Item 1.
Financial Statements.
GLASS
HOUSES ACQUISITION CORP.
UNAUDITED
CONDENSED BALANCE SHEET
|
|
September 30, 2021
|
|
Assets
|
|
|
|
Current assets:
|
|
|
|
Cash
|
|
$
|
1,142,358
|
|
Prepaid expenses
|
|
|
581,099
|
|
Total current assets
|
|
|
1,723,457
|
|
Prepaid expenses, non-current
|
|
|
212,602
|
|
Marketable securities held in Trust Account
|
|
|
220,483,102
|
|
Total Assets
|
|
$
|
222,419,161
|
|
|
|
|
|
|
Liabilities and Stockholders’ Deficit
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accrued expenses
|
|
$
|
117,810
|
|
Total current liabilities
|
|
|
117,810
|
|
Warrant liability
|
|
|
14,032,404
|
|
Deferred underwriting discount
|
|
|
7,716,553
|
|
Total liabilities
|
|
|
21,866,767
|
|
|
|
|
|
|
Commitments and Contingencies (Note 7)
|
|
|
|
|
Class A common stock subject to possible redemption, 22,047,293 shares at redemption value of approximately $10.00 per share
|
|
|
220,472,930
|
|
|
|
|
|
|
Stockholders’ Deficit:
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
-
|
|
Class A common stock, $0.0001 par value; 400,000,000 shares authorized; 0 shares issued and outstanding (excluding 22,047,293 shares subject to possible redemption)
|
|
|
-
|
|
Class B common stock, $0.0001 par value; 40,000,000 shares authorized; 5,511,823 shares issued and outstanding
|
|
|
551
|
|
Additional paid-in capital
|
|
|
-
|
|
Accumulated deficit
|
|
|
(19,921,087
|
)
|
Total stockholders’ deficit
|
|
|
(19,920,536
|
)
|
|
|
|
|
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
222,419,161
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
GLASS
HOUSES ACQUISITION CORP.
UNAUDITED
CONDENSED STATEMENTS OF OPERATIONS
|
|
For the three
months
ended September 30, 2021
|
|
|
For the
Period
from
January 19,
2021
(Inception)
through
September 30,
2021
|
|
Formation and operating costs
|
|
$
|
288,035
|
|
|
$
|
838,841
|
|
Loss from operations
|
|
|
(288,035
|
)
|
|
|
(838,841
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
Warrant issuance costs
|
|
|
-
|
|
|
|
(812,974
|
)
|
Other expense relating to fair value exceeding amount paid for warrants
|
|
|
-
|
|
|
|
(2,363,027
|
)
|
Interest earned on marketable securities held in Trust Account
|
|
|
2,837
|
|
|
|
10,172
|
|
Change in fair value of warrant liability
|
|
|
6,046,499
|
|
|
|
10,060,586
|
|
Total other income
|
|
|
6,049,336
|
|
|
|
6,894,757
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
5,761,301
|
|
|
$
|
6,055,916
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding of Class A, common stock subject to redemption
|
|
$
|
22,047,293
|
|
|
$
|
16,966,130
|
|
Basic and diluted net income per share of Class A, common stock subject to redemption
|
|
$
|
0.21
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding of Class B, non-redeemable common stock
|
|
$
|
5,511,823
|
|
|
$
|
5,384,390
|
|
Basic and diluted net income per share of Class B, non-redeemable common stock
|
|
$
|
0.21
|
|
|
$
|
0.27
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
GLASS
HOUSES ACQUISITION CORP.
UNAUDITED
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
|
|
Class A Common
Stock
|
|
|
Class B
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
Balance as of January 19, 2021
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Class B common stock issued to Sponsor
|
|
|
-
|
|
|
|
-
|
|
|
|
5,750,000
|
|
|
|
575
|
|
|
|
24,425
|
|
|
|
-
|
|
|
|
25,000
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,432,379
|
)
|
|
|
(3,432,379
|
)
|
Accretion of Class A common stock to redemption value
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(24,425
|
)
|
|
|
(25,977,027
|
)
|
|
|
(26,001,452
|
)
|
Balance as of March 31, 2021(1)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
5,750,000
|
|
|
$
|
575
|
|
|
$
|
-
|
|
|
$
|
(29,409,406
|
)
|
|
$
|
(29,408,831
|
)
|
Forfeiture of Class B common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(238,177
|
)
|
|
|
(24
|
)
|
|
|
-
|
|
|
|
24
|
|
|
|
-
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,726,994
|
|
|
|
3,726,994
|
|
Balance as of June 30, 2021(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
5,511,823
|
|
|
|
551
|
|
|
|
-
|
|
|
|
(25,682,388
|
)
|
|
|
(25,681,837
|
)
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,761,301
|
|
|
|
5,761,301
|
|
Balance as of September 30, 2021
|
|
|
-
|
|
|
|
-
|
|
|
|
5,511,823
|
|
|
|
551
|
|
|
|
-
|
|
|
|
(19,921,087
|
)
|
|
|
(19,920,536
|
)
|
(1) As restated for Class A common stock subject to redemption (see
Note 2).
The
accompanying notes are an integral part of these unaudited condensed financial statements.
GLASS
HOUSES ACQUISITION CORP.
