Item 1. Financial Statements (Unaudited)
LOGISTICS INNOVATION
TECHNOLOGIES CORP.
CONDENSED BALANCE SHEET
SEPTEMBER 30, 2021 (UNAUDITED)
|
|
September 30,
2021
|
|
Assets:
|
|
|
|
Current assets:
|
|
|
|
Cash
|
|
$
|
1,145,094
|
|
Prepaid expenses
|
|
|
465,229
|
|
Total current assets
|
|
|
1,610,323
|
|
Prepaid expenses, non-current
|
|
|
297,575
|
|
Investments held in Trust
|
|
|
340,901,212
|
|
Total Assets
|
|
$
|
342,809,110
|
|
|
|
|
|
|
Liabilities, Redeemable Class A Common Stock and Stockholders’ Deficit
|
|
|
|
|
Accrued offering costs and expenses
|
|
$
|
-
|
|
Due to related party
|
|
|
30,000
|
|
Due to sponsor
|
|
|
184,185
|
|
Total current liabilities
|
|
|
214,185
|
|
Warrant liability
|
|
|
15,926,567
|
|
Deferred underwriter fee payable
|
|
|
11,931,364
|
|
Total liabilities
|
|
|
28,072,116
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
Redeemable Class A common stock
|
|
|
|
|
Class A common stock $0.0001 par value; 308,000,000 shares authorized; 34,089,611 shares issued and outstanding subject to possible redemption, at redemption value
|
|
|
340,901,212
|
|
|
|
|
|
|
Stockholders’ Deficit:
|
|
|
|
|
Preferred Stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
-
|
|
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 8,522,403 shares issued and outstanding
|
|
|
853
|
|
Additional paid-in capital
|
|
|
-
|
|
Accumulated deficit
|
|
|
(26,165,071
|
)
|
Total Stockholders’ Deficit
|
|
|
(26,164,218
|
)
|
|
|
|
|
|
Total Liabilities, Redeemable Class A Common Stock and Stockholders’ Deficit
|
|
$
|
342,809,110
|
|
The accompanying notes
are an integral part of these unaudited condensed financial statements.
LOGISTICS INNOVATION
TECHNOLOGIES CORP.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND THE PERIOD FROM FEBRUARY 18, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021 (UNAUDITED)
|
|
|
|
|
For
the period
|
|
|
|
For
the three
|
|
|
from
February 18,
|
|
|
|
months
ended
|
|
|
2021
(inception) to
|
|
|
|
September
30,
2021
|
|
|
September
30,
2021
|
|
Formation
costs and other operating expenses
|
|
$
|
199,820
|
|
|
$
|
319,874
|
|
Loss from operations
|
|
|
(199,820
|
)
|
|
|
(319,874
|
)
|
Other income (loss)
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on
fair value changes of warrants
|
|
|
1,676,938
|
|
|
|
(692,460
|
)
|
Warrant transaction costs
|
|
|
-
|
|
|
|
(561,610
|
)
|
Bank interest income
|
|
|
29
|
|
|
|
29
|
|
Trust
interest income
|
|
|
4,387
|
|
|
|
5,102
|
|
Total
other income (loss)
|
|
|
1,681,354
|
|
|
|
(1,248,939
|
)
|
Net income
(loss)
|
|
$
|
1,481,534
|
|
|
$
|
(1,568,813
|
)
|
|
|
|
|
|
|
|
|
|
Class A Common stock
|
|
|
|
|
|
|
|
|
Basic and diluted weighted
average shares outstanding
|
|
|
34,089,611
|
|
|
|
16,363,013
|
|
Basic
and diluted net income per common stock
|
|
$
|
0.03
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
|
Class B common stock
|
|
|
|
|
|
|
|
|
Basic and diluted weighted
average shares outstanding
|
|
|
8,522,403
|
|
|
|
7,990,753
|
|
Basic
and diluted net loss per common stock
|
|
$
|
0.03
|
|
|
$
|
(1.07
|
)
|
The
accompanying notes are an integral part of these unaudited condensed financial statements
LOGISTICS
INNOVATION TECHNOLOGIES CORP.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER
30, 2021 AND THE PERIOD FROM FEBRUARY 18, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021 (UNAUDITED)
|
|
Common
Stock
|
|
|
Additional
Paid-In
|
|
|
|
|
|
Stockholders’
|
|
|
|
Class
A
|
|
|
Class
B
|
|
|
Capital
|
|
|
Accumulated
|
|
|
Equity
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
(Deficit)
|
|
|
Deficit
|
|
|
(Deficit)
|
|
Balance
as of February 18, 2021 (inception)
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Issuance
of Class B common shares to Sponsors
|
|
|
-
|
|
|
|
-
|
|
|
|
8,625,000
|
|
|
|
863
|
|
|
|
24,137
|
|
|
|
-
|
|
|
|
25,000
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(509
|
)
|
|
|
(509
|
)
|
Balance
as of March 31, 2021
|
|
|
-
|
|
|
$
|
-
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
24,137
|
|
|
$
|
(509
|
)
|
|
$
|
24,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of March 31, 2021
|
|
|
-
|
|
|
$
|
-
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
24,137
|
|
|
$
|
(509
|
)
|
|
$
|
24,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed
contribution from issuance of Private Placement Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,686,075
|
|
|
|
-
|
|
|
|
3,686,075
|
|
Accretion
of common stock subject to possible redemption
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,710,212
|
)
|
|
|
(24,591,166
|
)
|
|
|
(28,301,378
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,049,838
|
)
|
|
|
(3,049,838
|
)
|
Balance
as of June 30, 2021
|
|
|
-
|
|
|
$
|
-
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
-
|
|
|
$
|
(27,641,513
|
)
|
|
$
|
(27,640,650
|
)
|
Class
A ordinary shares subject to possible redemption
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10)
|
|
|
|
(5,092
|
)
|
|
|
(5,102
|
)
|
Class
B forfeited shares due to partial over-allotment exercise
|
|
|
-
|
|
|
|
-
|
|
|
|
(102,597)
|
|
|
|
(10)
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,481,534
|
|
|
|
1,481,534
|
|
Balance
as of September 30, 2021
|
|
|
-
|
|
|
$
|
-
|
|
|
|
8,522,403
|
|
|
$
|
853
|
|
|
$
|
-
|
|
|
$
|
(26,165,071
|
)
|
|
$
|
(26,164,218
|
)
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
LOGISTICS
INNOVATION TECHNOLOGIES CORP.
