears no interest and is due and payable upon the
earlier of (i) October 5, 2022 or (ii) the date on which we consummate our initial business combination. As of March 31, 2022, $540,000
was outstanding under the Note.
Administrative
Support Agreement
The
Company entered into an agreement, commencing on September 30, 2020 through the earlier of the Company’s consummation of a Business
Combination and its liquidation, to pay the Sponsor a total of $10,000 per month for office space, secretarial and administrative services.
Note
6 — Commitments and Contingencies
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic on the industry 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/or search for a target
company, the specific impact is 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.
Registration
Rights
Pursuant
to a registration rights agreement entered into on September 30, 2020, the holders of the Founder Shares, Private Placement Warrants
and any warrants that may be issued upon conversion of the Working Capital Loans (and any shares of Class A common stock issuable upon
the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans 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 shares of our Class A common stock). The holders of these securities are 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 consummation 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
Company will bear the expenses incurred in connection with the filing of any such registration statements.
Contingent
Fee Arrangement
The
Company has entered into a fee arrangement with a service provider pursuant to which certain fees incurred by the Company will be deferred
and become payable only if the Company consummates a Business Combination. If a Business Combination does not occur, the Company will
not be required to pay these contingent fees. As of March 31, 2022, the amount of these contingent fees was approximately $1,329,792,
all of which have been accrued for on the balance sheet within accrued expenses and recognized as an expense within operating costs on
the statements of operations. There can be no assurances that the Company will complete a Business Combination.
Underwriting
Agreement
The
representative of the underwriters is entitled to a deferred fee of $10,500,000 in the aggregate. The deferred fee will become payable
to the representative of the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a
Business Combination, subject to the terms of the underwriting agreement.
Note
7 — Stockholders’ Equity
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 March 31, 2022,
there were no shares of preferred stock issued or outstanding.
Class
A Common Stock — The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001
per share. Holders of Class A common stock are entitled to one vote for each share. At March 31, 2022, there were 30,000,000 shares of
Class A common stock issued or outstanding, all of which are subject to possible redemption.
Class
B Common Stock — The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per
share. At March 31, 2022, there were 7,500,000 shares of Class B common stock issued and outstanding.
Holders
of Class A common stock and Class B common stock will vote together as a single class on all matters submitted to a vote of stockholders
except as required by law. The shares of Class B common stock will automatically convert into shares of Class A common stock at the time
of a Business Combination on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock or
equity-linked securities are issued or deemed issued in connection with a Business Combination, the number of shares of Class A common
stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number
of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common
stock by public stockholders), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon
conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation
to the consummation of a Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable
for or convertible into shares of Class A common stock issued, or to be issued, to any seller in a Business Combination and any private
placement warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion
of Founder Shares will never occur on a less than one-for-one basis.
Public 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 Public Warrants
will become exercisable on the later of (a) 12 months from the closing of the IPO and (b) 30 days after the completion of a Business Combination.
The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no
obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A common
stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations
with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue any shares of Class A common
stock upon exercise of a warrant unless the share of Class A common stock issuable upon such warrant exercise has been registered, qualified
or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. 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, it will use its
best efforts to file with the SEC a registration statement registering the registration, under the Securities Act, of the Class A common
stock issuable upon exercise of the 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 warrants in accordance
with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise
of the warrants is not effective by the sixtieth (60th) business day after the closing of a Business Combination, warrant holders may,
until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an
effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities
Act or another exemption. Notwithstanding the above, if the 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 public 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 so elects, the Company will not be
required to file or maintain in effect a registration statement, but will use its best efforts to qualify the shares under applicable
blue sky laws to the extent an exemption is not available. Redemption of warrants for cash. Once the warrants become exercisable, the
Company may call the warrants for redemption:
|
● |
in whole and not in part; |
| ● | at a price of $0.01 per warrant; |
|
● |
upon not less than 30 days’ prior written notice of redemption to each warrant holder; and |
| ● | if, and only if, the closing price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing once the warrants become exercisable and ending three business days before we send to the notice of redemption to the warrant holders. |
If and when the warrants become redeemable by
the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale
under all applicable state securities laws.
If the Company calls the Public Warrants for redemption
for cash, 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 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, except as described below, the warrants will not be adjusted for issuance of common stock at a price
below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. 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.
In addition, if (x) the Company
issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing
of a Business Combination 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 the funding of a Business Combination on the date of the consummation
of a Business Combination (net of redemptions), 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 after the day on which the Company consummates a Business Combination (such price, the
“Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be
equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be
adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants will be identical
to the Public Warrants underlying the Units being sold in the IPO, except that the Private Placement Warrants and the shares of common
stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable until 30 days after
the completion of a Business Combination, subject to certain limited exceptions, and will be entitled to certain registration rights (see
Note 6). Additionally, the Private Placement Warrants will be exercisable for cash or on a cashless basis, at the holder’s option,
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 in all redemption scenarios and exercisable by such holders on the same basis as the Public Warrants.