UNAUDITED
CONDENSED STATEMENT OF CASH FLOWS
|
|
For the
Period
from January 19,
2021 (Inception)
through
September 30,
2021
|
|
Cash flows from Operating Activities:
|
|
|
|
Net income
|
|
$
|
6,055,916
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
Interest earned on marketable securities held in Trust Account
|
|
|
(10,172
|
)
|
Change in fair value of warrants
|
|
|
(10,060,586
|
)
|
Warrant issuance costs
|
|
|
812,974
|
|
Other expense relating to fair value exceeding amount paid for warrants
|
|
|
2,363,027
|
|
Changes in current assets and current liabilities:
|
|
|
|
|
Prepaid expenses
|
|
|
(793,701
|
)
|
Accrued expenses
|
|
|
217,170
|
|
Net cash used in operating activities
|
|
|
(1,415,372
|
)
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
Cash held in Trust Account
|
|
|
(220,472,930
|
)
|
Net cash used in investing activities
|
|
|
(220,472,930
|
)
|
|
|
|
|
|
Cash flows from Financing Activities:
|
|
|
|
|
Proceeds from Initial Public Offering, net of underwriter’s fees
|
|
|
216,063,471
|
|
Proceeds from private placement
|
|
|
7,609,459
|
|
Proceeds from issuance of founder shares
|
|
|
25,000
|
|
Repayment to promissory note to related party
|
|
|
(99,360
|
)
|
Payments of offering costs
|
|
|
(567,910
|
)
|
Net cash provided by financing activities
|
|
|
223,030,660
|
|
|
|
|
|
|
Net change in cash
|
|
|
1,142,358
|
|
Cash, beginning of the period
|
|
|
-
|
|
Cash, end of the period
|
|
$
|
1,142,358
|
|
|
|
|
|
|
Supplemental disclosure of noncash investing and financing activities:
|
|
|
|
|
Deferred underwriting commissions charged to additional paid in capital
|
|
$
|
7,716,553
|
|
Initial value of Class A common stock subject to possible
redemption(1)
|
|
$
|
194,471,478
|
|
Accretion of Class A common stock to redemption value
(1)
|
|
$
|
26,001,452
|
|
Initial classification of warrant liability
|
|
$
|
21,729,963
|
|
Deferred offering costs paid by Sponsor loan
|
|
$
|
99,360
|
|
Forfeiture of Class B common stock
|
|
$
|
24
|
|
(1) As restated for Class A common stock subject to redemption (see
Note 2).
The
accompanying notes are an integral part of these unaudited condensed financial statements.
GLASS HOUSES ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 — Organization and Business
Operations
Organization and General
Glass Houses Acquisition Corp. (the “Company”)
is a blank check company incorporated as a Delaware corporation on January 19, 2021. 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
(“Business Combination”). The Company has not selected any specific Business Combination target.
Although the Company is not limited to a particular
industry or geographic region for purposes of consummating a Business Combination, the Company intends to search for a target business
that provides critical resources and/or services to the technologies powering the 21st century industrial economy. 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.
The Company’s fiscal year-end is December
31.
As of September 30, 2021, the Company had not
commenced any operations. All activity for the period from January 19, 2021 (inception) through September 30, 2021 relates to the Company’s
formation, the initial public offering (“IPO”), which is described below, and, since the closing of the IPO, a search for
a Business Combination candidate. The Company will not generate any operating revenues until after the 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 IPO and will recognize changes in the fair value of its warrant liability as other income (or expense).
The Company’s sponsor is Glass Houses Sponsor
LLC, a Delaware limited liability company (the “Sponsor”).
Financing
The registration statement for the Company’s
IPO was declared effective on March 22, 2021 (the “Effective Date”). On March 25, 2021, the Company consummated the IPO of 20,000,000 units
(the “Units” and, with respect to the shares of common stock included in the Units being offered, the “public shares”),
at $10.00 per Unit, generating gross proceeds of $200,000,000, which is discussed in Note 4.
Simultaneously with the closing of the IPO, the
Company consummated the sale of 7,200,000 Private Placement Warrants (the “Private Placement Warrants”) at a price
of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating total gross proceeds of $7,200,000.
Transaction costs amounted to $11,567,910 consisting
of $4,000,000 of cash underwriting fees, $7,000,000 of deferred underwriting underwriting fees, and $567,910 of other offering
costs.
The Company granted the underwriter in the IPO
a 45-day option to purchase up to 3,000,000 additional Units to cover over-allotments, if any. On March 30, 2021, the underwriter
partially exercised the over-allotment option to purchase 2,047,293 Units (the “Over-allotment Units”), generating
an aggregate of gross proceeds of $20,472,930, and the Company incurred $409,459 in cash underwriting fees and $716,553 in deferred
underwriting fees. Simultaneously with the closing of the over-allotment option, the Company sold an additional 409,459 Private
Placement Warrants to the Sponsor at a price of $1.00 per share.
Trust Account
Following the closing of the IPO on March 25,
2021 and the closing of the underwriter’s partial exercise of the over-allotment option on April 1, 2021, $220,472,930 ($10.00 per
Unit) from the net proceeds of the sale of the Units in the IPO and over-allotment and the sale of the Private Placement Warrants was
placed in a Trust Account, which may only be invested in United States “government securities” within the meaning of Section
2(a)(16) of 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 which invest only in direct U.S. government treasury obligations. Except with respect
to interest earned on the funds held in the Trust Account that may be released to the Company to pay its franchise and income taxes, the
proceeds from the IPO and the sale of the Private Placement Warrants will not be released from the Trust Account until the earliest to
occur of: (a) the completion of the initial Business Combination; (b) the redemption of any public shares properly tendered in connection
with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (i) to modify the substance or
timing of the Company’s obligation to redeem 100% of the Company’s public shares if the Company does not complete the
initial Business Combination within 24 months from the closing of the IPO (the “Combination Period”), or (ii) with respect
to any other provisions relating to the rights of holders of the Class A common stock; and (c) the redemption of the Company’s public
shares if the Company is unable to complete the Business Combination within the Combination Period, subject to applicable law.