CONDENSED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM FEBRUARY 18, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021
(UNAUDITED)
Cash flows from Operating Activities:
|
|
|
|
Net loss
|
|
$
|
(1,568,813
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
Interest earned on marketable securities held in Trust
Account
|
|
|
(5,102
|
)
|
Change in fair value of warrants
|
|
|
692,460
|
|
Warrant issuance costs
|
|
|
561,610
|
|
Changes in current assets and current liabilities:
|
|
|
|
|
Prepaid expenses
|
|
|
(762,804
|
)
|
Net cash used in operating
activities
|
|
|
(1,082,649
|
)
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
Investment held in Trust Account
|
|
|
(340,896,110
|
)
|
Net cash used in investing
activities
|
|
|
(340,896,110
|
)
|
|
|
|
|
|
Cash flows from Financing Activities:
|
|
|
|
|
Proceeds from sale of common stock to initial stockholders
|
|
|
25,000
|
|
Proceeds from Initial Public Offering, net of underwriters fees
|
|
|
334,578,188
|
|
Proceeds from private placement warrants
|
|
|
8,917,922
|
|
Proceeds from sponsor
|
|
|
184,185
|
|
Proceeds from related party
|
|
|
285,538
|
|
Repayments to related party
|
|
|
(255,538
|
)
|
Payment of deferred offering costs
|
|
|
(611,442
|
)
|
Net cash provided by financing
activities
|
|
|
343,123,853
|
|
|
|
|
|
|
Net change in cash
|
|
|
1,145,094
|
|
Cash, beginning of the period
|
|
|
-
|
|
Cash, end of the period
|
|
$
|
1,145,094
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
Deferred underwriter fee payable
|
|
$
|
11,931,364
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
LOGISTICS
INNOVATION TECHNOLOGIES CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note
1 — Organization and Business Operations
Logistics
Innovation Technologies Corp. (the “Company”) is a blank check company incorporated in Delaware on February 18, 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 (the “Business Combination”). 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 September 30, 2021, the Company had not commenced any operations. All activity for the period from February 18, 2021 (inception) through
September 30, 2021 relates to the Company’s formation and the initial public offering (the “IPO”), described below.
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 unrealized gains and losses from the change in the fair value of its warrant liabilities. The Company has selected December 31
as its fiscal year end. The Company’s sponsors are 1P Management LLC (the “Sponsor”) and AG LIT Holdings, LLC (“AG
LIT”, and together with 1P Management LLC, the “Sponsors”), Delaware limited liability companies.
The
registration statement for the Company’s IPO was declared effective on June 10, 2021 (the “Effective Date”). On June
15, 2021, Company consummated its IPO of 34,089,611 units (the “Units”), including the issuance of 4,089,611 Units
as a result of the underwriter’s exercise in part of their option to purchase additional Units (the “Over-Allotment Option”). Each
Unit consists of one share of Class A common stock, par value $0.0001 per share, and one-third of one redeemable warrant of the Company
(“Public Warrant”). Each whole Public Warrant is exercisable into one share of Class A common stock at an exercise price
of $11.50 per share. The Units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $340,896,110,
which is discussed in Note 3.
The
underwriters have a 45-day option to purchase up to 4,500,000 over-allotment Units. After partially exercising their option
at the time of the IPO to purchase 4,089,611 Units, the underwriters had up to 410,389 additional Units available
under their option. This 45-day option expired on July 26, 2021.
Simultaneously
with the consummation of the IPO and the sale of the Units, the Company consummated the private placement (“Private Placement”)
of an aggregate 5,945,281 warrants (“Private Placement Warrants”), which were purchased by the Sponsors at a price
of $1.50 per Placement Warrant, generating total proceeds of $8,917,922.
Transaction
costs of the IPO amounted to $18,860,728 consisting of $6,817,922 of underwriting discount, $11,931,364 of deferred underwriting
discount, $611,442 of other offering costs and a reimbursement of $500,000 of underwriting costs from the underwriter.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and sale of the
Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a
Business Combination.
The
stock exchange listing 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 value of the assets held in the Trust Account (as defined below) (excluding the
deferred underwriting commissions and taxes payable) at the time of the Company signing a definitive agreement in connection with the
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 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.
