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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 9, 2023

Graphic

P3 Health Partners Inc.

(Exact name of registrant as specified in its charter)

Delaware

    

001-40033

   

85-2992794

(State or other jurisdiction of incorporation)

 

(Commission File Number)

 

(I.R.S. Employer Identification No.)

2370 Corporate Circle, Suite 300 Henderson, Nevada

 89074

(Address of principal executive offices)

(Zip Code)

(702) 910-3950

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act

Soliciting material pursuant to Rule 14a-12 under the Exchange Act

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Securities registered pursuant to Section 12(b) of the Act:

   

Trading

   

Name of each exchange

Title of each class

 

Symbol(s)

 

on which registered

Class A common stock, par value $0.0001 per share

 

PIII

 

The Nasdaq Stock Market LLC

Warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50

 

PIIIW

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 8.01. Other Events.

As previously disclosed, on December 3, 2021, P3 Health Partners Inc. (f/k/a Foresight Acquisition Corp. (“Foresight”)) (the “Company”) consummated the previously announced business combinations pursuant to (1) an agreement and plan of merger, dated as of May 25, 2021, as amended, by and among Foresight, P3 Health Group Holdings, LLC (“P3 Health Group Holdings”) and FAC Merger Sub LLC (“Merger Sub”), and (2) the transaction and combination agreement, dated as of May 25, 2021, as amended, by and among Foresight, FAC-A Merger Sub Corp., a Delaware corporation and a wholly owned subsidiary of Foresight, FAC-B Merger Sub Corp., a Delaware corporation and a wholly owned subsidiary of Foresight (together with FAC-A Merger Sub Corp., the “Merger Corps”), CPF P3 Blocker-A, LLC, a Delaware limited liability company, CPF P3 Blocker-B, LLC, a Delaware limited liability company (together with CPF P3 Blocker-A, LLC, the “Blockers”), CPF P3 Splitter, LLC, a Delaware limited liability company, Chicago Pacific Founders Fund-A, L.P., a Delaware limited partnership, and Chicago Pacific Founders Fund-B, L.P., a Delaware limited partnership (together with Chicago Pacific Founders Fund-A, L.P., the “Blocker Sellers”), pursuant to which, among other things, P3 Health Group Holdings merged with and into Merger Sub (the “P3 Merger”), with Merger Sub as the surviving company, which was renamed P3 LLC, and the Merger Corps merged with and into the Blockers, with the Blockers as the surviving entities and wholly owned subsidiaries of Foresight (collectively, the “Business Combinations”).

The Business Combinations represent a forward merger and is accounted for using the acquisition method of accounting under which P3 Health Group Holdings was treated as the acquired company for financial reporting purposes. This Current Report on Form 8-K is being filed to include the audited financial statements of Foresight as of December 2, 2021 and December 31, 2020, and for the period from August 20, 2020 (inception) through December 31, 2020 and for the period from January 1, 2021 through December 2, 2021 (the “Foresight Financial Statements”), which have been audited by Marcum LLP, Foresight’s independent registered public accounting firm prior to the Business Combinations, for purposes of incorporation by reference into any of the Company’s registration statements to be filed under the Securities Act of 1933 requiring the incorporation by reference of the Foresight Financial Statements.

The Foresight Financial Statements were previously included in post-effective amendment no. 1 to the Company’s registration statement on Form S-1, filed with the Securities and Exchange Commission on November 7, 2022 (Registration No. 333-261904), and in the Company’s registration statement on Form S-1, filed with Securities and Exchange Commission on May 2, 2023 (Registration No. 333-271565).

Item 9.01 Financial Statements and Exhibits.

(d)   Exhibits

Exhibit
Number

    

Description

23.1

 

Consent of Marcum LLP, Independent Registered Public Accounting Firm.

99.1

 

Audited financial statements of Foresight Acquisition Corp. as of December 2, 2021 and December 31, 2020, and for the period from August 20, 2020 (inception) through December 31, 2020 and for the period from January 1, 2021 through December 2, 2021.

101.INS

 

XBRL Instance Document.

101.SCH

 

XBRL Taxonomy Extension Schema Document.

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document.

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

9

 

 

 

P3 Health Partners Inc.

 

 

 

 

Date:

November 9, 2023

By:

/s/ Atul Kavthekar

 

 

 

Atul Kavthekar

 

 

 

Chief Financial Officer

Exhibit 23.1

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT

We consent to the incorporation by reference in the Registration Statement of P3 Health Partners Inc. (formerly Foresight Acquisition Corp.) (the “Company”) on Form S-8 (File No. 333-267966) of our report dated November 3, 2022, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audits of the consolidated financial statements of P3 Health Partners Inc. (formerly Foresight Acquisition Corp.) as of December 2, 2021 and December 31, 2020 and for the periods from January 1, 2021 through December 2, 2021 and from August 20, 2020 (inception) through December 31, 2020 which report is included in this Current Report on Form 8-K of P3 Health Partners Inc. We were dismissed as auditors on December 3, 2021 and, accordingly, we have not performed any audit or review procedures with respect to any financial statements incorporated by reference in such Form S-8 for the periods after the date of our dismissal.

/s/ Marcum LLP

Marcum LLP

New York, NY

November 8, 2023


0087387508738750790625079062500003162500000.01000790625083250079062507906250

Exhibit 99.1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of P3 Health Partners Inc. (f/k/a Foresight Acquisition Corp.)