Initial Business Combination
The Company’s Business Combination must
be with one or more target businesses that together have a fair market value equal to at least 80% of the net balance in the Trust
Account (excluding the amount of deferred underwriting discounts held and taxes payable on the income earned on the Trust Account) at
the time of the signing an agreement to enter into a Business Combination. However, 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 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 public stockholders with
the opportunity to redeem all or a portion of their public shares of Class A common stock 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. The decision as to whether the Company will seek stockholder approval of a proposed Business Combination or conduct a tender offer
will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem their shares for a pro rata share of
the aggregate amount then on deposit in the Trust Account (initially approximately $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 shares of common stock subject to redemption
are recorded at a redemption value and classified as temporary equity upon the completion of the IPO, in accordance with Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed
with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination
and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business
Combination.
If the Company is unable to complete the initial
Business Combination within the Combination Period, the Company will: (i) cease all operations except for the purpose of winding up; (ii)
as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem
the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including
interest earned on the funds held in the Trust Account and not previously released to the Company to pay the 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 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, officers and directors have agreed
(i) to waive their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion
of the Company’s initial Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account
with respect to any founder shares held by them if the Company fails to complete the initial Business Combination within the Combination
Period, although they will be entitled to liquidating distributions from the Trust Account with respect to any public shares they hold
if the Company fails to complete the Business Combination within the Combination Period.
The Company’s Sponsor has agreed that it
will be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or by
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 (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account as of the
date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which
may be withdrawn to pay the franchise and income taxes. This liability will not apply with respect to any claims by a third party
who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the indemnity of the
underwriter of the IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed
waiver is deemed to be unenforceable against a third party, then the Sponsor will not be responsible to the extent of any liability for
such third-party claims. To the Company’s knowledge, the Sponsor’s only assets are securities of the Company. The Company
has not asked the Sponsor to reserve for such indemnification obligations. None of the Company’s officers will indemnify the Company
for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Liquidity and Capital Resources
As of September 30, 2021, the Company had
approximately $1.1 million in its operating bank account, and working capital of approximately $1.6 million.
Prior to the completion of the Initial Public
Offering, the Company’s liquidity needs had been satisfied through a payment from the Sponsor of $25,000 (see Note 6) for the
founder shares to cover certain offering costs and the loan under an unsecured promissory note from the Sponsor of $99,160 (see Note
6). The promissory note from the Sponsor was paid in full on March 26, 2021. Subsequent to the consummation of the Initial Public Offering
and Private Placement, the Company’s liquidity needs have been satisfied through the proceeds from the consummation of the Private
Placement not held in the Trust Account.
In addition, in order to finance transaction costs
in connection with an intended initial Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of
the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans, as defined below
(see Note 6). To date, there were no amounts outstanding under any Working Capital Loans.
Based on the foregoing, management believes that
the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a
Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts
payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target
businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating
the Business Combination.
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 its operations, cash flows and/or search for a target company, the specific impact is not readily determinable
as of the date of the condensed financial statements. The condensed financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Note 2 – Restatement
of Prior Period Financial Statements
In connection with the preparation of the Company’s
financial statements as of September 30, 2021, management determined that it should restate its previously reported financial statements
– the Current Report on Form 8-K filed on April 1, 2021 with audited balance sheet as of March 25, 2021 (as previously restated
in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2021 and filed with the SEC on June 11, 2021), the
Quarterly Report on Form 10-Q filed on June 11, 2021 with unaudited condensed financial statements as of March 31, 2021, and the Quarterly
Report on Form 10-Q filed on August 16, 2021 with unaudited condensed financial statements as of June 30, 2021. The Company previously
determined the Class A common stock subject to possible redemption to be equal to the redemption value of $10.00 per share of Class A
common stock while also taking into consideration its charter’s requirement that a redemption cannot result in net tangible assets
being less than $5,000,001. Upon review of its financial statements for the period ended September 30, 2021, the Company reevaluated the
classification of the Class A common stock and determined that the Class A common stock issued during the IPO and pursuant to the exercise
of the underwriters’ overallotment can be redeemed or become redeemable subject to the occurrence of future events considered outside
the Company’s control under ASC 480-10-S99. Therefore, management concluded that the carrying value should include all Class A common
stock subject to possible redemption, resulting in the Class A common stock subject to possible redemption being classified as temporary
equity in its entirety. As a result, management has noted a reclassification adjustment related to temporary equity and permanent equity.
This resulted in an adjustment to the initial carrying value of the Class A common stock subject to possible redemption with the offset
recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A common stock.
In connection with the change in presentation
for the Class A common stock subject to redemption, the Company also restated its earnings per share calculation to allocate net income
(loss) on a proportional basis to Class A and Class B common stock. This presentation contemplates a Business Combination as the most
likely outcome, in which case, both classes of common stock share pro rata in the income (loss) of the Company.
There has been no change in the Company’s
total assets, liabilities or operating results.
The impact of the restatement on the Company’s
financial statements is reflected in the following table.