Upon
the closing of the IPO, management has deposited $10.00 per Unit sold in the IPO, including the proceeds of the sale of the Private
Placement Warrants, into a trust account (“Trust Account”) and has agreed to invested only in U.S. government securities
with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment
Company Act which invest only in direct U.S. government treasury obligations. The Trust Account is intended as a holding place for funds
pending the earliest to occur of: (i) the completion of the initial Business Combination; (ii) the redemption of any public
shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation
(A) to modify the substance or timing of the Company’s obligation to redeem 100% of the public shares if the Company
does not complete the initial Business Combination within 24 months from the closing of the IPO or (B) with respect to any other
provision relating to stockholders’ rights or pre-initial Business Combination activity; or (iii) absent an initial Business
Combination within 24 months from the closing of the IPO, the return of the funds held in the Trust Account to the public stockholders
as part of redemption of the public shares.
The
Company will provide its public stockholders with the opportunity to redeem all or a portion of their 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
initial Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval
of a proposed initial Business Combination or conduct a tender offer will be made by the Company, solely in the Company’s discretion.
The public stockholders will be entitled to redeem their shares at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination including
interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income taxes,
divided by the number of then outstanding public shares. The amount in the Trust Account is initially anticipated to be approximately
$10.00 per public share.
The
shares of common stock subject to redemption was recorded in temporary equity upon the completion of the IPO and immediately accreted
to redemption value, in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
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.
The
Company’s amended and restated certificate of incorporation provides that the Company will have only 24 months from the closing
of the IPO (the “Combination Period”) to complete the initial Business Combination. If the Company is unable to complete
its initial business combination within such 24-month period from the closing of the IPO or during any extended period of time that the
Company may have to consummate an initial business combination as a result of an amendment to the Company’s amended and restated
certificate of incorporation (an “Extension Period”), the Company will: (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned
on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay
dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and the Company’s board of directors,
liquidate and dissolve, 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. There will be no redemption rights or liquidating distributions with respect to the warrants,
which will expire worthless if the Company fails to complete its initial business combination within the 24-month time period or during
any Extension Period.
The
Sponsors have agreed that they 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 entered into a written letter of intent, confidentiality
or other similar agreement or business combination 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 date of the liquidation
of the trust account, if less than $10.00 per public 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 the 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”). However, the Company has not asked the Sponsors to reserve for such indemnification
obligations, nor has the Company independently verified whether the Sponsors have sufficient funds to satisfy its indemnity obligations
and the Company believes that the Sponsors’ only assets are securities of the Company. Therefore, there is no assurance that the
Sponsors would be able to satisfy those obligations.
Liquidity
and Capital Resources
At
September 30, 2021, the Company had cash outside the Trust Account of $1,145,094 and a working capital of $1,396,138. All remaining
cash held in the Trust Account is generally unavailable for the Company’s use prior to an initial business combination, and is
restricted for use either in a Business Combination or to redeem common stock.
Additionally, the
Sponsors or an affiliate of the Sponsors 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 such loaned amounts out of the proceeds of the Trust Account released to the Company. Otherwise, such loans would
be repaid only out of funds held outside the Trust Account. 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 such loaned amounts but no proceeds from the Trust Account
would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.50 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. As of September 30, 2021, $30,000 in Working Capital Loans were outstanding.
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 the date the financial statements are issued. 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
is currently evaluating 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 condensed financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
Note
2 — Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form
10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information or footnote
disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the
rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes
necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the
accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary
for a fair statement of the financial position, operating results and cash flows for the periods presented.
The
interim results for the period from February 18, 2021 (inception) to September 30, 2021 are not necessarily indicative of the results
to be expected for the year ending December 31, 2021 or for any future interim periods.
Emerging
Growth Company Status
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 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 condensed 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 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. Actual results could differ 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 September 30, 2021.
Fair
Value of Financial Instruments
FASB
ASC Topic 820, “Fair Value Measurement”, defines fair value as the amount that would be received to sell an asset or paid
to transfer a liability, in an orderly transaction between market participants. Fair value measurements are classified on a three-tier
hierarchy as follows:
|
●
|
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
many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy described
above. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under the ASC Topic 820 approximates
the carrying amounts represented in the balance sheet, primarily due to its short-term nature.
Derivative
Financial Instruments
The
Company accounts for derivative financial instruments in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative
financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value upon issuance
and remeasured at each reporting date, with changes in the fair value reported in the statements of operations. The classification of
derivative financial instruments is evaluated at the end of each reporting period.
Warrants
The
Company accounts for the redeemable warrants to public investors (the “Public Warrants”) and Private Placement Warrants as
liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance of
ASC Topic 480 and ASC Topic 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC
480, meet the definition of a liability pursuant to ASC Topic 480, and whether the warrants meet all of the requirements for equity classification
under ASC Topic 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders
could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions
for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance
and as of each subsequent quarterly period end date while the warrants are outstanding. Because the Company does not control the occurrence
of events, such as a tender offer or exchange, that may trigger cash settlement of the warrants where not all of the shareholders also
receive cash, the warrants do not meet the criteria for equity treatment thereunder, as such, the warrants must be recorded as derivative
liability.
For
issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component
of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification,
the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.
Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
Class
A Common Stock Subject to Possible Redemption
The
Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480. Common
stock subject to mandatory redemption (if any) are classified as a liability instrument and measured at fair value. Conditionally redeemable
common stock (including common stock that feature redemption rights that are either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity and subsequently
measured at redemption value. At all other times, shares of common stock are classified as stockholders’ equity (deficit).