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of P3 Health Partners Inc. (f/k/a Foresight Acquisition Corp.) (the “Company”) as of December 2, 2021 and December 31, 2020, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the periods ended January 1, 2021 through December 2, 2021 and from August 20, 2020 (inception) through December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 2, 2021 and December 31, 2020, and the consolidated results of their operations and their cash flows for the periods January 1, 2021 through December 2, 2021 and from August 20, 2020 (inception) through December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s business plan is dependent on the completion of a business combination and the Company’s cash and working capital as of December 2, 2021 are not sufficient to complete its planned activities. These conditions raise substantial doubt about the Company’s ability to continue as going concern. Management’s plans with regard to these matters are described in Note 1. The financial statements to not include any adjustment that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Marcum LLP

Marcum LLP

We have served as the Company’s auditor since 2020.

New York, NY

November 3, 2022

1

P3 HEALTH PARTNERS INC.

(F/K/A FORESIGHT ACQUISITION CORP.)

CONSOLIDATED BALANCE SHEETS

    

December 2,

    

December 31, 

2021

2020

ASSETS

 

  

 

  

Current Assets

 

  

 

  

Cash and cash equivalents

$

100,935

$

179,512

Prepaid expenses

 

355,188

 

Total Current Assets

 

456,123

 

179,512

Deferred offering costs

 

 

215,448

Cash and securities held in Trust Account

 

316,267,136

 

Total Assets

$

316,723,259

$

394,960

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

  

 

  

Current liabilities

 

  

 

  

Accrued expenses

$

21,284,300

$

2,286

Accrued offering costs

 

15,450

 

94,960

Advance from related parties

 

150,000

 

Promissory note – related party

 

 

275,000

Total Current Liabilities

 

21,449,750

 

372,246

Warrant liabilities

 

13,213,259

 

Total Liabilities

 

34,663,009

 

372,246

Commitments (Note 6)

 

  

 

  

Class A common stock subject to possible redemption, 31,625,000 and no shares at redemption value as of December 2, 2021 and December 31, 2020, respectively

 

316,250,000

 

Stockholders’ (Deficit) Equity

 

  

 

  

Preferred stock, $0.0001 par value; 1,000,000 shares authorized, none issued and outstanding

 

 

Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 8,738,750 shares issued and outstanding as of December 2, 2021 and December 31, 2020, excluding shares subject to redemption

 

874

 

Class B common shares, $0.0001 par value; 20,000,000 shares authorized; 7,906,250 shares issued and outstanding as of December 2, 2021 and December 31, 2020

 

 

791

Additional paid-in capital

 

 

24,209

Accumulated deficit

 

(34,190,624)

 

(2,286)

Total Stockholders’ (Deficit) Equity

 

(34,189,750)

 

22,714

Total Liabilities, Redeemable Shares and Stockholders’ Equity

$

316,723,259

$

394,960

The accompanying notes are an integral part of the financial statements.

2

P3 HEALTH PARTNERS INC.

(F/KA FORESIGHT ACQUISITION CORP.)

CONSOLIDATED STATEMENTS OF OPERATIONS

    

    

For the Period from

For the Period 

August 20,

from January 1, 

2020 (Inception)

2021 through

through

December 2, 2021

December 31, 2020

General and administrative expenses

$

22,747,817

$

2,286

Loss from operations

 

(22,747,817)

 

(2,286)

Other income (expense):

 

  

 

  

Interest income

 

24

 

Interest earned on marketable securities held in Trust Account

 

17,136

 

Change in fair value of warrant liabilities

 

(2,074,467)

 

Other income

 

2,057,307

 

Net loss

$

(24,805,124)

$

(2,286)

Basic and diluted weighted average shares outstanding of Class A common stock

 

29,692,013

 

Basic and diluted net loss per share, Class A Common stock

$

(0.84)

$

Basic and diluted weighted average shares outstanding of Class B common stock

 

 

6,875,000

Basic and diluted net loss per share, Class B Common stock

$

$

The accompanying notes are an integral part of the financial statements.

3

P3 HEALTH PARTNERS INC.

(F/K/A FORESIGHT ACQUISITION CORP.)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

Class A Common 

Total 

Stock subject to 

Class B 

Additional 

Stockholders’ 

possible redemption

Common Stock

Paid-in

Accumulated

Equity

Shares

Amount

Shares

Amount

Capital

Deficit

(Deficit)

Balance – August 20, 2020 (inception)

    

    

$

    

    

$

    

$

    

$

    

$

Issuance of Class B common stock to Sponsor

 

 

 

7,906,250

 

791

 

24,209

 

 

25,000

Net loss

 

 

 

 

 

 

(2,286)

 

(2,286)

Balance – December 31, 2020

 

 

 

7,906,250

 

791

 

24,209

 

(2,286)

 

22,714

Accretion for Class A common stock to redemption amount

 

 

 

 

 

(8,068,251)

 

(9,383,214)

 

(17,451,465)

Sale of 832,500 Private Placement Units, Net

 

832,500

 

83

 

 

 

8,044,042

 

 

8,044,125

October 4, 2021 Class B conversion

 

7,906,250

 

791

 

(7,906,250)

 

(791)

 

 

 

Net loss

 

 

 

 

 

 

(24,805,124)

 

(24,805,124)

Balance – December 2, 2021

 

8,738,750

$

874

 

$

$

$

(34,190,624)

$

(34,189,750)

The accompanying notes are an integral part of the financial statements.

4

P3 HEALTH PARTNERS INC.