|
|
As Previously
Reported
|
|
|
Restatement Adjustments
|
|
|
As Restated
|
|
Balance Sheet at March 25, 2021
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption
|
|
$
|
168,418,850
|
|
|
$
|
31,581,150
|
|
|
$
|
200,000,000
|
|
Class A common stock
|
|
|
316
|
|
|
|
(316
|
)
|
|
|
-
|
|
Additional paid-in capital
|
|
|
7,977,695
|
|
|
|
(7,977,695
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
$
|
(2,978,581
|
)
|
|
$
|
(23,603,139
|
)
|
|
$
|
(26,581,720
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet at March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption
|
|
$
|
186,064,090
|
|
|
$
|
34,408,840
|
|
|
$
|
220,472,930
|
|
Class A common stock
|
|
|
344
|
|
|
|
(344
|
)
|
|
|
-
|
|
Additional paid-in capital
|
|
|
8,431,469
|
|
|
|
(8,431,469
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
$
|
(3,432,379
|
)
|
|
$
|
(25,977,027
|
)
|
|
$
|
(29,409,406
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the period from January 19, 2021 (inception) through March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding of Class A, common stock subject to redemption
|
|
|
1,629,860
|
|
|
|
338,645
|
|
|
|
1,968,505
|
|
Basic and diluted net income (loss) per share of Class A, common stock subject to redemption
|
|
$
|
0.00
|
|
|
$
|
(0.49
|
)
|
|
$
|
(0.49
|
)
|
Basic and diluted weighted average shares outstanding of Class B, non-redeemable common stock
|
|
|
5,850,468
|
|
|
|
(842,213
|
)
|
|
|
5,008,255
|
|
Basic and diluted net loss per share of Class B, non-redeemable common stock
|
|
$
|
(0.59
|
)
|
|
$
|
0.10
|
|
|
$
|
(0.49
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows for the period from January 19, 2021 (inception) through March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial value of Class A common stock subject to possible redemption
|
|
$
|
168,418,850
|
|
|
$
|
26,052,628
|
|
|
$
|
194,471,478
|
|
Change in value of Class A common stock subject to possible redemption
|
|
$
|
17,645,240
|
|
|
$
|
8,356,212
|
|
|
$
|
26,001,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet at June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption
|
|
$
|
189,791,090
|
|
|
$
|
30,681,840
|
|
|
$
|
220,472,930
|
|
Class A common stock
|
|
|
307
|
|
|
|
(307
|
)
|
|
|
-
|
|
Additional paid-in capital
|
|
|
4,704,530
|
|
|
|
(4,704,530
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
$
|
294,615
|
|
|
$
|
(25,977,003
|
)
|
|
$
|
(25,682,388
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the three months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding of Class A, common stock subject to redemption
|
|
|
18,606,409
|
|
|
|
3,440,884
|
|
|
|
22,047,293
|
|
Basic and diluted net income per share of Class A, common stock subject to redemption
|
|
$
|
0.00
|
|
|
$
|
0.14
|
|
|
$
|
0.14
|
|
Basic and diluted weighted average shares outstanding of Class B, non-redeemable common stock
|
|
|
8,952,707
|
|
|
|
(3,440,884
|
)
|
|
|
5,511,823
|
|
Basic and diluted net income per share of Class B, non-redeemable common stock
|
|
$
|
0.42
|
|
|
$
|
(0.28
|
)
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the period from January 19, 2021 (inception) through June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding of Class A, common stock subject to redemption
|
|
|
11,727,023
|
|
|
|
2,183,768
|
|
|
|
13,910,791
|
|
Basic and diluted net income per share of Class A, common stock subject to redemption
|
|
$
|
0.00
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
Basic and diluted weighted average shares outstanding of Class B, non-redeemable common stock
|
|
|
7,695,590
|
|
|
|
(2,387,827
|
)
|
|
|
5,307,763
|
|
Basic and diluted net income per share of Class B, non-redeemable common stock
|
|
$
|
0.04
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows for the period from January 19, 2021 (inception) through June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial value of Class A common stock subject to possible redemption
|
|
$
|
168,418,850
|
|
|
$
|
26,052,628
|
|
|
$
|
194,471,478
|
|
Change in value of Class A common stock subject to possible redemption
|
|
$
|
21,372,240
|
|
|
$
|
4,629,212
|
|
|
$
|
26,001,452
|
|
Note 3 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial
statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and pursuant to the SEC’s rules and regulations found in Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial
statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and
results for the period presented. Operating results for the three months ended September 30, 2021 and for the period from January 19,
2021 (inception) through September 30, 2021 are not necessarily indicative of the results that may be expected through December 31,
2021.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering as filed with the SEC on
March 24, 2021.
Emerging Growth Company Status
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
the Company’s 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 auditor 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 the unaudited condensed financial
statements in conformity with US GAAP requires 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 balance sheet. Actual results could differ from
those estimates.
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.
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 held cash of $1,142,358 and
did not have any cash equivalents as of September 30, 2021.
Cash and Securities Held in Trust Account
At September 30, 2021, the assets held in the
Trust Account consisted of $220,483,041 held in mutual funds invested in U.S. Treasury securities and $61 held in cash.
Fair Value Measurements
Fair value is defined as the price that would
be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement
date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
|
●
|
Level 1,
defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
|
●
|
Level 2,
defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices
for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
|
●
|
Level 3,
defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In some circumstances, the inputs used to measure
fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is
categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
See Note 8 for details.
The fair value of the Company’s certain
assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates
the carrying amounts represented in the balance sheet. The fair values of cash and cash equivalents, prepaid expenses, and accrued expenses
are estimated to approximate the carrying values as of September 30, 2021 due to the short maturities of such instruments.
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
Depository Insurance Coverage of $250,000. At September 30, 2021, the Company has not experienced losses on this account.
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.” Shares of Class A common stock subject to mandatory redemption are classified as a liability instrument
and are measured at redemption 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.
All of the 22,047,293 shares of Class A common
stock sold as part of the Units in the IPO contain a redemption feature which allows for the redemption of such public shares in connection
with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in
connection with certain amendments to the Company’s amended and restated certificate of incorporation. In accordance with the SEC
and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not
solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Therefore,
all Class A common stock has been classified outside of permanent equity.
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.