The
Company’s shares of Class A common stock feature certain redemption rights that are considered to be outside of the Company’s
control and subject to the occurrence of uncertain future events. Accordingly, 34,089,611 Class A common stock subject to possible
redemption are presented at redemption value as temporary equity, outside of the stockholders’ equity (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. Such changes are reflected in additional
paid-in capital, or in the absence of additional paid-in capital, in accumulated deficit. For the period from February 18, 2021 (inception)
through September 30, 2021, the Company recorded an accretion of $28,306,480, $3,710,222 of which was recorded in additional paid
in capital and $24,596,258 was recorded in accumulated deficit.
Offering
Costs Associated with IPO
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. Offering costs are charged against the carrying value of Class A Common Stock or the statement of operations
based on the relative value of the Class A Common Stock and the Public Warrants to the proceeds received from the Units sold upon the
completion of the IPO. Accordingly, on September 30, 2021, offering costs totaling $18,860,728 were recognized, $561,610 of
which was allocated to the Public Warrants and immediately expensed, and $18,299,118 were allocated to Class A Common Stock reducing
the initial carrying amount of such shares.
Net
Income (Loss) Per Common Stock
The
Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share”. The condensed statements
of operations include a presentation of income (loss) per Class A redeemable public stock and income (loss) per non-redeemable stock
following the two-class method of income per share. In order to determine the net income (loss) attributable to both the Class A redeemable
stock and non-redeemable stock, the Company first considered the total income (loss) allocable to both sets of stock. This is calculated
using the total net income (loss) less any dividends paid. For purposes of calculating net income (loss) per share, any remeasurement
of the Class A common stock subject to possible redemption was considered to be dividends paid to the public stockholders. Subsequent
to calculating the total income (loss) allocable to both sets of stock, the Company split the amount to be allocated using a ratio of
80% for the Class A public stock and 20% for the non-redeemable stock for the three months ended September 30, 2021 and 65% for the Class
A public stock and 35% for the non-redeemable stock for the period from February 18, 2021 (inception) to September 30, 2021, reflective
of the respective participation rights.
The
earnings per share presented in the condensed statements of operations is based on the following:
|
|
|
|
|
For the period from
|
|
|
|
For the three months
ended
|
|
|
February 18,
2021 (inception) to
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2021
|
|
|
2021
|
|
Net income (loss)
|
|
$
|
1,481,534
|
|
|
$
|
(1,568,813
|
)
|
Accretion of temporary equity to redemption value
|
|
|
(5,092
|
)
|
|
|
(24,596,258
|
)
|
Net income (loss) including accretion of temporary equity to redemption
value
|
|
$
|
1,476,442
|
|
|
$
|
(26,165,071
|
)
|
|
|
For the three months
ended
|
|
|
For the period from
February 18,
2021
(inception) to
|
|
|
|
September
30,
2021
|
|
|
September
30, 2021
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
Basic and diluted net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income (loss) including accretion of temporary
equity
|
|
$
|
1,181,154
|
|
|
$
|
295,286
|
|
|
$
|
(17,580,008
|
)
|
|
$
|
(8,585,063
|
)
|
Accretion of temporary equity to redemption value
|
|
|
5,092
|
|
|
|
-
|
|
|
|
24,596,258
|
|
|
|
-
|
|
Net income (loss)
|
|
$
|
1,186,246
|
|
|
$
|
295,286
|
|
|
$
|
7,016,250
|
|
|
$
|
(8,585,063
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding
|
|
|
34,089,611
|
|
|
|
8,522,403
|
|
|
|
16,363,013
|
|
|
|
7,990,753
|
|
Basic and diluted net income (loss) per share
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
0.43
|
|
|
$
|
(1.07
|
)
|
In
connection with the underwriters’ partial exercise of the over-allotment option on June 15, 2021, 1,022,403 Founder Shares
were no longer subject to forfeiture. These shares were excluded from the calculation of weighted average shares outstanding until they
were no longer subject to forfeiture.
At
September 30, 2021, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted
into common stock and then share in earnings. As a result, diluted income (loss) per share is the same as basic income (loss) per share
for the periods presented.
Income
Taxes
The
Company accounts for income taxes under ASC Topic 740, “Income Taxes”. ASC Topic 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 Topic 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 Topic 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 Topic 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.
The
provision for income taxes was deemed to be immaterial for the period from February 18, 2021 (inception) through September 30, 2021.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect
on the Company’s condensed financial statements.
Note
3 — Initial Public Offering
On
June 15, 2021, the Company consummated its IPO of 34,089,611 Units, including the issuance of 4,089,611 Units as
a result of the underwriter’s exercise in part of their Over-Allotment Option. Each Unit consists of one share of Class A
common stock, par value $0.0001 per share, and one-third of one redeemable Public Warrant, each whole Public Warrant exercisable into
one share of Class A common stock at an exercise price of $11.50 per share. The Units were sold at a price of $10.00 per unit,
generating gross proceeds to the Company of $340,896,110.
The
underwriters had a 45-day option to purchase up to 4,500,000 over-allotment Units. After partially exercising their Over-Allotment
Option at the time of the IPO to purchase 4,089,611 Units, the underwriters had up to 410,389 additional Units available
under their Over-Allotment Option. This 45-day option expired on July 26, 2021.