(F/K/A FORESIGHT ACQUISITION CORP.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

    

    

For the Period 

For the Period 

from

from

August 20, 2020

January 1, 2021

(Inception)

through

through

December 2, 2021

December 31, 2020

Cash Flows from Operating Activities:

 

  

 

  

Net loss

$

(24,805,124)

$

(2,286)

Adjustments to reconcile net loss to net cash used in operating activities:

 

  

 

  

Interest earned on marketable securities held in Trust Account

 

(17,136)

 

Change in fair value of warrant liabilities

 

2,074,467

 

Transaction costs incurred in connection with IPO

 

234,419

 

Changes in operating assets and liabilities:

 

  

 

  

Prepaid expenses

 

(355,188)

 

Accounts payable and accrued expenses

 

21,282,014

 

2,286

Net cash used in operating activities

 

(1,586,548)

 

Cash Flows from Investing Activities:

 

  

 

  

Investment of cash into trust Account

 

(316,250,000)

 

Net cash used in investing activities

 

(316,250,000)

 

Cash Flows from Financing Activities:

 

  

 

  

Proceeds from issuance of Class B common stock to Sponsor

 

 

25,000

Proceeds from sale of Units, net of underwriting discounts paid

 

309,924,999

 

Proceeds from sale of Private Placements Warrants

 

8,325,000

 

Proceeds from convertible promissory note – related party

 

 

275,000

Advances from related party

 

150,000

 

Repayment of convertible promissory note – related party

 

(275,000)

 

Payment of offering costs

 

(367,028)

 

(120,488)

Net cash provided by financing activities

 

317,757,971

 

179,512

Net (Decrease) Increase in Cash

 

(78,577)

 

179,512

Cash – Beginning

 

179,512

 

Cash – Ending

$

100,935

$

179,512

Non-cash investing and financing activities:

 

  

 

  

Offering costs included in accrued offering cost

$

15,450

$

94,960

Initial classification of Class A common stock subject to possible redemption

$

316,250,000

$

The accompanying notes are an integral part of the financial statements.

5

NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

P3 Health Partners Inc. (f/k/a Foresight Acquisition Corp.) (the “Company”) was incorporated in Delaware on August 20, 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”).

The Company has three non-operating, wholly-owned subsidiaries, which were formed to facilitate the merger with P3 Health Group Holdings (see below), FAC Merger Sub LLC, a Delaware limited liability company (“Merger Sub”), FAC-A Merger Sub Corp., a Delaware corporation (“Merger Corp-A”), and FAC-B Merger Sub Corp., a Delaware corporation (“Merger Corp-B” and, together with Merger Corp-A, the “Merger Corps” and each, a “Merger Corp”).

The Company is not limited to a particular industry or sector for purposes of consummating a 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.

Business Combination

On December 3, 2021 (the “Closing Date”), the Company consummated the previously announced business combinations (the “Business Combinations”) pursuant to (1) the agreement and plan of merger, dated as of May 25, 2021 (as amended, the “Merger Agreement”), by and among P3 Health Group Holdings (“P3”), and FAC Merger Sub LLC, and (2) the transaction and combination agreement, dated as of May 25, 2021 (as amended, the “Transaction and Combination Agreement” and together with the Merger Agreement, the “Transaction Agreements”), by and among Foresight and the Merger Corps, CPF P3 Blocker-A, LLC, a Delaware limited liability company (“Blocker-A”), CPF P3 Blocker-B, LLC, a Delaware limited liability company (“Blocker-B” and, together with Blocker-A, the “Blockers” and each, a “Blocker”), CPF P3 Splitter, LLC, a Delaware limited liability company (“Splitter”), Chicago Pacific Founders Fund-A, L.P., a Delaware limited partnership (“Blocker A Seller”), and Chicago Pacific Founders Fund-B, L.P., a Delaware limited partnership (“Blocker B Seller” and, together with Blocker A Seller, the “Blocker Sellers” and each, a “Blocker Seller”), pursuant to which, among other things, P3 Health Group Holdings merged with and into Merger Sub (the “P3 Merger”), with Merger Sub as the surviving company, which was renamed P3 Health Group, LLC (“P3 LLC”), and the Merger Corps merged with and into the Blockers, with the Blockers as the surviving entities and wholly-owned subsidiaries of the Company (collectively, the “Business Combinations”). Upon completion of the Business Combinations (the “Closing”), the Company and P3 LLC were organized in an “Up-C” structure in which all of the P3 LLC operating subsidiaries are held directly or indirectly by P3 LLC, and the Company directly owned approximately 17.1% of P3 LLC and became the sole manager of P3 LLC.

PIPE Investment

On December 3, 2021, certain investors (the “Subscribers”) purchased from the Company an aggregate of 20,370,307 shares of Class A Common Stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $203.7 million, pursuant to separate subscription agreements (the “Subscription Agreements”) entered into effective as of May 25, 2021, as amended by the Consent and Amendment to Subscription Agreement, entered into on November 19, 2021. Pursuant to the Subscription Agreements, the Company gave certain registration rights to the Subscribers with respect to the PIPE Shares. The sale of PIPE Shares was consummated concurrently with the Closing.

In connection with the Closing, the Company also issued (i) 8,732,517 shares of Class A Common Stock to the Blocker Sellers (including 723,291 shares of Class A Common Stock held by the escrow agent) pursuant to the Transaction and Combination Agreement, and (ii) 202,024,923 shares of Class V Common Stock to the P3 Sellers other than the Blocker Sellers (including 17,923,782 shares of Class V Common Stock held by the escrow agent), pursuant to the Merger Agreement.

Business Prior to the Business Combination

As of December 2, 2021, the Company had not commenced any operations. All activity for the period from August 20, 2020 (inception) through December 2, 2021 relates to the Company’s formation and the initial public offering (“Initial Public Offering”), which is described below, and identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company has generated non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.