As of September 30, 2021, the Class A common stock
reflected on the balance sheet are reconciled in the following table:
Gross proceeds from IPO
|
|
$
|
220,472,930
|
|
Less:
|
|
|
|
|
Proceeds allocated to Public Warrants
|
|
|
(14,120,504
|
)
|
Class A common stock issuance costs
|
|
|
(11,880,948
|
)
|
Plus:
|
|
|
|
|
Accretion of carrying value to redemption value
|
|
|
26,001,452
|
|
Class A common stock subject to possible redemption
|
|
$
|
220,472,930
|
|
Net Income Per Share of Common Stock
The Company has two classes
of shares, which are referred to as Class A common stock and Class B common stock. Earnings and losses are shared pro rata between the
two classes of shares. The 18,633,106 potential common shares for outstanding warrants to purchase the Company’s stock
were excluded from diluted earnings per share for the three months ended September 30, 2021 and for the period from January 19, 2021 (inception)
through September 30, 2021 because the warrants are contingently exercisable, and the contingencies have not yet been met. As a result,
diluted net income per common share is the same as basic net income per common share for such periods. The table below presents a
reconciliation of the numerator and denominator used to compute basic and diluted net income per share for each class of common stock:
|
|
For the
Three Months Ended
September 30,
2021
|
|
|
For the
Period from
January 19,
2021
(Inception)
through
September 30,
2021
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
Basic and diluted net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income
|
|
$
|
4,609,041
|
|
|
$
|
1,152,260
|
|
|
$
|
4,597,005
|
|
|
$
|
1,458,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding
|
|
|
22,047,293
|
|
|
|
5,511,823
|
|
|
|
16,966,130
|
|
|
|
5,384,390
|
|
Basic and diluted net income per share
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.27
|
|
|
$
|
0.27
|
|
Offering Costs associated with the Initial
Public Offering
The Company complies with the requirements of
the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - “Expenses of Offering”. Offering costs
consist principally of professional and registration fees incurred through the balance sheet date that are related to the IPO. Accordingly,
as of September 30, 2021, offering costs of $12,693,922 (consisting of $4,409,459 of underwriting commissions, $7,716,553 of
deferred underwriters’ commission, and $567,910 other cash offering costs) have been incurred. Offering costs are allocated
to the separable financial instruments issued in the IPO based on a relative fair value basis compared to total proceeds received. Offering
costs associated with warrant liabilities is expensed, and offering costs associated with the Class A common stock are charged to the
stockholders’ equity. Accordingly, $812,974 of offering costs associated with warrant liabilities is expensed in the statement
of operations for the period from January 19, 2021 (inception) through September 30, 2021.
Derivative Financial Instruments
The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic
815, “Derivatives and Hedging”. Derivative instruments are recorded at fair value on the grant date and re-valued at each
reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified
on the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required
within 12 months of the balance sheet date. The Company has determined the warrants are a derivative instrument.
Income Taxes
The Company accounts for income taxes under ASC
740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected
impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit
to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when
it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty
in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process
for financial statement recognition and measurement of a tax position 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. ASC 740 also provides
guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
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 September 30, 2021. 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 has identified the United States as
its only “major” tax jurisdiction.
The Company is subject to income tax examinations
by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus
of income among various tax jurisdictions and compliance with federal and state 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.
Recent Accounting Pronouncements
In August 2020, the FASB issued 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which
simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes
certain settlement conditions that are required for equity-linked contracts to qualify for scope exception, and it simplifies the diluted
earnings per share calculation in certain areas. The Company adopted ASU 2020-06 on January 19, 2021. Adoption of the ASU
did not impact the Company’s financial position, results of operations or cash flows.
The Company's management does not believe that
any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying
financial statements.
Note 4 — Initial Public Offering
Pursuant to the IPO on March 25, 2021, the Company
sold 20,000,000 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. Each whole warrant entitles the holder to purchase one share of Class A common stock at a price
of $11.50 per share, subject to adjustment. Each warrant will become exercisable 30 days after the completion of the initial Business
Combination and will expire five years after the completion of the initial Business Combination, or earlier upon redemption or liquidation.
On March 30, 2021, the underwriter partially exercised
the over-allotment option to purchase 2,047,293 units.
Following the closing of the IPO on March 25,
2021 and the closing of the underwriter’s partial exercise of the over-allotment option on April 1, 2021, $220,472,930 ($10.00 per
Unit) from the net proceeds of the sale of the Units in the IPO and over-allotment and the sale of the Private Placement Warrants was
placed in a Trust Account, which may only be invested in United States “government securities” within the meaning of Section
2(a)(16) of 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 which invest only in direct U.S. government treasury obligations.
Public Warrants
Each whole warrant entitles the holder to purchase
one share of the Company’s Class A common stock at a price of $11.50 per share, subject to adjustment as discussed herein. 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 the initial Business Combination at an issue price or effective issue price of less than $9.20 per share
of the Class A common stock (with such issue price or effective issue price to be determined in good faith by the 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 the initial Business
Combination on the date of the consummation of the initial 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 prior to the day on which the Company
consummates the initial 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 described below under “Redemption of Warrants When the Price per Share of Class
A Common Stock Equals or Exceeds $18.00” and “Redemption of Warrants When the Price per Share of Class A Common Stock Equals
or Exceeds $10.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued
Price, and the $10.00 per share redemption trigger price described below under “Redemption of Warrants When the Price per Share
of Class A Common Stock Equals or Exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market
Value and the Newly Issued Price.
The warrants will become exercisable 30 days after
the completion of its initial Business Combination, and will expire five years after the completion of the Company’s initial Business
Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
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 shares of Class A common stock underlying the warrants is then effective
and a prospectus relating thereto is current, subject to the Company’s satisfying its obligations described below with respect to
registration, or a valid exemption from registration is available. No warrant will be exercisable and the Company will not be obligated
to issue a share of Class A common stock upon exercise of a warrant unless the 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. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant,
the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. 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.