Warrants — Public 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 Public Warrants will become exercisable on the later of (a) 12 months from the closing of the IPO and (b) 30 days after
the completion of a Business Combination. The Company will not be obligated to deliver any shares of Class A common stock pursuant to
the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities
Act with respect to the Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject
to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated
to issue any shares of Class A common stock upon exercise of a warrant unless the share of Class A common stock issuable upon such warrant
exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder
of the warrants. 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, it will use its best efforts to file with the SEC a registration statement registering the registration, under
the Securities Act, of the Class A common stock issuable upon exercise of the 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 warrants in accordance with the provisions of the warrant agreement. If a registration statement covering
the shares of Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the
closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any
period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the 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 public 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 so elects, the Company will not be required to file or maintain in effect a registration statement, but will use its best efforts
to qualify the shares under applicable blue sky laws to the extent an exemption is not available. Redemption of warrants for cash. Once
the warrants become exercisable, the Company may call the warrants for redemption:
| ● | in whole and not in part; |
|
● |
at a price of $0.01 per warrant; |
|
● |
upon not less than 30 days’ prior written notice of redemption to each warrant holder; and |
| ● | if, and only if, the closing price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing once the warrants become exercisable and ending three business days before we send to the notice of redemption to the warrant holders. |
If and when the warrants become redeemable by
the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale
under all applicable state securities laws.
If the Company calls the Public Warrants for redemption
for cash, 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 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, except as described below, the warrants will not be adjusted for issuance of common stock at a price
below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. 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.
In addition, if (x) the Company issues additional
shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination
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 the funding of a Business Combination on the date of the consummation of a Business Combination
(net of redemptions), 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 after the day on which the Company consummates a Business Combination (such price, the “Market Value”)
is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher
of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent)
to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants will be identical
to the Public Warrants underlying the Units being sold in the IPO, except that the Private Placement Warrants and the shares of common
stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable until 30 days after
the completion of a Business Combination, subject to certain limited exceptions, and will be entitled to certain registration rights (see
Note 6). Additionally, the Private Placement Warrants will be exercisable for cash or on a cashless basis, at the holder’s option,
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 in all redemption scenarios and exercisable by such holders on the same basis as the Public Warrants.
In accordance with ASC 815-40, Derivatives and Hedging: Contracts in
an Entities Own Equity, entities must consider whether to classify contracts that may be settled in its own stock, such as warrants, as
equity of the entity or as an asset or liability. If an event that is not within the entity’s control could require net cash settlement,
then the contract should be classified as an asset or a liability rather than as equity. We have determined because the terms of Public
Warrants include a provision that entitles all warrant holders to cash for their warrants in the event of a qualifying cash tender offer,
while only certain of the holders of the underlying shares of common stock would be entitled to cash, our warrants should be classified
as a derivative liability measured at fair value, with changes in fair value each period reported in earnings. Volatility in our Common
Stock and Public Warrants may result in significant changes in the value of the derivatives and resulting gains and losses on our statement
of operations.
In conjunction with the Company’s public
offering, which closed October 5, 2020, the Company sold 30,000,000 Units at a price of $10.00 per Unit (the “Public Units”).
Each Unit consists of one share of the Company’s Class A common stock, $0.0001 par value and one-half of one redeemable warrant
(each a “Public Warrant”) and simultaneously, the Sponsor purchased an aggregate of 8,000,000 Sponsor Warrants at a price
of $1.00 per warrant ($8,000,000 in the aggregate) in the Private Placement. As of March 31, 2022, 15,000,000 Public Warrants and 8,000,000
Sponsor Warrants are outstanding. The Sponsor Warrants (including the Class A common stock issuable upon exercise of the Sponsor Warrants)
are not transferable, assignable or salable until 30 days after the completion of the Business Combination and they are non-redeemable
so long as they are held by the initial purchasers of the Sponsor Warrants or their permitted transferees. If the Sponsor Warrants are
held by someone other than the initial purchasers of the Sponsor Warrants or their permitted transferees, the Sponsor Warrants will be
redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. Otherwise, the Sponsor Warrants have
terms and provisions that are identical to those of the Public Warrants except that the Sponsor Warrants may be exercised on a cashless
basis. If the Company does not complete the Business Combination, then the proceeds will be part of the liquidating distribution to the
public stockholders and the Sponsor Warrants issued to the Sponsors will expire worthless. Because the terms of the Sponsor Warrants and
Public Warrants are so similar, we classified both types of warrants as a derivative liability measured at fair value.
Each Public Warrant entitles the holder to purchase one share of Class
A common stock at a price of $11.50 per share. Each Public Warrant will become exercisable on the later of 30 days after the completion
of the Business Combination or 12 months from the closing of the Public Offering. However, if the Company does not complete the Business
Combination on or prior to October 5, 2022, the warrants will expire at the end of such period. If the Company is unable to deliver registered
shares of Class A common stock to the holder upon exercise of Public Warrants issued in connection with the Units during the exercise
period, there will be no net cash settlement of these Public Warrants and the Public Warrants will expire worthless, unless they may be
exercised on a cashless basis in the circumstances described in the warrant agreement. Once the Public Warrants become exercisable, the
Company may call the warrants for redemption: (i) in whole and not in part; (ii) at a price of $0.01 per warrant; (iii) upon not less
than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and (iv) if,
and only if, the reported closing price of the Class A common stock equals or exceeds $18.00 per share for any 20 trading days within
a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders.
Note 8 —Fair Value Measurements
The Company follows the guidance in ASC Topic
820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial
assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1: |
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
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Level 2: |
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
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Level 3: |
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
The following table presents information about
the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2022, and indicates the
fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | |
Level | | |
As of March 31, 2022 | | |
As of December 31, 2021 | |
Assets: | |
| | |
| | |
| |
Marketable securities held in Trust Account | |
| 1 | | |
$ | 300,019,704 | | |
$ | 300,025,015 | |
Liabilities: | |
| | | |
| | | |
| | |
Public Warrants | |
| 1 | | |
$ | 4,800,000 | | |
$ | 12,000,000 | |
Private Warrants | |
| 2 | | |
$ | 2,560,000 | | |
$ | 6,400,000 | |
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the financial statements were issued. The Company did not identify any
subsequent events that would have required adjustment or disclosure in the financial statements.