NOTES
TO FINANCIAL STATEMENTS
Note
1 — Organization and Business Operations
Organization
and General
Goal
Acquisitions Corp. (the “Company”) was incorporated in Delaware on October 26, 2020. 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”). Although the Company is not limited to a particular industry or geographic
region for purposes of consummating a Business Combination. The Company intends to focus on businesses that service the sports industry.
The Company is in 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 June 30, 2021, the Company had not yet commenced any operations. All activity from October 26, 2020 (inception) through June 30, 2021,
relates to the Company’s formation and the Initial Public Offering (“IPO”) described below, and, since the closing
of the IPO, the search for a prospective initial Business Combination. 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 warrant liabilities
as other income (expense). The Company has selected December 31 as its fiscal year end.
Financing
The
registration statement for the Company’s IPO was declared effective on February 10, 2021 (the “Effective Date”). On
February 16, 2021, the Company consummated the IPO of 22,500,000 units (the “Units” and, with respect to the common stock
included in the Units being offered, the “public share”), at $10.00 per Unit, generating gross proceeds of $225,000,000.
Simultaneously
with the closing of the IPO, the Company consummated the sale of 600,000 units (the “Private Units”), at a price of $10.00
per Private Unit to the Sponsor, generating total gross proceeds of $6,000,000.
The
Company granted the underwriters in the IPO a 45-day option to purchase up to 3,375,000
additional Units to cover over-allotments, if
any. On February 24, 2021, the underwriters exercised the over-allotment option in full, and the closing of the issuance and sale of
the additional 3,375,000
Units (the “Over-Allotment Units”). The
issuance by the Company of the Over-Allotment Units at a price of $10.00
per unit resulted in total gross proceeds of
$33,750,000.
On February 24, 2021, simultaneously with the issuance and sale of the Over-Allotment Units, the Company consummated the sale of an additional
67,500
Private Units (the “Over-Allotment Private
Units” and, together with the IPO Private Placement, the “Private Placements”), generating gross proceeds of $675,000.
Transaction
costs amounted to $5,695,720 consisting
of $5,175,000 of
underwriting discount, and $520,720 of
other offering costs.
Trust
Account
Following
the closing of the IPO on February 16, 2021 and the underwriters’ full exercise of the over-allotment option on February 24, 2021,
$258,750,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO, the sale of Over-allotment Units, and the sale
of the Private Units was placed in a Trust Account, which will be held as cash or invested only in U.S. government securities, within
the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less or in any open-ended investment
company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company
Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the
funds in the Trust Account.
Initial
Business Combination
The
Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem
all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting
called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder
approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders
will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated
to be $10.00 per Public 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). There will be no redemption rights upon the completion of a Business Combination with respect
to the Company’s warrants. The Public Shares subject to redemption will be recorded at redemption value and classified as temporary
equity upon the completion of the IPO in accordance with the 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 immediately prior to or
upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the then outstanding shares
of common stock present and entitled to vote at the meeting to approve the Business Combination are voted in favor of the Business Combination.
If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons,
the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”),
conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file
tender offer documents with the SEC containing substantially the same information as would be included in a proxy statement prior to
completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to
obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation
pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with
a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during
or after the IPO in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public
Shares irrespective of whether they vote for or against the proposed transaction or do not vote at all.
Notwithstanding
the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender
offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of
such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section
13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares
with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The
Sponsor and the Company’s officers and directors will agree (a) to waive redemption rights with respect to the Founder Shares and
Public Shares held by them in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended
and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemption
in connection with the Company’s initial Business Combination and certain amendments to the Amended and Restated Certificate of
Incorporation or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to
any other provision relating to stockholders’ rights or pre-initial Business Combination activity, unless the Company provides
the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
The
Company will have until 24 months from the closing of the IPO to complete a Business Combination (the “Combination Period”).
If the Company is unable to complete a Business Combination within the Combination Period and stockholders do not approve an amendment
to the Amended and Restated Certificate of Incorporation to extend this date, 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 (which interest
shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve
and liquidate, subject in the case of clauses (ii) and (iii) 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 Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination
Period.
The
holders of the Founder Shares will agree to waive liquidation distributions with respect to such shares if the Company fails to complete
a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the IPO, such Public
Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within
the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held
in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event,
such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public
Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution
will be less than the IPO price per Unit ($10.00).