Note
4 — Private Placement
Simultaneously
with the closing of the IPO and the sale of the Units, the Company consummated the Private Placement of an aggregate 5,945,281 Private
Placement Warrants, which were purchased by 1P Management LLC and AG LIT Holdings, LLC (and/or its designees), at a price of $1.50 per
Private Placement Warrant, generating total proceeds of $8,917,922. Each Private Placement Warrant is exercisable for one share of Class
A common stock at a price of $11.50 per share. The Company recorded the excess of the proceeds over the fair value of the Private
Placement Warrants of $3,686,074 in additional paid-in capital as deemed capital contribution.
Each
Private Placement Warrant is exercisable for one share of Class A common stock at a price of $11.50 per share. The Private Placement
Warrants (including the Class A common stock issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable
or salable until 30 days after the completion of the initial Business Combination and they will not be redeemable by the Company so long
as they are held by the Sponsors or its permitted transferees. The Sponsors, or its permitted transferees, have the option to exercise
the Private Placement Warrants on a cashless basis.
The
Sponsors, officers and directors of the Company have entered into a letter agreement with the Company, pursuant to which they have agreed
(A) to waive their redemption rights with respect to any Company’s Class B common stock, par value $0.0001 per share (the
“Founder Shares”) and public shares they hold in connection with the completion of the Company’s initial business combination,
(B) to waive their redemption rights with respect to any Founder Shares and public shares they hold in connection with a stockholder
vote to approve an amendment to the Company’s amended and restated certificate of incorporation 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 the Company’s public shares if the Company has not consummated an initial business combination within the Combination Period
or with respect to any other provisions relating to stockholders’ rights or pre-initial business combination activity and (C) to
waive their rights to liquidating distributions from the trust account with respect to any Founder Shares they hold if the Company fails
to complete an initial business combination within the Combination Period or during any Extension 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 an initial
business combination within such time period, and (iii) the Founder Shares are automatically convertible into Class A common stock concurrently
with or immediately following the consummation of an initial business combination on a one-for-one basis, subject to adjustment as described
in the Company’s amended and restated certificate of incorporation. If the Company submits an initial business combination to the
Company’s public stockholders for a vote, the Company’s initial stockholders have agreed to vote their Founder Shares and
any public shares purchased during or after the IPO in favor of the initial business combination.
Note
5 — Related Party Transactions
Founder
Shares
On
February 18, 2021, the Sponsors paid $25,000 to the Company in consideration for 11,500,000 shares of Class B
common stock. The number of Founder Shares issued was determined based on the expectation that the Founder Shares would represent 20%
of the outstanding shares of common stock upon completion of the IPO.
On
March 31, 2021, the Sponsors surrendered 1,437,500 Founder Shares to the Company for cancellation for no consideration.
On
June 10, 2021, 1,437,500 Founder Shares were surrendered to the Company for cancellation for no consideration, resulting in 8,625,000 shares
of Class B common stock outstanding. Of the 8,625,000 shares of Class B common stock outstanding, an aggregate of 1,125,000 shares
were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so
that the Sponsors will own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the IPO.
On
June 15, 2021, Company consummated its IPO and the underwriters partially exercised their Over-Allotment Option. As a result 102,597 Founder
Shares were subject to forfeiture as of June 15, 2021. On July 26, 2021, such remaining Founder Shares were forfeited.
The
Founder Shares will automatically convert into shares of Class A common stock upon consummation of a Business Combination on a one-for-one
basis, subject to certain adjustments, as described in Note 8.
The
Sponsors have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of (A) one year after
the completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the last reported
sale 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.
Promissory
Note — Related Party
On
February 18, 2021, the Sponsors 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 is non-interest bearing, unsecured and due at the earlier of (i) December 31, 2021, (ii) the date
on which Maker consummates the IPO, or (iii) the date on which Maker determines to not proceed with such IPO. The loan would be
repaid upon the closing of the IPO out of offering proceeds not held in the Trust Account. As of September 30, 2021, the Company had
not borrowed any amount under the promissory note.
Related
Party Loans
In
order to finance transaction costs in connection with an intended initial Business Combination, the Sponsors or an affiliate of the Sponsors
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 such loaned amounts
out of the proceeds of the Trust Account released to the Company. Otherwise, such loans would be repaid only out of funds held outside
the Trust Account. 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 such loaned amounts but no proceeds from the Trust Account would be used to repay such loaned
amounts. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.50 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. As of September 30, 2021, $30,000 in Working Capital Loans were outstanding.
Administrative
Services Agreement
The
Company has entered into an agreement that would provide that, subsequent to the closing of the IPO and continuing until the earlier
of the Company’s consummation of a Business Combination or the Company’s liquidation, the Company will pay the Sponsor a
total of $10,000 per month for office space, secretarial and administrative services.
Note
6 — Fair Value Measurements
Investments
Held in Trust Account
As
of September 30, 2021, the investments in the Company’s Trust Account consisted of $340,901,212 in U.S. Money Market funds.
The Company considers all investments with original maturities of more than three months but less than one year to be short-term investments.
Fair
values of the Company’s investments are classified as Level 1 utilizing quoted prices (unadjusted) in active markets for identical
assets.
Recurring
Fair Value Measurements
The
Company’s permitted investments consist of U.S. Money Market funds. Fair values of these investments are determined by Level 1
inputs utilizing quoted prices (unadjusted) in active markets for identical assets. The Company’s Private Placement Warrant liability
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 fair value of the Private Placement Warrant liability is classified within Level 3 of the fair value hierarchy.