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The registration statement for the Company’s Initial Public Offering was declared effective on February 9, 2021. On February 12, 2021, the Company consummated the Initial Public Offering of 31,625,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriter of its over-allotment option in the amount of 4,125,000 Units, at $10.00 per Unit, generating gross proceeds of $316,250,000, which is described in Note 3.

On October 4, 2021, all outstanding shares of Class B Common Stock were converted into shares of Class A Common Stock on a one-for-one basis at the direction of the holders. The transfer restrictions and agreement to waive redemption rights and rights to liquidating distributions apply to the shares of Class A Common Stock received upon conversion of the Class B Common Stock.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 832,500 units (each, a “Private Placement Unit” and, collectively, the “Private Placement Units”) at a price of $10.00 per Private Placement Unit in a private placement to Foresight Sponsor Group, LLC (the “Sponsor”) and FA Co-Investment LLC (an affiliate of one of the underwriters of the Initial Public Offering) ( “FA Co-Investment” and, together with the Sponsor, the “Sponsors”) generating gross proceeds of $8,325,000, which is described in Note 4.

Transaction costs amounted to $6,827,967, consisting of $6,325,000 of underwriting fees, and $502,967 of other offering costs.

Following the closing of the Initial Public Offering on February 12, 2021, an amount of $316,250,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”), invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account to the Company’s stockholders, as described below except that interest earned on the Trust Account can be released to the Company to pay its tax obligations.

Liquidity and Going Concern

As of December 2, 2021, the Company had $100,935 in its operating bank accounts, $316,267,136 in marketable securities held in the Trust Account to be used for a Business Combination or to repurchase or redeem stock in connection therewith and a working capital deficit of $20,793,627, which excludes franchise taxes payable of $200,000. On August 19, 2021, the sponsor committed to provide up to $300,000 in working capital loans as needed by the Company in order to finance transaction costs in connection with a Business Combination. The loans, if issued, will be non-interest bearing, unsecured and will be repaid upon the consummation of an initial business combination. If the Company had not consummated the initial business combination, all amounts loaned to the Company would have been forgiven except to the extent the Company had funds available outside of the Trust Account to repay such loans. On October 27, 2021, the sponsor committed to provide up to an additional $600,000 in working capital loans as needed by the Company in order to finance transaction costs in connection with a Business Combination. The loans will follow the same structure as the $300,000 working capital loans as described above. The total commitment provided by the Sponsor will total $900,000, none of which had been borrowed as of December 2, 2021.

Until the consummation of the Business Combination, the Company used the funds not held in the Trust Account for identifying and evaluating target businesses, performing due diligence on prospective target businesses, traveling to and from the offices, plants or similar location of prospective target businesses or their representatives or owners, reviewing corporate documents and material agreements of prospective target businesses and structuring, negotiating and completing a Business Combination, which was the Business Combination with P3. The Company completed its Business Combination with P3 on December 3, 2021.

In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that its future capital requirements will depend on many factors, including its rate of growth, ability to manage costs and its ability to raise additional capital when needed. There can be no assurance that such financing will be available on commercially acceptable terms. If the Company is unable to obtain additional funding when needed, it will have to curtail it activities and reduce costs. As a result of these matters, substantial doubt exists about the Company’s ability to continue as a going concern for one year after the date the financial statements are issued. The accompanying financial statements do not include any adjustment that might result from the outcome of these uncertainties.

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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 and/or search for a target company, the specific impact is not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy is not determinable as of the date of these financial statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the private warrant liabilities. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.

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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 December 2, 2021 and December 31, 2020.

Cash Held in Trust Account

At December 2, 2021, substantially all of the assets held in the Trust Account were held cash.

Class A Common Stock Subject to Possible Redemption

The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at December 2, 2021 and December 31, 2020, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets.

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.

Warrant Liabilities

The Company accounts for warrants as either equity-classified or 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 ordinary shares, 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.

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. The fair value of the private warrants was estimated using a binomial lattice simulation approach (see Note 11).

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 statement 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.

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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 December 2, 2021 and December 31, 2020. 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 effective tax rate differs from the statutory tax rate of 21% for the year ended December 2, 2021 due to the valuation allowance recorded on the Company’s net operating losses and permanent differences.

Net Loss Per Common Share

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. The Company applies the two-class method in calculating earnings per share.

The Company has not considered the effect of the warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 10,819,167 shares in the calculation of diluted loss per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.

The following table reflects the calculation of basic and diluted net loss per common share (in dollars, except per share amounts):

    

For the Period from

    

For the Period from

January 1,

August 20, 2020

2021 through

(Inception) through

December 2, 2021

December 31, 2020

Class A

    

Class B

Class A

    

Class B

Basic and diluted net loss per common stock

 

  

 

  

 

  

 

  

Numerator:

 

  

 

  

 

  

 

  

Allocation of net loss, as adjusted

$

(24,805,124)

$

$

$

(2,286)

Denominator:

 

  

 

  

 

  

 

  

Basic and diluted weighted average stock outstanding

 

29,692,013

 

 

 

6,875,000

Basic and diluted net loss per common stock

$

(0.84)

$

$

$

(0.00)

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. The Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

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In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging.” For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

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 is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.

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 financial statements.

NOTE 3 — INITIAL PUBLIC OFFERING

Pursuant to the Initial Public Offering, the Company sold 31,625,000 Units, which includes a full exercise by the underwriters of their over-allotment option in the amount of 4,125,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-third of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 10).