In
order to protect the amounts held in the Trust Account, the Sponsor will agree to 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 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 trust assets, in each case net of the interest which may be withdrawn to pay the Company’s tax obligation and up to
$100,000 for liquidation excepts, except as to any claims by a third party who executed a waiver of any and all rights to seek access
to the Trust Account (even if such waiver is deemed to be unenforceable) and except as to any claims under the Company’s indemnity
of the underwriters of IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities
Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not
be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor
will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective
target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title,
interest or claim of any kind in or to monies held in the Trust Account.
Liquidity and Management’s Plans
As of June 30, 2021, the Company had
$172,622 in cash and working capital of $278,573. The Company has incurred and expects to continue to incur significant
costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about the Company’s ability
to continue as a going concern one year from the issuance date of the condensed financial statements. In order to mitigate these
concerns, in May 2021, the Company received a Commitment Letter from the Sponsor whereby the Sponsor commits to funding any working
capital shortfalls through the earlier of an initial Business Combination or the Company’s liquidation. The loans would be
issued as required and each loan would be evidenced by a promissory note, up to an aggregate of $300,000. In August 2021, the Company received an amended Commitment Letter from the Sponsor to
increase such loan amount up to $500,000. The loans will be non-interest bearing, unsecured and payable upon the consummation of the
Company’s initial Business Combination or at the holder’s discretion, convertible into warrants of the Company at a
price of $1.50 per warrant. If the Company does not complete a Business Combination, any such loans will be forgiven (see Note 5).
None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in, the Company. There is no
assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful. The condensed
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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— 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 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 presentation of the financial position, operating results and cash flows for the periods presented.
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 5, 2021, as well as the Company’s Current Reports on Form 8-K and other filings
with the SEC. The interim results for the three months and six months ended June 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 financial statements with another public company which
is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ
significantly from those estimates.
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.
There is no cash equivalents as of June 30, 2021 or December 31, 2020.
Marketable
Securities Held in Trust Account
At
June 30, 2021, the Trust Account had $258,766,781 held in marketable securities. During the three and six months ended June 30, 2021,
the Company did not withdraw any interest income from the Trust Account to pay its tax obligations.
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 June 30, 2021 and December 31, 2020, the
Company had not experienced losses on this account.
Common
Stock Subject to Possible Redemption
The
Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Common stock subject to mandatory redemption (if any) are classified as a liability instrument and are
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. At all other times, common stock is classified as stockholders’ equity. The Company’s
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, as of June 30, 2021, 25,384,917 shares of common stock subject to possible redemption are presented
at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.
Net
Income (Loss) per Common Share
The
Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company’s
statements of operations include a presentation of income (loss) per share for Common stock subject to possible redemption in a manner
similar to the two-class method of income (loss) per share. Net income per common stock, basic and diluted for common stock subject to
redemption is calculated by dividing the interest income earned on the Trust Account totaling $9,255
and $16,791
for the three months and six months ended June
30, 2021 respectively (less any amounts utilized for taxes), by the weighted average number of common stock subject to possible
redemption outstanding since original issuance. Net loss per common stock, basic and diluted for non-redeemable common stock is calculated
by dividing the net loss, adjusted for income attributable to common stock subject to redemption, by the weighted average number of non-redeemable
common stock outstanding for the periods. Non-redeemable common stock includes the non-redeemable common stock and the Founder
Shares as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.
The
Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common shares
and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the periods
presented.
Schedule
of Earnings Per Share
|
|
Three months
ended June 30,
2021
|
|
|
Six months
ended June 30,
2021
|
|
Common stock subject to possible redemption
|
|
|
|
|
|
|
|
|
Numerator: Earnings allocable to common stock subject to redemption
|
|
|
|
|
|
|
|
|
Interest earned on marketable securities held in Trust Account
|
|
$
|
9,255
|
|
|
$
|
16,791
|
|
Less: interest available to be withdrawn for payment of taxes
|
|
|
(9,255
|
)
|
|
|
(16,791
|
)
|
Net income allocatable to shares subject to possible redemption
|
|
$
|
-
|
|
|
$
|
-
|
|
Denominator: Weighted average common stock subject to possible redemption
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
|
25,438,884
|
|
|
|
18,966,258
|
|
Basic and diluted net income per share
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
Non-Redeemable Common Stock
|
|
|
|
|
|
|
|
|
Numerator: Net income less earnings allocable to common stock subject to possible redemption
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(539,676
|
)
|
|
$
|
(237,333
|
)
|
Net income allocable to shares subject to possible redemption
|
|
|
-
|
|
|
|
-
|
|
Non-Redeemable Net Loss
|
|
$
|
(539,676
|
)
|
|
$
|
(237,333
|
)
|
Denominator: Weighted Average Non-Redeemable Common Stock
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, common stock
|
|
|
7,722,366
|
|
|
|
7,411,263
|
|
Basic and diluted net loss per share, common stock
|
|
$
|
(0.07
|
)
|
|
$
|
(0.03
|
)
|
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement,”
approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature, other than
discussed in Note 8.