For the period ending September 30, 2021 there were no transfers into or out of Level 3 classification.
On
August 2, 2021, the Company announced that holders of the Units sold in the Company’s IPO may elect to separately trade the shares
of Class A common stock and warrants included in the Units. As such, the Company’s warrant liability for the Public Warrants is
based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. The
fair value of the Public Warrant liability is classified within Level 1 of the fair value hierarchy.
The
following table presents fair value information as of September 30, 2021 of the Company’s financial assets and liabilities that
were accounted for at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company
utilized to determine such fair value.
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
Description
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account – U.S. Money Market
|
|
$
|
340,901,212
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public Warrants
|
|
$
|
10,456,908
|
|
|
$
|
-
|
|
|
$
|
|
|
Private Warrants
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,469,659
|
|
The
Company permitted investments and warrants are revalued each quarter with changes in fair value recognized in the statements of operations.
The
Company utilized a Monte Carlo simulation model to value the Private Placement Warrants and the Public Warrants at the date of issuance
(June 15, 2021) and utilized a Monte Carlo simulation model to value the Private Placement Warrants at September 30, 2021.
The following
table provides quantitative information regarding Level 3 fair value measurements:
|
|
At
June 15,
2021
|
|
|
At
September 30,
2021
|
|
Stock price
|
|
$
|
10.00
|
|
|
$
|
9.69
|
|
Strike price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Term (in years)
|
|
|
5.98
|
|
|
|
5.76
|
|
Volatility
|
|
|
13.8
|
%
|
|
|
14.5
|
%
|
Risk-free rate
|
|
|
1.00
|
%
|
|
|
1.11
|
%
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
The
following table provides a reconciliation of changes in fair value of the beginning and ending balances for the Company’s Warrants
classified as Level 3:
Fair value at February 18, 2021
|
|
$
|
-
|
|
Warrant liability – initial fair
value
|
|
|
15,234,107
|
|
Public Warrants reclassified to Level 1 (1)
|
|
$
|
(10,456,908
|
)
|
Change in fair value
|
|
|
692,450
|
|
Fair Value at September 30, 2021
|
|
$
|
5,469,659
|
|
(1)
|
Assumes the Public Warrants
were reclassified to Level 1 on September 30, 2021.
|
Except for
the Public Warrants transferring from Level 3 to Level 1, there were no other transfers between Levels 1, 2 or 3 during the period from
February 18, 2021 (inception) to September 30, 2021.
Note
7 — Commitments and Contingencies
Registration
and Stockholder 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 agreement to be signed prior to the consummation of the IPO, 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.
Underwriting
Agreement
The
underwriters had a 45-day option to purchase up to 4,500,000 over-allotment Units. After partially exercising their option
at the time of the IPO to purchase 4,089,611 Units, the underwriters had up to 410,389 additional Units available
under their option. This 45-day option expired on July 26, 2021.
The
underwriters were paid a cash underwriting discount of two percent (2%) of the gross proceeds of the IPO, or $6,817,922 and reimbursed
the Company $500,000 for offering expenses. 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 upon the completion of the Company’s initial Business Combination subject
to the terms of the underwriting agreement.
Note
8 — 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 designations,
voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At September
30, 2021, there were no shares of preferred stock issued or outstanding.
Class A
Common Stock
The
Company is authorized to issue 308,000,000 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 September 30, 2021, there were no shares of Class A
common stock issued or outstanding (excluding 34,089,611 shares subject to possible redemption).
Class B
Common Stock
The Company
is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of
the Company’s Class B common stock are entitled to one vote for each common share. As of September 30, 2021, there were 8,522,403 shares
of Class B common stock issued and outstanding.
At
February 18, 2021, there were 11,500,000 shares of Class B common stock issued and outstanding.
On
March 31, 2021, the Sponsors surrendered 1,437,500 Founder Shares to the Company for cancellation for no consideration.
On
June 10, 2021, 1,437,500 Founder Shares were surrendered to the Company for cancellation for no consideration, resulting in 8,625,000 shares
of Class B common stock outstanding. Of the 8,625,000 shares of Class B common stock outstanding, an aggregate of 1,125,000 shares
were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so
that the Sponsors will own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the IPO. All
share and per share amounts have been retroactively restated. (See Note 5)
On
June 15, 2021, Company consummated its IPO and the underwriters partially exercised their Over-Allotment Option. As a result 102,597 Founder
Shares were subject to forfeiture. On July 26, 2021, such remaining Founder Shares were forfeited.
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; provided that only holders of shares of Class B common stock have the right to vote on
the election of the Company’s directors prior to the initial Business Combination.
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 for stock splits, stock dividends, reorganizations, recapitalizations and the like), and
subject to further adjustment. 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 IPO and related to the closing of a 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 completion of the IPO plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection
with a Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination
and any private placement-equivalent warrants issued to the Sponsors or its affiliates upon conversion of loans made to the Company).
Note
9 — Warrant Liabilities
Each
whole warrant entitles the registered holder to purchase one whole share of the Class A common stock at a price of $11.50 per
share, subject to adjustment, at any time commencing 30 days after the completion of the initial Business Combination. The warrants
will expire five years after the completion of the initial Business Combination, at 5:00 p.m., New York City time, or
earlier upon redemption or liquidation.