NOTE 4 — PRIVATE PLACEMENT

Simultaneously with the closing of the Initial Public Offering, the Sponsors have agreed to purchase an aggregate of 832,500 Private Placement Units at a price of $10.00 per Private Placement Unit, for an aggregate purchase price of $8,325,000, in a private placement. Each Private Placement Unit consists of one share of Class A common stock (“Private Placement Share” or, collectively, “Private Placement Shares”) and one-third of one warrant (each, a “Private Placement Warrant”). Each whole Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment. A portion of the proceeds from the sale of the Private Placement Units were added to the proceeds from the Initial Public Offering to be held in the Trust Account.

NOTE 5 — RELATED PARTY TRANSACTIONS

Founder Shares

In October 2020, the Sponsors purchased an aggregate of 7,906,250 shares (the “Founder Shares”) of the Company’s Class B common stock for an aggregate price of $25,000. The Founder Shares included an aggregate of up to 1,031,250 shares subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the number of Founder Shares will equal 20% of the Company’s issued and outstanding shares after the Initial Public Offering (not including the Private Placement Shares). As a result of the underwriters’ election to fully exercise their over-allotment option, no Founder Shares are currently subject to forfeiture.

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The Sponsors have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last 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 a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of common stock for cash, securities or other property.

On October 4, 2021, all outstanding shares of Class B Common Stock were converted into shares of Class A Common Stock on a one-for-one basis at the direction of the holders. The transfer restrictions and agreement to waive redemption rights and rights to liquidating distributions apply to the shares of Class A Common Stock received upon conversion of the Class B Common Stock.

Promissory Notes — Related Parties

On October 22, 2020 and October 27, 2020, the Sponsors issued unsecured promissory notes to the Company (the “Promissory Notes”), pursuant to which the Company may borrow up to an aggregate principal amount of $300,000. The Promissory Notes are non-interest bearing and payable on the earlier of (i) March 31, 2021 or (ii) the consummation of the Initial Public Offering. The outstanding balance under the Promissory Notes of $275,000 as of December 31, 2020 was repaid at the closing of the Initial Public Offering on February 12, 2021. Borrowings under the Promissory Note are no longer available.

On August 19, 2021, our Sponsor committed to provide us with an aggregate of $300,000 in loans. The loans, if issued, would have been non-interest bearing, unsecured and would be repaid upon the consummation of an initial business combination. If the Company had not consummated an initial business combination, all amounts loaned to the Company would have been forgiven except to the extent that the Company had funds available outside of the Trust Account to repay such loans. On October 27, 2021, the sponsor committed to provide up to an additional $600,000 in working capital loans as needed by the Company in order to finance transaction costs in connection with a Business Combination. The total commitment provided by the sponsor will total $900,000, none of which had been borrowed as of December 2, 2021.

Advances from Related Party and Due to Sponsor

As of December 2, 2021, the Sponsor advanced the Company an aggregate of $150,000 in working capital loans to pay for certain operating costs. The advances are non-interest bearing and are due on demand.

Related Party Loans

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“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. 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 upon consummation of the Business Combination at a price of $10.00 per unit. The units would be identical to the Private Placement Units. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of December 2, 2021 and December 31, 2020, there were no amounts outstanding under the Working Capital Loans.

Administrative Services Agreement

The Company agreed, commencing on February 9, 2021 through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of up to $10,000 per month for office space, administrative and support services. For the year ended December 2, 2021, the Company incurred and paid $99,745 of such fees. As of December 2, 2021, $20,000 remained unpaid in the accrued expenses line item on the balance sheet.

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NOTE 6 — COMMITMENTS AND CONTINGENCIES

Registration Rights

Pursuant to a registration rights agreement entered into on February 9, 2021, the holders of the Founder Shares, Private Placement Units (including securities contained therein) and units (including securities contained therein) 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 or upon the exercise of any warrants included within units issued upon conversion of Working Capital Loans will be entitled to registration rights to be signed prior to or on the effective date of the Initial Public Offering requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A common stock). The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. Notwithstanding the foregoing, FA Co-Investment may not exercise its demand or “piggyback” registration rights after five and seven years, respectively, after the effective date of the registration statement of which this prospectus forms a part and may not exercise its demand rights on more than one occasion. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Business Combination Marketing Agreement

The Company engaged the underwriters to act as advisors in connection with its Business Combination to assist the Company in holding meetings with its stockholders to discuss the potential Business Combination and the target business’s attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection with the potential Business Combination, assist in obtaining stockholder approval for the Business Combination and assist with the Company’s press releases and public filings in connection with the Business Combination. The Company will pay the underwriters a fee for such services upon the consummation of its Business Combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds of the Initial Public Offering, including any proceeds from the full or partial exercise of the over-allotment option. As a result of the Business Combination, Cowen & Company, will be paid $8,500,000 million in relation to the work they performed as described in the aforementioned Business Combination Marketing Agreement.

NOTE 7 — CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION

Class A Common Stock — The Company is authorized to issue 200,000,000 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 December 2, 2021, there were 31,625,000 shares of Class A common stock issued and outstanding, including Class A common stock subject to possible redemption, which is presented as temporary equity. At December 31, 2020, there were no shares of Class A common stock issued or outstanding

Prior to the Company’s initial Business Combination, holders of Class B common stock will have the right to elect all of the Company’s directors and may remove members of the Company’s board of directors for any reason. On any other matter submitted to a vote of the Company’s stockholders, holders of Class A common stock and holders of Class B common stock will vote together as a single class, except as otherwise required by law. The shares of Class B common stock will automatically convert into Class A common stock at the time of a Business Combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering 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 the Class B common stock agree to waive such anti-dilution 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 total number of all shares of common stock outstanding upon completion of the Initial Public Offering (not including the shares of Class A common stock underlying the Private Placement Units) plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (net of the number of shares of Class A common stock redeemed 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.