Derivative
warrant liabilities
The
Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates
all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain
features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including
whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The
Company accounts for its private placement 667,500
private warrants included as part of the private
units as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as
liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement
at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations.
The fair value of warrants issued by the Company in connection with the Private Units have been estimated using Monte-Carlo simulations
at each measurement date (see Note 8).
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax
assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included
the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be
realized.
ASC
740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be
sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits
as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 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 is subject to income tax examinations by major taxing authorities since inception.
The
provision for income taxes was deemed to be de minimis for the three months and six months ended June 30, 2021.
Recent
Accounting Standards
In August 2020, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other
Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”)
to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial
conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining
to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible
debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings
per share guidance, including the requirement to use the if converted method for all convertible instruments. ASU 2020-06 is effective
January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1,
2021. The Company adopted ASU 2020-06 effective January 1, 2021. The Company is currently evaluating the impact of adopting ASU 2020-06
will have on the Company’s financial statements.
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 Company’s
condensed financial statements.
Note
3 — Initial Public Offering
The
Company sold 22,500,000 Units, at a purchase price of $10.00 per Unit in its IPO on February
16, 2021. Each Unit consists of one share of common stock and one warrant to purchase one share of common stock (“Public Warrant”).
Each whole Public Warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment.
On
February 16, 2021, an aggregate of $10.00 per Unit sold in the IPO was held in the Trust Account and will be held as cash or invested
only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of
180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting
the conditions of Rule 2a-7 of the Investment Company Act.
On
February 24, 2021, the underwriters of the IPO exercised the over-allotment option in full to purchase 3,375,000 Units.
Following
the closing of the IPO on February 16, 2021 and the underwriters’ full exercise of over-allotment option on February 24, 2021,
$258,750,000 was placed in the Trust Account.
Note
4 — Private Units
Simultaneously
with the closing of the IPO on February 16, 2021, the Sponsor purchased an aggregate of Private Units at a price of $ per
Private Unit, for an aggregate purchase price of $.
On
February 24, 2021, simultaneously with the issuance and sale of the Over-Allotment Units, the Company consummated the sale of an additional
Private Units to the Sponsor, generating
gross proceeds of $675,000.
Note
5 — Related Party Transactions
Founder
Shares
On
November 24, 2020, the Sponsor purchased an aggregate of 5,750,000
shares of the Company’s common stock for
an aggregate price of $25,000
(the “Founder Shares”). The Founder
Shares include an aggregate of up to shares subject to forfeiture by the Sponsor to
the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the Sponsor will collectively own
20%
of the Company’s issued and outstanding shares after the IPO (assuming the Sponsor does not purchase any Public Shares in the IPO
and excluding the Private Shares). On December 16, 2020, the Company effected a effected a stock dividend of .125
of a share of common stock for each outstanding
share of common stock, and as a result our Sponsor holds founder shares of which an aggregate of up to
shares were subject to forfeiture by the
Sponsor to the extent that the underwriters’ over-allotment was not exercised in full or in part. Because of the underwriters’
full exercise of the over-allotment option on February 24, 2021, 843,750 shares are no longer subject to forfeiture.
The
Sponsor has agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until after the
completion of a Business Combination.
Promissory
Note — Related Party
Concurrently
with the filing of the Company’s registration statement on Form S-1 on January 21, 2021,
the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company was
authorized to borrow up to an aggregate principal amount of $200,000.
In May 2021, the Sponsors agreed to increase the capacity (aggregate
principal) on the Promissory Note to $300,000,
and in August 2021, the Sponsors agreed to increase the capacity (aggregate principal) on the Promissory Note to $.
A copy of the May 2021 Amendment to the Promissory Note is filed as Exhibit 10.1 hereto. The
Promissory Note is non-interest bearing and payable on the earliest of (i) April 30, 2021, (iii) the consummation of the
IPO or (ii) the date on which the Company determines not to proceed with the IPO. As
of June 30, 2021, the Company had borrowed $175,551
under the Promissory Note.