The
Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of the initial Business
Combination, the Company will use the commercially reasonable efforts to file a post-effective amendment to the registration statement,
or a registration statement, for the registration, under the Securities Act, of the shares of Class A common stock issuable upon
exercise of the warrants, and the Company will use the commercially reasonable efforts to cause the same to become effective within 60
business days after the closing of the initial Business Combination, and to maintain the effectiveness of such registration statement
and a current prospectus relating to the shares of Class A common stock until the warrants expire or are redeemed, as specified
in the warrant agreement; provided that if the shares of Class A common stock are at the time of any exercise of a warrant not listed
on a national securities exchange such that they satisfy 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 elect, it will not be
required to file or maintain in effect a registration statement, but the Company will use the commercially reasonably efforts to register
or qualify the shares under applicable blue sky laws to the extent an exemption is not available. 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 the commercially
reasonably 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.
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 (except as described herein with respect to the Private
Placement Warrants):
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in
whole and not in part;
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at
a price of $0.01 per warrant;
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upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and
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if, and only if, 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 three trading days before the Company sends the notice of redemption to the warrant holders.
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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 (but not the Private Placement Warrants):
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●
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in
whole and not in part;
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at
$0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption
provided that holders will be able to exercise their warrants on a cashless basis prior to
redemption and receive that number of shares determined based on the redemption date and
the “fair market value” of the Class A common stock (as defined above) except
as otherwise described below; and
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●
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if, and only if, the closing price of the Class A common stock equals or exceeds $10.00 per public 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.
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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 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 Sponsors or its affiliates, without taking into account any Founder Shares held by the Sponsors 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 above 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 above 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.
If
a tender offer, exchange or redemption offer shall have been made to and accepted by the holders of the Class A common stock (other than
a tender, exchange or redemption offer made by the Company in connection with redemption rights held by stockholders as provided for
in the amended and restated certificate of incorporation or as a result of the repurchase of shares of Class A common stock by the Company
if a proposed initial business combination is presented to the stockholders for approval) and upon completion of such offer, the offeror
owns beneficially more than 50% of the outstanding shares of Class A Common Stock, the holder of the warrant shall be entitled to
receive the highest amount of cash, securities or other property to which such holder would actually have been entitled as a stockholder
if such warrant had been exercised, accepted such offer and all of the Class A Common Stock held by such holder had been purchased pursuant
to the offer. If less than 70% of the consideration receivable by the holders of the Class A common stock in the applicable event
is payable in the form of common equity in the successor entity that is listed on a national securities exchange or is quoted in an established
over-the-counter market, and if the holder of the warrant properly exercises the warrant within thirty days following the public disclosure
of the consummation of the applicable event by the Company, the warrant price shall be reduced by an amount equal to the difference (but
in no event less than zero) of (i) the warrant price in effect prior to such reduction minus (ii) (A) the Per Share Consideration (as
defined in the warrant agreement) minus (B) the value of the warrant based on the Black-Scholes Warrant Model for a Capped American Call
on Bloomberg Financial Markets.
The
Company accounted for the Public Warrants and Private Placement Warrants as liabilities in accordance with the guidance contained in
ASC Topic 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity”, upon issuance at IPO. Because
the Company does not control the occurrence of events, such as a tender offer or exchange, that may trigger cash settlement of the warrants
where not all of the shareholders also receive cash, the warrants do not meet the criteria for equity treatment thereunder, as such,
the warrants must be recorded as derivative liability.
Additionally,
certain adjustments to the settlement amount of the Private Placement Warrants are based on a variable that is not an input to the fair
value of a “fixed-for-fixed” option as defined under ASC 815 — 40, and thus the Private Placement Warrants are not
considered indexed to the Company’s own stock and not eligible for an exception from derivative accounting. The accounting treatment
of derivative financial instruments requires that the Company record a derivative liability upon issuance of the warrants at the closing
of the IPO. Accordingly, the Company classified each warrant as a liability at its fair value. The Public Warrants were allocated a portion
of the proceeds from the issuance of the Units equal to its fair value determined with the assistance of a professional independent valuation
firm. The warrant liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability
will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations. The Company
will reassess the classification of the warrants at each balance sheet date. If the classification changes as a result of events during
the period, the warrants will be reclassified as of the date of the event that causes the reclassification.
Note
10 — Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial
statements were issued. Except as noted below, the Company did not identify any subsequent events that would have required adjustment
or disclosure in the financial statement.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References
to the “Company,” “Logistics Innovation Technologies Corp.,” “our,” “us” or “we”
refer to Logistics Innovation Technologies Corp. The following discussion and analysis of the Company’s financial condition and
results of operations should be read in conjunction with the unaudited interim 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, and Section
21E of 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 on February 18, 2021 as a Delaware corporation for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We are
an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies.
Our
Sponsors are AG LIT Holdings, LLC, a Delaware limited liability company, and 1P Management LLC, a Delaware limited liability company.
The registration statement for our IPO was declared effective on June 10, 2021. On June 15, 2021, we consummated the IPO of 34,089,611
Units, including the issuance of 4,089,611 Units as a result of the underwriters’ exercise in part of their option to purchase
additional Units, at $10.00 per Unit, generating gross proceeds of $340,896,110, and incurring offering costs of $18,860,728, inclusive
of $11,931,364 in deferred underwriting commissions.