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. As of December 2, 2021 and December 31, 2020, there were no shares of preferred stock issued or outstanding.

13

Class A Common Stock — The Company is authorized to issue 200,000,000 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. As of December 2, 2021 and December 31, 2020, there were 832,500 and 7,906,250 shares of Class A common stock issued and outstanding, respectively. The common stock outstanding as of December 2, 2021 represents the Private Placement shares.

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 Class B common stock are entitled to one vote for each share. As of both December 2, 2021 and December 31, 2020, there were 7,906,250 shares of Class B common stock issued and outstanding. On October 4, 2021, all outstanding shares of Class B Common Stock were converted into shares of Class A Common Stock on a one-for-one basis at the direction of the holders. The transfer restrictions and agreement to waive redemption rights and rights to liquidating distributions apply to the shares of Class A Common Stock received upon conversion of the Class B Common Stock.

NOTE 9 — INCOME TAX

The Company’s net deferred tax assets at December 2, 2021 and 2020 is as follows:

    

December 2,

    

December 31,

2021

2020

Deferred tax assets

  

  

Net operating loss carryforward

$

38,800

$

480

Startup/Organization Expenses

 

4,728,629

 

Total deferred tax assets, net

 

4,767,429

 

480

Valuation Allowance

 

(4,767,429)

 

(480)

Deferred tax assets, net of valuation allowance

$

$

The income tax provision (benefit) for the period from January 1, 2021 through December 2, 2021 and for the period from August 20, 2020 (inception) through December 31, 2020 consists of the following:

    

    

For the period

from

For the period

August 20,

from

2020

January 1,

(inception)

2021 through

through

December 2,

December 31,

2021

2020

Federal

 

  

 

  

Current

$

$

Deferred benefit

 

(4,773,438)

 

(480)

State and Local

 

  

 

  

Current

 

 

Deferred

 

 

Change in valuation allowance

 

4,773,438

 

480

Income tax provision

$

$

As of December 2, 2021 and December 31, 2020, the Company had $182,476 and $2,286 of U.S. federal net operating loss carryovers available to offset future taxable income. These net operating loss carryovers do not expire and may offset up to 80% of taxable income in any given year.

In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the period from January 1, 2021 through December 2, 2021 and for the period from August 20, 2020 (inception) through December 31, 2020, the change in the valuation allowance was $4,773,438 and $480, respectively.

14

On March 27, 2020, the CARES Act was enacted in response to COVID-19 pandemic. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period which the new legislation is enacted. The CARES Act made various tax law changes including among other things (i) increasing the limitation under Section 163(j) of the Internal Revenue Code of 1986, as amended (the “IRC”) for 2019 and 2020 to permit additional expensing of interest (ii) enacting a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k), (iii) making modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and (iv) enhancing the recoverability of alternative minimum tax credits. Given the Company’s full valuation allowance position and capitalization of all costs, the CARES Act did not have an impact on the financial statements.

A reconciliation of the federal statutory income tax rate to the Company’s effective tax rate at December 31, 2021 and 2020 is as follows:

    

December 2,

    

December 31,

 

2021

2020

 

Statutory federal income tax rate

 

21.00

%  

21.00

%

State taxes, net of federal tax benefit

 

0.00

%  

0.00

%

Change in fair value of warrant liabilities

 

(1.76)

%  

0.00

%

Transaction costs incurred in connection with IPO

 

0.00

%  

0.00

%

Fair value of warrant liability in excess of proceeds from Private Placement

 

0.00

%  

0.00

%

Change in valuation allowance

 

(19.24)

%  

(21.00)

%

Income tax provision

 

0.00

%  

0.00

%

The Company files income tax returns in the U.S. federal jurisdiction. The Company’s tax returns since inception remain open to examination by the taxing authorities.

NOTE 10 — WARRANT LIABILITIES

Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A common stock underlying the warrants is then effective and a current prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable, and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless the shares of Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing a Business Combination, the Company will use its commercially reasonable efforts to file with the SEC, and within 60 business days following a Business Combination to have declared effective, a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elect, the Company will not be required to file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Redemption of warrants when the price per Class A ordinary share 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):

in whole and not in part;
at a price of $0.01 per warrant;
upon a minimum of 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and

15

if, and only if, the last reported sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00.  Commencing ninety days after the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement Units):

in whole and not in part;
at a price of $0.10 per warrant provided that holders will be able to exercise their warrants prior to redemption and receive that number of shares of Class A common stock determined based on the redemption date and the fair market value of the Class A common stock;
upon a minimum of 30 days’ prior written notice of redemption;
if, and only if, the last reported sale price of our Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; and
if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given.

If the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger, or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public 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 Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.

In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or its affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the completion of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day after the day on which the Company completes a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market Value and the Newly Issued Price.

16

The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

NOTE 11 — FAIR VALUE MEASUREMENTS

The Company follows the guidance in ASC 820 for its financial assets and liabilities that arere-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1:   Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2:   Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3:   Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 2, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.

    

    

    

December 2,

Description

Level

2021

Liabilities:

Warrant Liability – Public Warrants

 

 

1

 

12,860,834

Warrant Liability – Private Placement Warrants

 

 

3

 

288,925

Warrant Liability – Underwriter Warrants

 

 

3

 

63,500

The Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the balance sheet. The warrant liabilities are measured at fair value at inception and remeasured on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the statements of operations.