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Initial Stockholders, or certain of the Company’s
officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital
Loans”). If the Company completes a Business Combination, the Company will repay the Working Capital Loans out of the proceeds
of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the
Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust
Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
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 units of the post Business
Combination entity at a price of $10.00 per unit. The units would be identical to the Private Units. To date, the Company had no borrowings
under the Working Capital Loans. At June 30, 2021, no such Working Capital Loans were outstanding.
Note
6 — Commitments & Contingencies
Registration
Rights
The
holders of the Founder Shares and Representative Shares, as well as the holders of the Private Units and any units that may be issued
in payment of Working Capital Loans made to Company, are entitled to registration rights pursuant to an agreement to be signed prior
to or on the Effective Date of the IPO. The holders of a majority of these securities are entitled to make up to two demands that
the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights
at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders
of a majority of the Representative Shares, Private Units and units issued in payment of Working Capital Loans (or underlying securities)
can elect to exercise these registration rights at any time after the Company consummates a business combination. Notwithstanding anything
to the contrary, EarlyBirdCapital may only make a demand on one occasion and only during the five-year period beginning on the Effective
Date of the IPO. In addition, the holders have certain “piggy-back” registration rights with respect to registration
statements filed subsequent to the consummation of a Business Combination; provided, however, that EarlyBirdCapital may participate in
a “piggy-back” registration only during the seven-year period beginning on the Effective Date of the IPO. The
Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriters
Agreement
The
underwriters have a 45-day option beginning February 16, 2021 to purchase up to an additional 3,375,000 units to cover
over-allotments, if any, at the IPO price less the underwriting discounts. On February 24, 2021, the underwriters purchased an
additional 3,375,000 units to exercise its over-allotment option in full. The proceeds of $33,750,000 from the over-allotment was deposited in the Trust Account after deducting the underwriting discounts.
The
underwriters received a cash underwriting discount of 2.0% of the gross proceeds of the IPO, or $5,175,000, because the underwriters’
over-allotment option was exercised in full.
Business
Combination Marketing Agreement
The
Company has engaged EarlyBirdCapital as an advisor in connection with a Business Combination to assist the Company in holding meetings
with its stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company
to potential investors that are interested in purchasing the Company’s securities in connection with a Business Combination, assist
the Company in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and public
filings in connection with the Business Combination. The Company will pay EarlyBirdCapital a cash fee for such services upon the consummation
of a Business Combination in an amount equal to 3.5% of the gross proceeds of IPO (exclusive of any applicable finders’ fees which
might become payable).
Note
7 — Stockholders’ Equity
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 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 June 30,
2021, there were no shares of preferred stock issued or outstanding.
Common
Stock — The Company is authorized to issue 100,000,000
shares of common stock with a par value of $0.0001
per share. On December 16, 2020, the Company
effected a stock dividend of .125
of a share of common stock for each outstanding
share of common stock, and as a result our Sponsor holds founder shares of which an aggregate of up to
shares were subject to forfeiture by the
Sponsor to the extent that the underwriters’ over-allotment was not exercised in full or in part. Because of the underwriters’
full exercise of the over-allotment option on February 24, 2021, 843,750 shares are no longer subject to forfeiture. The Company
considered the above stock dividend to be in substance a stock split due to the dividend being part of the Company’s initial capitalization.
The dividend was therefore valued at par and offset to additional paid-in capital. The effect was reflected retroactively to the earliest
period presented in the accompanying financial statements. At June 30, 2021, there were 7,776,333
shares of common stock issued and outstanding,
excluding 25,384,917
shares of common stock subject to possible redemption.
Warrants
— The Public Warrants will become exercisable 30 days after the completion of a Business Combination. No warrants will
be exercisable for cash unless the Company has an effective and current registration statement covering the shares of common stock issuable
upon exercise of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration
statement covering the shares of common stock issuable upon exercise of the Public Warrants is not effective within a specified period
following the consummation of a Business Combination, warrant holders may, until such time as there is an effective registration statement
and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless
basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that
exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. The Public
Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
Once
the warrants become exercisable, the Company may redeem the Public Warrants:
|
●
|
in
whole and not in part;
|
|
|
|
|
●
|
at
a price of $0.01 per warrant;
|
|
|
|
|
●
|
upon
not less than 30 days’ prior written notice of redemption to each warrant holder (the “30-day redemption period”);
|
|
|
|
|
●
|
if,
and only if, the closing price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations,
reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing once the warrants
become exercisable and ending three business days before the Company sends to the notice of redemption to the warrant holders; and
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|
|
|
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●
|
if,
and only if, there is a current registration statement in effect with respect to the share of common stock underlying such warrants.
|
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the
Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
In
addition, if (x) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection
with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share of common stock (with
such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of
any such issuance to the Sponsor or their affiliates, without taking into account any Founder Shares held by them prior to such issuance),
(y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available
for the funding of a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the
volume weighted average trading price of the Company’s common stock during the 20 trading day period starting on the trading day
prior to the day on which the Company consummates 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 greater of (i) the Market
Value or (ii) the price at which we issue the additional shares of common stock or equity-linked securities.