Simultaneously
with the closing of the IPO, we consummated the Private Placement of 5,945,281 Private Placement Warrants at a price of $1.50 per Private
Placement Warrants to the Sponsor, generating gross proceeds of $8,917,922.
Upon
the closing of the IPO and the Private Placement in June 2021, $340,896,110 ($10.00 per Unit) of the net proceeds of the IPO and certain
of the proceeds of the Private Placement were placed in a Trust Account located in the United States at JP Morgan Chase Bank, N.A. with
Continental Stock Transfer & Trust Company acting as trustee, and was invested only in U.S. “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, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the
Trust Account as described below.
Our
management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale of Private Placement
Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
If
we are unable to complete a Business Combination within 24 months from the closing of the IPO, or June 15, 2023, we will (i) cease all
operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
including interest earned on the funds held in the Trust Account and not previously released to us to pay its 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), and (iii)
as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of
directors, liquidate and dissolve, subject, in each case, to our obligations under Delaware law to provide for claims of creditors and
the requirements of other applicable law.
Liquidity
and Capital Resources
At
September 30, 2021, the Company had cash outside the Trust Account of $1,145,094 and working capital of $1,396,138. All remaining cash
held in the Trust Account is generally unavailable for the Company’s use, prior to an initial business combination, and is restricted
for use either in a Business Combination or to redeem common stock.
During
the period covered by this Quarterly Report, the Company consummated its IPO and Private Placement, and the underwriters partially exercised
their Over-Allotment Option. Of the net proceeds from the IPO, partial exercise of the Over-Allotment Option, and associated Private
Placements, $340,896,110 of cash was placed in the Trust Account and $2,427,771 of cash was held outside of the Trust Account and is
available for the Company’s working capital purposes.
The Company’s
initial stockholders, officers, directors or their affiliates may, but are not obligated to, loan the Company Working Capital Loans.
If the Company completes a Business Combination, the Company may repay the Working Capital Loans out of the proceeds of the Trust Account
released to the Company. Otherwise, the Working Capital Loans may 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, other than the interest
on such proceeds that may be released for working capital purposes. Except for the foregoing, the terms of such Working Capital Loans,
if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be
repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such
Working Capital Loans may be convertible into Private Placement Warrants of the post Business Combination entity at a price of $1.50
per warrant. As of September 30, 2021, no Working Capital Loans were outstanding.
Based
on the foregoing, management believes that the Company will have sufficient working capital 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.
Our
management continues to evaluate the impact of the COVID-19 pandemic and has concluded that the specific impact is not readily determinable
as of the date of the balance sheet. The unaudited condensed financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Results
of Operations
We
have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational
activities, those necessary to prepare for our IPO and identifying a target company for our initial Business Combination. We do not expect
to generate any operating revenues until after completion of our initial Business Combination. We generate non-operating income in the
form of interest income on cash and cash equivalents held in the Trust Account. We incur expenses as a result of being a public company
(for legal, financial reporting, accounting and auditing compliance), as well as expenses as we conduct due diligence on prospective
Business Combination candidates.
For
the period from February 18, 2021 (inception) through September 30, 2021, we had net loss of $1,568,813, which consisted of formation
costs and other operating expenses of $319,874, unrealized loss of on fair value changes of warrants of $692,460, warrant transaction
costs of $561,610, partially offset by bank interest income of $29, and trust interest income of $5,102.
For
the three months ended September 30, 2021, we had net income of $1,481,534, which consisted of formation costs and other operating expenses
of $199,820 offset by an unrealized gain on fair value changes of warrants of $1,676,938, bank interest income of $29, and trust interest
income of $4,387.
Contractual
Obligations
Registration
Rights
The
holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any,
(and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued
upon conversion of Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a
registration rights agreement. These holders will be entitled to certain demand and “piggyback” registration rights. We will
bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
We
granted the underwriters a 45-day option from the final prospectus relating to the IPO to purchase up to 4,500,000 additional Units to
cover over-allotments, if any, at the IPO price less the underwriting discounts and commissions. The underwriters partially exercised
their over-allotment option on June 15, 2021 with the purchase of 4,089,611 units.
The
underwriters were paid a cash underwriting discount of $0.20 per Public Share, or $6,817,922 in the aggregate. Additionally, the underwriters
reimbursed us $500,000 for offering costs. In addition, $0.35 per Public Share, or $11,931,364 in the aggregate will be payable to the
underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in
the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Critical
Accounting Policies
Warrants
We
account for the Public Warrants and Private Placement Warrants as liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging
(“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet
the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under
ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially
require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity
classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as
of each subsequent quarterly period end date while the warrants are outstanding. Because we do not control the occurrence of events,
such as a tender offer or exchange, that may trigger cash settlement of the warrants where not all of the shareholders also receive cash,
the warrants do not meet the criteria for equity treatment thereunder, as such, the warrants must be recorded as derivative liability.
Our Private Placement Warrant liability 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.
Recent
Accounting Pronouncements
Our
management does not believe that there are any other recently issued, but not yet effective, accounting pronouncements, if currently
adopted, that would have a material effect on our unaudited condensed financial statements.
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.
JOBS
Act
The
Jumpstart Our Business Startups Act of 2012 (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,
the 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 CEO’s compensation to median employee
compensation. These exemptions will apply for a period of five years following the completion of our IPO or until we are no longer an
“emerging growth company,” whichever is earlier.