Measurement

The Company utilizes a Cox-Ross-Rubenstein lattice model to value the warrants at each reporting period, with changes in fair value recognized in the statements of operations. The estimated fair value of the warrant liability is determined using Level 3 inputs. Inherent in a binomial lattice 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 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 Warrants are measured at fair value on a recurring basis. The subsequent measurement of the Public Warrants as of December 3, 2021 is classified as Level 1 due to the use of an observable market quote in an active market.

17

The key inputs into the binomial lattice simulation model for the Private Placement Warrants and Public Warrants were as follows at initial measurement and December 3, 2021 (Private Placement Warrants only):

    

February 12, 2021

    

 

(Initial

 

Measurement)

December 3, 2021

 

Risk-free interest rate

 

0.56

%  

1.13

%

Trading days per year

 

252

 

252

Expected volatility

 

17.8

%  

21.0

%

Exercise price

$

11.50

$

11.50

Stock Price

$

9.65

$

9.48

On February 12, 2021, the fair value of the Private Placement Warrants and Public Warrants were determined to be $1.05 and $1.03 per warrant for aggregate values of $0.2 million and $10.8 million, respectively. On December 2, 2021, the fair value of the Private Placement Warrants and Public Warrants were determined to be $1.22 and $1.27 per warrant for aggregate values of $0.3 million and $12.8 million, respectively.

The following table presents the changes in the fair value of warrant liabilities:

    

Private

    

    

Warrant

Placement

Public

Liabilities

Fair value as of January 1, 2021

$

$

$

Initial measurement on February 12, 2021 (including over-allotment)

 

280,875

 

10,857,917

 

11,138,792

Change in valuation inputs or other assumptions

$

71,550

$

2,002,917

$

2,074,467

Fair value as of December 2, 2021

$

352,425

$

12,860,834

$

13,213,259

Due to the use of quoted prices in an active market (Level 1) to measure the fair value of the Public Warrants, subsequent to initial measurement, the Company had transfers out of Level 3 totaling $12,860,834 during the period from February 12, 2021 through December 2, 2021.

NOTE 12 — SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. The Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements other than as follows:

On December 3, 2021, the Company consummated the previously announced business combinations pursuant to (1) the agreement and plan of merger, dated as of May 25, 2021, by and among P3 Health Group Holdings, and FAC Merger Sub LLC, and (2) the transaction and combination agreement, dated as of May 25, 2021, by and among Foresight and the Merger Corps, CPF P3 Blocker-A, LLC, , CPF P3 Blocker-B, LLC, , CPF P3 Splitter, LLC, , Chicago Pacific Founders Fund-A, L.P., and Chicago Pacific Founders Fund-B, L.P., , pursuant to which, among other things, P3 Health Group Holdings merged with and into Merger Sub, with Merger Sub as the surviving company, which was renamed P3 Health Group, LLC, and the Merger Corps merged with and into the Blockers, with the Blockers as the surviving entities and wholly-owned subsidiaries of the Company. Upon completion of the Business Combinations, the Company and P3 LLC were organized in an “Up-C” structure in which all of the P3 LLC operating subsidiaries are held directly or indirectly by P3 LLC, and the Company directly owned approximately 17.1% of P3 LLC and became the sole manager of P3 LLC.

Following the Closing, substantially all of the Company’s assets and operations are held and conducted by P3 LLC and its subsidiaries, and the Company’s only assets are equity interests in P3 LLC. In connection with the Closing, the Company changed its name from “Foresight Acquisition Corp.” to “P3 Health Partners Inc.”