Redemption of Warrants When the Price per Share of Class A Common
Stock Equals or Exceeds $18.00
Once the warrants become exercisable, the Company may redeem the outstanding
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 reported sales price (the “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 on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
|
Redemption of Warrants When the Price per Share of Class A Common
Stock Equals or Exceeds $10.00
Once the warrants become exercisable, the Company may redeem the outstanding
warrants:
|
●
|
in whole and not in part;
|
|
●
|
upon a minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
if, and only if, the closing price of the Class A common stock equals or exceeds $10.00 per share for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders.
|
If a registration statement covering the shares
of Class A common stock issuable upon exercise of the warrants is not effective by the 60th day after the closing of the initial 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, but the Company will use its commercially reasonable efforts to register or
qualify the shares under applicable blue sky laws to the extent an exemption is not available. In such event, each holder would pay the
exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the lesser of (A) the quotient
obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess
of the “fair market value” (defined below) less the exercise price of the warrants by (y) the fair market value and (B) 0.361. The
“fair market value” as used in this paragraph shall mean the volume weighted average price of the Class A common stock for
the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent.
Note 5 — Private Placement
Simultaneously with the closing of the IPO, the
Sponsor purchased an aggregate of 7,200,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant,
for an aggregate purchase price of $7,200,000, in a private placement (the “Private Placement”).
Pursuant to the underwriter’s partial exercise
of the over-allotment option on March 30, 2021, on April 1, 2021 the Sponsor purchased an additional 409,459 Private Placement
Warrants at a price of $1.00 per warrant.
Each Private Placement Warrant entitles the holder
to purchase one share of the Class A common stock at a price of $11.50 per share. The Private Placement Warrants will be non-redeemable
and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants
are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company
in all redemption scenarios and exercisable by the holders on the same basis as the warrants included in the Units being sold in the IPO.
The Private Placement Warrants (including the
Class A common stock issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or saleable until
30 days after the completion of the initial Business Combination.
Note 6 — Related Party Transactions
Founder Shares
On January 19, 2021, the Sponsor paid $25,000 to
cover certain offering costs of the Company in consideration for 5,750,000 shares of Class B common stock (the “founder
shares”). The founder shares include an aggregate of up to 750,000 shares subject to forfeiture if the over-allotment
option is not exercised by the underwriter in full. On February 7, 2021, the Sponsor transferred 20,000 founder shares to each
of the Company’s independent directors and chief financial officer (which shares will not be subject to forfeiture in the event
the underwriter’s over-allotment is not exercised).
On March 30, 2021, the underwriter partially exercised
the over-allotment option to purchase 2,047,293 Units. As a result, 238,177 founder shares were forfeited on April
1, 2021.
With certain limited exceptions, the founder shares
will not be transferable, assignable by the Sponsor until the earlier of: (A) one year after the completion of the initial Business Combination;
or (B) subsequent to the initial Business Combination, (x) if the closing price of the 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 (y) the date on which the Company completes
a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the stockholders having
the right to exchange their shares of common stock for cash, securities or other property.
The Sponsor has agreed (i) to waive its redemption
rights with respect to any founder shares and any public shares held by it in connection with the completion of the Company’s initial
Business Combination and (ii) to waive its rights to liquidating distributions from the Trust Account with respect to any founder shares
held by it if the Company fails to complete the initial Business Combination within the Combination Period, although the Sponsor will
be entitled to liquidating distributions from the Trust Account with respect to any public shares it hold if the Company fails to complete
the Business Combination within the Combination Period.
Promissory Note — Related Party
The Company’s Sponsor agreed to loan the
Company an aggregate of up to $300,000 to be used for a portion of the expenses of the IPO. The loan was non-interest bearing, unsecured
and due at the earlier of December 31, 2021 or the closing of the IPO. As of March 25, 2021, the Company had an outstanding balance of
$99,160 under the promissory note. The promissory note from the Sponsor was paid in full on March 26, 2021.
Related Party Loans
In order to finance transaction costs in connection
with an intended initial Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and
directors may, but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”). If the Company
completes an initial Business Combination, the Company would repay the Working Capital Loans. In the event that the initial Business Combination
does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans
but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of such Working Capital
Loans may be convertible into warrants at a price of $1.00 per warrant at the option of the lender. The warrants would be identical
to the Private Placement Warrants, including as to exercise price, exercisability and exercise period. At September 30, 2021, no such
Working Capital Loans were outstanding.
Administrative Support Agreement
Pursuant to an administrative support agreement
effective on March 22, 2021, the Company agreed to pay the Sponsor a total of $25,000 per month for office space, utilities and professional,
secretarial and administrative support. Upon completion of the initial Business Combination or the Company’s liquidation, the Company
will cease paying these monthly fees. The Company recorded administrative support fees of $75,000 and $156,452 for the three
months ended September 30, 2021 and for the period from March 22, 2021 through September 30, 2021.
Note 7 — Commitments and Contingencies
Registration and Shareholder Rights
The holders of the founder shares, Private Placement
Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable upon
the exercise of the Private Placement Warrants 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 pursuant to a registration rights and stockholder agreement signed on March
22, 2021, requiring the Company to register such securities for resale (in the case of the founder shares, only after conversion to the
Class A common stock). The holders of the majority of these securities are entitled to make up to three demands, excluding short form
demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights
with respect to registration statements filed subsequent to the completion of the initial Business Combination and rights to require the
Company to register for resale such securities pursuant to Rule 415 under the Securities Act.
Underwriters Agreement
The underwriter had a 45-day option from the date
of the IPO to purchase up to an additional 3,000,000 Units to cover over-allotments, if any.