The
exercise price and number of shares of common stock issuable on exercise of the warrants may be adjusted in certain circumstances including
in the event of a stock dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, the
warrants will not be adjusted for issuances of shares of common stock at a price below their respective exercise prices. Additionally,
in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination
within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any
of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of
the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
The
Private Warrants are identical to the Public Warrants underlying the Units being sold in the IPO, except that the Private Warrants and
the common stock issuable upon the exercise of the Private Warrants will not be transferable, assignable or salable until 30 days after
the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants are exercisable on
a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If
the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants are redeemable
by the Company and exercisable by such holders on the same basis as the Public Warrants.
Representative
Shares — The Representative Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a
period of 180 days immediately following the Effective Date of the registration statement related to the IPO pursuant to Rule
5110(g)(1) of FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging,
short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period
of 180 days immediately following the Effective Date of the registration statements related to the IPO, nor may they be sold,
transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the Effective Date of the registration
statements related to the IPO except to any underwriter and selected dealer participating in the IPO and their bona fide officers or
partners.
The
holders of the Representative Shares have agreed not to transfer, assign or sell any such shares until the completion of a Business Combination.
In addition, the holders have agreed (i) to waive their conversion rights (or right to participate in any tender offer) with respect
to such shares in connection with the completion of a Business Combination and (ii) to waive their rights to liquidating distributions
from the Trust Account with respect to such shares if the Company fails to complete a Business Combination within the Combination Period.
Note
8 — 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:
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●
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Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
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|
|
|
|
●
|
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
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|
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●
|
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.
|
The
following table presents information about the Company’s assets that are measured at fair value on a recurring basis at June 30,
2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Schedule
of Fair Value Measurement of Financial Assets and Liabilities
|
|
June 30,
|
|
|
Quoted
Prices In
Active
Markets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Other
Unobservable
Inputs
|
|
|
|
2021
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
|
$
|
258,766,781
|
|
|
$
|
258,766,781
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability
|
|
|
(464,741
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(464,741
|
)
|
|
|
$
|
258,302,040
|
|
|
$
|
258,766,781
|
|
|
$
|
-
|
|
|
$
|
(464,741
|
)
|
The
Company utilizes a Monte Carlo simulation model to value the warrants at each reporting period, with changes in fair value recognized
in the statement of operations. The estimated fair value of the warrant liability is determined using Level 3 inputs. Inherent in a binomial
options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend
yield. The Company estimates the volatility of its ordinary
shares
based on historical volatility of comparable companies that matches the expected remaining life of the warrants. The risk-free interest
rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of
the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is
based on the historical rate, which the Company anticipates to remain at zero.
The
aforementioned warrant liabilities are not subject to qualified hedge accounting.
There
were no transfers between Levels 1, 2 or 3 during the quarter ended June 30, 2021.
The
following table provides quantitative information regarding Level 3 fair value measurements:
Schedule
of Fair Value Input Measurement
|
|
At
June 30,
2021
|
|
|
At
February 16,
2021
|
|
Stock price
|
|
$
|
9.64
|
|
|
$
|
9.01
|
|
Strike price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Term (in years)
|
|
|
5.79
|
|
|
|
6.27
|
|
Volatility
|
|
|
15.6
|
%
|
|
|
24.1
|
%
|
Risk-free rate
|
|
|
1.00
|
%
|
|
|
0.86
|
%
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
The
following table presents the changes in the fair value of warrant liabilities:
Schedule
of Changes in Fair Value of Warrant Liabilities
|
|
Private
Placement
|
|
Fair value as of December 31, 2020
|
|
$
|
—
|
|
Initial measurement on February 16, 2021
|
|
|
666,643
|
|
Change in valuation inputs or other assumptions
|
|
|
(354,867
|
)
|
Fair value as of March 31, 2021
|
|
$
|
311,776
|
|
Change in valuation inputs or other assumptions
|
|
|
152,965
|
|
Fair value as of June 30, 2021
|
|
$
|
464,741
|
|
Note
9 — Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the financial statements
were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure
in the financial statements.