18

v3.23.3
Cover
Nov. 09, 2023
Cover  
Document Type 8-K
Document Period End Date Nov. 09, 2023
Entity Registrant Name P3 Health Partners Inc.
Entity Incorporation, State or Country Code DE
Securities Act File Number 001-40033
Entity Tax Identification Number 85-2992794
Entity Address, Address Line One 2370 Corporate Circle, Suite 300
Entity Address, City or Town Henderson
Entity Address, State or Province NV
Entity Address, Postal Zip Code 89074
City Area Code 702
Local Phone Number 910-3950
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company true
Entity Ex Transition Period false
Entity Central Index Key 0001832511
Amendment Flag false
Class A Common Stock  
Cover  
Title of 12(b) Security Class A common stock, par value $0.0001 per share
Trading Symbol PIII
Security Exchange Name NASDAQ
Warrants  
Cover  
Title of 12(b) Security Warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50
Trading Symbol PIIIW
Security Exchange Name NASDAQ
v3.23.3
CONSOLIDATED BALANCE SHEETS - USD ($)
Dec. 02, 2021
Dec. 31, 2020
Current Assets    
Cash and cash equivalents $ 100,935 $ 179,512
Prepaid expenses 355,188  
Total Current Assets 456,123 179,512
Deferred offering costs   215,448
Cash and securities held in Trust Account 316,267,136  
Total Assets 316,723,259 394,960
Current liabilities    
Accrued expenses 21,284,300 2,286
Accrued offering costs 15,450 94,960
Advance from related parties 150,000  
Promissory note - related party   275,000
Total Current Liabilities 21,449,750 372,246
Warrant liabilities 13,213,259  
Total Liabilities 34,663,009 372,246
Commitments (Note 6)
Class A common stock subject to possible redemption, 31,625,000 and no shares at redemption value as of December 2, 2021 and December 31, 2020, respectively 316,250,000  
Stockholders' (Deficit) Equity    
Preferred stock, $0.0001 par value; 1,000,000 shares authorized, none issued and outstanding
Additional paid-in capital   24,209
Accumulated deficit (34,190,624) (2,286)
Total Stockholders' (Deficit) Equity (34,189,750) 22,714
Total Liabilities, Redeemable Shares and Stockholders' Equity 316,723,259 394,960
Class A Common Stock    
Stockholders' (Deficit) Equity    
Common stock $ 874  
Class B Common Stock    
Stockholders' (Deficit) Equity    
Common stock   $ 791
v3.23.3
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Dec. 02, 2021
Dec. 31, 2020
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock authorized 1,000,000 1,000,000
Preferred stock issued 0 0
Preferred stock outstanding 0 0
Class A Common Stock    
Temporary equity shares outstanding 31,625,000 0
Common stock par or stated value per share $ 0.0001 $ 0.0001
Common stock shares authorized 200,000,000 200,000,000
Common stock shares issued 832,500 7,906,250
Common stock shares outstanding (in shares) 832,500 7,906,250
Class A Common Stock subject to possible redemption    
Temporary equity shares outstanding 31,625,000 0
Class A common stock not subject to possible redemption    
Common stock shares issued 8,738,750 8,738,750
Common stock shares outstanding (in shares) 8,738,750 8,738,750
Class B Common Stock    
Common stock par or stated value per share $ 0.0001 $ 0.0001
Common stock shares authorized 20,000,000 20,000,000
Common stock shares issued 7,906,250 7,906,250
Common stock shares outstanding (in shares) 7,906,250 7,906,250
v3.23.3
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
4 Months Ended 11 Months Ended
Dec. 31, 2020
Dec. 02, 2021
General and administrative expenses $ 2,286 $ 22,747,817
Loss from operations (2,286) (22,747,817)
Other income (expense):    
Interest income   24
Interest earned on marketable securities held in Trust Account   17,136
Change in fair value of warrant liabilities   (2,074,467)
Other income   2,057,307
Net loss (2,286) (24,805,124)
Class A Common Stock    
Other income (expense):    
Net loss   $ (24,805,124)
Weighted average shares outstanding basic (in shares)   29,692,013
Weighted average shares outstanding diluted (in shares)   29,692,013
Net loss per share basic (in dollars per share)   $ (0.84)
Net loss per share diluted (in dollars per share)   $ (0.84)
Class B Common Stock    
Other income (expense):    
Net loss $ (2,286)  
Weighted average shares outstanding basic (in shares) 6,875,000  
Weighted average shares outstanding diluted (in shares) 6,875,000  
Net loss per share basic (in dollars per share) $ 0.00  
Net loss per share diluted (in dollars per share) $ 0.00  
v3.23.3
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($)
Class B Common Stock
Common Stock
Class B Common Stock
Class A Common Stock subject to possible redemption
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Total
Beginning balance at Aug. 19, 2020 $ 0   $ 0 $ 0 $ 0 $ 0
Beginning (in shares) at Aug. 19, 2020 0   0      
Issuance of Class B common stock to Sponsor $ 791     24,209   25,000
Issuance of Class B common stock to Sponsor (in shares) 7,906,250          
Net loss   $ (2,286)     (2,286) (2,286)
Ending balance at Dec. 31, 2020 $ 791     24,209 (2,286) 22,714
Ending (in shares) at Dec. 31, 2020 7,906,250          
Accretion for Class A common stock to redemption amount       (8,068,251) (9,383,214) (17,451,465)
Sale of 832,500 Private Placement Units, Net     $ 83 $ 8,044,042   8,044,125
Sale of 832,500 Private Placement Units, Net (Shares)     832,500      
October 4, 2021 Class B conversion $ (791)   $ 791      
October 4, 2021 Class B conversion (in shares) (7,906,250)   7,906,250      
Net loss         (24,805,124) (24,805,124)
Ending balance at Dec. 02, 2021     $ 874   $ (34,190,624) $ (34,189,750)
Ending (in shares) at Dec. 02, 2021     8,738,750      
v3.23.3
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical)
9 Months Ended
Oct. 04, 2021
shares
Private Placement Units  
Sale of 832,500 Private Placement Units, Net (Shares) 832,500
v3.23.3
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
4 Months Ended 11 Months Ended
Dec. 31, 2020
Dec. 02, 2021
Cash Flows from Operating Activities:    
Net loss $ (2,286) $ (24,805,124)
Adjustments to reconcile net loss to net cash used in operating activities:    
Interest earned on marketable securities held in Trust Account   (17,136)
Change in fair value of warrant liabilities   2,074,467
Transaction costs incurred in connection with IPO   234,419
Changes in operating assets and liabilities:    
Prepaid expenses   (355,188)
Accounts payable and accrued expenses 2,286 21,282,014
Net cash used in operating activities   (1,586,548)
Cash Flows from Investing Activities:    
Investment of cash into trust Account   (316,250,000)
Net cash used in investing activities   (316,250,000)
Cash Flows from Financing Activities:    
Proceeds from issuance of Class B common stock to Sponsor 25,000  
Proceeds from sale of Units, net of underwriting discounts paid   309,924,999
Proceeds from sale of Private Placements Warrants   8,325,000
Proceeds from convertible promissory note - related party 275,000  
Advances from related party   150,000
Repayment of convertible promissory note - related party   (275,000)
Payment of offering costs (120,488) (367,028)
Net cash provided by financing activities 179,512 317,757,971
Net (Decrease) Increase in Cash 179,512 (78,577)
Cash - Beginning   179,512
Cash - Ending 179,512 100,935
Non-cash investing and financing activities:    
Offering costs included in accrued offering cost $ 94,960 15,450
Initial classification of Class A common stock subject to possible redemption   $ 316,250,000