On March 25, 2021, the Company paid a fixed underwriting
discount in aggregate of $4,000,000. Additionally, the underwriter will be entitled to a deferred underwriting discount of 3.5% of
the gross proceeds of the IPO held in the Trust Account, or $7,716,553, upon the completion of the Company’s initial Business Combination
subject to the terms of the underwriting agreement.
On March 30, 2021, the underwriter partially exercised
the over-allotment option to purchase 2,047,293 Units. In connection therewith, the Company paid additional underwriting fees
of $409,459.
Note 8 — 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 September 30, 2021, and indicates
the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
|
|
September 30,
|
|
|
Quoted
Prices In
Active
Markets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Other
Unobservable
Inputs
|
|
|
|
2021
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
|
$
|
220,483,102
|
|
|
$
|
220,483,102
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
220,483,102
|
|
|
$
|
220,483,102
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability – Public Warrants
|
|
$
|
7,716,553
|
|
|
$
|
7,716,553
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Warrant Liability – Private Placement Warrants
|
|
|
6,315,851
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,315,851
|
|
|
|
$
|
14,032,404
|
|
|
$
|
7,716,553
|
|
|
$
|
-
|
|
|
$
|
6,315,851
|
|
The fair value of the Public Warrants at September
30, 2021 is classified as Level 1 due to the use of an observable market quote in an active market. As of September 30, 2021, the aggregate
value of Public Warrants was $7,716,553.
The fair value of the Private Placement Warrants
is based on a valuation model utilizing management judgment and pricing inputs from observable and unobservable markets with less volume
and transaction frequency than active markets. Significant deviations from these estimates and inputs could result in a material change
in fair value. The valuation model utilizes inputs such as assumed share prices, volatility, discount factors and other assumptions and
may not be reflective of the price at which they can be settled at Level 3.
The following table provides quantitative information
regarding Level 3 fair value measurements as of September 30, 2021:
|
|
Private Placement Warrants
|
|
Expected term (years)
|
|
|
5.50
|
|
Expected volatility
|
|
|
14.00
|
%
|
Risk-free interest rate
|
|
|
1.07
|
%
|
Fair value of the common stock price
|
|
$
|
9.78
|
|
The following table sets forth a summary of the
changes in the fair value of the Level 3 warrant liability for the period from January 19, 2021 (inception) through September 30, 2021:
|
|
Warrant Liability
|
|
Fair value as of January 19, 2021 (inception)
|
|
$
|
—
|
|
Initial fair value of warrant liability on March 22, 2021
|
|
|
22,232,000
|
|
Initial fair value of warrant liability on March 31, 2021 (for over allotment)
|
|
|
1,860,990
|
|
Transfer out of Level 3 to Level 1
|
|
|
(7,716,553
|
)
|
Change in valuation inputs or other assumptions
|
|
|
(10,060,586
|
)
|
Fair value as of September 30, 2021
|
|
$
|
6,315,851
|
|
Note 9 — Stockholders’ Equity
Preferred Stock — The
Company is authorized to issue a total of 1,000,000 preferred shares at par value of $0.0001 each. At September 30, 2021,
there were no shares of preferred stock issued or outstanding.
Class A Common Stock —
The Company is authorized to issue a total of 400,000,000 shares of Class A common stock at par value of $0.0001 each.
As of September 30, 2021, there were 0 shares of Class A common stock issued and outstanding, excluding 22,047,293 shares
of Class A common stock subject to possible redemption.
Class B Common Stock —
The Company is authorized to issue a total of 40,000,000 shares of Class B common stock at par value of $0.0001 each. On
January 19, 2021, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 5,750,000 shares
of Class B common stock. The founder shares included an aggregate of up to 750,000 shares subject to forfeiture if the over-allotment
option was not exercised by the underwriter in full. On March 30, 2021, the underwriter partially exercised the over-allotment option
to purchase 2,047,293 Units. As a result, 238,177 founder shares were forfeited on April 1, 2021. As of September
30, 2021, there were 5,511,823 shares of Class B common stock issued and outstanding.
With certain limited exceptions, the founder shares
will not be transferable, assignable by the Sponsor until the earlier of: (A) one year after the completion of the initial Business Combination;
or (B) subsequent to the initial Business Combination, (x) if the closing price of the 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 (y) the date on which the Company completes
a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the stockholders having
the right to exchange their shares of common stock for cash, securities or other property.
The shares of Class B common stock will automatically
convert into shares of the Company’s Class A common stock at the time of the Company’s initial Business Combination on a one-for-one
basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further
adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or
deemed issued in excess of the amounts offered in the registration statement and related to the closing of the initial Business Combination,
the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders
of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed
issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal,
in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the
completion of the IPO plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with
the initial Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the Business
Combination).
Holders of founder shares may also elect to convert
their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided above,
at any time.
Holders of the Class A common stock and holders
of the Class B common stock will vote together as a single class on all matters submitted to a vote of the stockholders, except as required
by law.
Note 10 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the unaudited condensed financial statements were available to be issued.
The Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial
statements.
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References
to the “Company,” “Glass Houses Acquisition Corp.” “our,” “us” or “we” refer
to Glass Houses Acquisition Corp. The following discussion and analysis of the Company’s financial condition and results of operations
should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this report.
Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and
uncertainties.
Cautionary
Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections
about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that
may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels
of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as “may,” “should,” “could,” “would,” “expect,”
“plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of
such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to,
those described in our other SEC filings.
Overview
We
are a blank check company incorporated as a Delaware corporation and 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, which we refer to herein
as our initial business combination. We have not selected any specific business combination target. We intend to effectuate our initial
business combination using cash from the proceeds of this offering and the private placement of the private placement warrants, our capital
stock, debt or a combination of cash, stock and debt.
We
expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete
our initial business combination will be successful.
Results
of Operations
Our
entire activity since inception up to September 30, 2021 relates to our formation, the Initial Public Offering and, since the closing
of the Initial Public Offering, a search for a Business Combination candidate. We will not be generating any operating revenues until
the closing and completion of our initial Business Combination, at the earliest.
For the three months ended September 30, 2021,
we had net income of $5,761,301, which was comprised of the change in the fair value of our warrants of $6,046,499 and interest earned
on marketable securities held in trust account of $2,837, partially offset by operating costs of $288,035.
For the period from January 19, 2021 through September
30, 2021, we had net income of $6,055,916, which was comprised of the change in the fair value of our warrants of $10,060,586 and interest
earned on marketable securities held in trust account of $10,172, partially offset by operating costs of $838,841, warrant issuance costs
of $812,974, and other expense relating to the fair value exceeding the amount paid for the warrants of $2,363,027.
Liquidity
and Capital Resources
As
of September 30, 2021, we had approximately $1.1 million in our operating bank account, and working capital of approximately
$1.6 million.
Prior
to the completion of the IPO, our liquidity needs had been satisfied through a payment from the Sponsor of $25,000 for the founder shares
to cover certain offering costs and the loan under an unsecured promissory note from the Sponsor of $99,160. On March 25, 2021, we consummated
the IPO of 20,000,000 Units at a price of $10.00 per Unit. On March 30, 2021, the underwriter partially exercised the over-allotment
option, purchasing an additional 2,047,293 Units, at $10.00 per Unit, on April 1, 2021. In aggregate, gross proceeds of $220,472,930
were generated. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 7,200,000 Private Placement
Warrants at a price of $1.00 per Private Placement Warrant in a private placement to our Sponsor. On April 1, 2021, simultaneously with
the closing of the over-allotment option, we sold an additional 409,459 Private Placement Warrants to our Sponsor at a price of $1.00
per share. In aggregate, gross proceeds of $7,609,459 were generated.
Following
the Initial Public Offering, the closing of the over-allotment option and the sale of the Private Placement Warrants, a total of $220,472,930
was placed in the Trust Account. We incurred $12,693,922 in transaction costs, including $4,409,459 of underwriting fees, $7,716,553
of deferred underwriting fees and $567,910 of other offering costs. The promissory note from the Sponsor was paid in full on March 26,
2021. Subsequent to the consummation of the Initial Public Offering and Private Placement, our liquidity needs have been satisfied through
the proceeds from the consummation of the Private Placement not held in the Trust Account.
In
addition, in order to finance transaction costs in connection with an intended initial Business Combination, our Sponsor or an affiliate
of the Sponsor or certain of our officers and directors may, but are not obligated to, provide us Working Capital Loans. To date, there
were no amounts outstanding under any Working Capital Loans.
Based
on the foregoing, management believes that we will have sufficient working capital and borrowing capacity to meet our needs through the
earlier of the consummation of a Business Combination or one year from this filing. Over this time period, we will be using these funds
for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due
diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and
structuring, negotiating and consummating the Business Combination.
Critical
Accounting Policies and Estimates
The
preparation of the unaudited condensed financial statements in conformity with US GAAP requires 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 unaudited
condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those
estimates. We have identified the following as our critical accounting policies:
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.” Shares of Class A common stock subject to mandatory redemption are classified as a liability instrument
and are measured at redemption 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.
All of the 22,047,293 shares of Class A common
stock sold as part of the Units in the IPO contain a redemption feature which allows for the redemption of such public shares in connection
with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in
connection with certain amendments to the Company’s amended and restated certificate of incorporation. In accordance with the SEC
and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not
solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Therefore,
all Class A common stock has been classified outside of permanent equity.
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.
Net
Income Per Share of Common Stock
The Company has two classes of shares, which are
referred to as Class A common stock and Class B common stock. Earnings and losses are shared pro rata between the two classes of shares.
The 18,633,106 potential common shares for outstanding warrants to purchase the Company’s stock were excluded from diluted
earnings per share for the three months ended September 30, 2021 and for the period from January 19, 2021 (inception) through September
30, 2021 because the warrants are contingently exercisable, and the contingencies have not yet been met. As a result, diluted net income
per common share is the same as basic net income per common share for such periods.
Derivative
Financial Instruments
The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded
derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. Derivative instruments are recorded at fair value
on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative
assets and liabilities are classified on the balance sheet as current or non-current based on whether or not net-cash settlement or conversion
of the instrument could be required within 12 months of the balance sheet date. The Company has determined the warrants are a derivative
instrument.
FASB
ASC 470-20, Debt with Conversion and Other Options addresses the allocation of proceeds from the issuance of convertible debt into its
equity and debt components. The Company applies this guidance to allocate IPO proceeds from the Units between Class A common stock and
warrants, using the residual method by allocating IPO proceeds first to fair value of the warrants and then the Class A common stock.
Off-Balance Sheet Arrangements
As
of September 30, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Contractual
Obligations
We
do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement
to pay an affiliate of the Sponsor a monthly fee of $25,000 for office space and administrative support to the Company. We began incurring
these fees on March 22, 2021 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination
and the Company’s liquidation.
The
underwriter is entitled to a deferred fee of $0.35 per Unit, or $7,716,553 in the aggregate. Subject to the terms of the underwriting
agreement, (i) the deferred fee will be placed in the Trust Account and released to the underwriters only upon the completion of a Business
Combination and (ii) the deferred fee will be waived by the underwriters in the event that we do not complete a Business Combination.
JOBS
Act
On
April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements
for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply
with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing
to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards
on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements
may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally,
we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject
to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions
we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over
financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted
by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about
the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items
such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation
to median employee compensation. These exemptions will apply for a period of five years following the completion of this offering or
until we are no longer an “emerging growth company,” whichever is earlier.