UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
(Amendment
No. 1)
(Mark
One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2020
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR
THE TRANSITION PERIOD FROM TO
Commission
File Number 001-39125
PROPERTY
SOLUTIONS ACQUISITION CORP.
(Exact
name of registrant as specified in its charter)
Delaware
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84-4720320
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(State or Other Jurisdiction
of Incorporation)
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(I.R.S. Employer
Identification No.)
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654
Madison Avenue
New
York, NY 10065
(Address
of Principal Executive Offices) (Zip Code)
(646)
502-9845
(Registrant’s
Telephone Number, Including Area Code)
Securities
registered pursuant to Section 12(b) of the Act:
Title
of Each Class
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Trading
Symbol(s)
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Name
of Each Exchange on Which Registered
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Units,
each consisting of one share of common stock and one-half of one redeemable warrant
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PSACU
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The
Nasdaq Stock Market LLC
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Common
stock, $0.0001 per share
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PSAC
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The
Nasdaq Stock Market LLC
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Redeemable
warrants, exercisable for shares of common stock at an exercise price of $11.50 per share
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PSACW
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The
Nasdaq Stock Market LLC
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Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934
during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirement for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller
reporting company
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Emerging growth company
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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. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
As
of June 30, 2020, the last business day of the registrant’s most recently completed second fiscal quarter, the registrant’s
shares of common stock were not publicly traded. Accordingly, there was no market value for the registrant’s shares of common stock
on such date.
As
of March 31, 2021, there are 29,516,511 shares of common stock, par value $0.0001 per share, issued and outstanding.
PROPERTY
SOLUTIONS ACQUISITION CORP.
ANNUAL
REPORT ON FORM 10-K
TABLE
OF CONTENTS
Unless
otherwise stated, references in this Annual Report on Form 10-K/A to:
“common
stock” are to our common stock, par value $0.0001 per share;
“equity-linked
securities” refers to any debt or equity securities issued in a transaction, including but not limited to a private placement of
equity or debt, that are convertible, exercisable or exchangeable for shares of common stock;
“initial
stockholders” are to our stockholders prior to our initial public offering (excluding EarlyBirdCapital);
“management”
“management team” are to our officers and directors;
“Nasdaq”
means the Nasdaq Capital Market;
“private
units” are to units issued to the sponsor in a private placement simultaneously with the closing of our initial public offering;
“public
shares” are to shares of our common stock sold as part of the units sold in our initial public offering (whether they are purchased
in such offering or thereafter in the open market);
“public
stockholders” are to the holders of our public shares, including our sponsor (as defined below), officers and directors to the
extent they purchase public shares, provided that their status as “public stockholders” shall only exist with respect to
such public shares;
“public
warrants” are to our redeemable warrants sold as part of the units in our initial public offering (whether they were purchased
in our initial public offering or thereafter in the open market) and to any private placement warrants or warrants issued upon conversion
of working capital loans that are sold to third parties that are not initial purchasers or executive officers or directors (or permitted
transferees) following the consummation of our initial business combination;
“SEC”
are to the United States Securities and Exchange Commission;
“sponsor”
are to Property Solutions Acquisition Sponsor, LLC, a company affiliated with our officers and directors;
“units”
are to units consisting of one share of common stock and one warrant;
“warrants”
are to our redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share; and
“we,”
“us,” “our,” and “company” are to Property Solutions Acquisition Corp.
EXPLANATORY
NOTE
Property
Solutions Acquisition Corp. (the “Company,” “we”, “our” or “us”) is filing this Annual
Report on Form 10-K/A (Amendment No. 1), or this Amendment, to amend our Annual Report on Form 10-K for the year ended December 31, 2020,
originally filed with the Securities and Exchange Commission, or the SEC, on March 31, 2021, or the Original Filing, to restate our financial
statements as of and for the period ended December 31, 2020. We are also restating the financial statements as of July 24, 2020; and
as of and for the period ended September 30, 2020 in the accompanying financial statements included in this Annual Report (collectively,
the “Original Financial Statements”).
The
restatement primarily relates to consideration of the factors in determining whether to classify contracts that may be settled in an
entity’s own stock as equity of the entity or as an asset or liability in accordance with Accounting Standards Codification (“ASC”)
815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity. In the Original Financial Statements, the Company
classified the public warrants and private placement warrants issued in connection with the Company’s initial public offering (“IPO”)
as equity instruments. Upon further consideration of the rules and guidance, management of the Company concluded that the 594,551 private
warrants issued at the time of the Company’s IPO (the “Private Warrants”) are precluded from equity classification
due to certain settlement provisions. As a result, the Private Warrants should be recorded as liabilities on the balance sheet and measured
at fair value at inception and on a recurring basis in accordance with ASC 820, Fair Value Measurement, with changes in fair value
recognized in the statement of operations.
As
a result, on May 20, 2021, the Company’s management and Audit Committee concluded that the Original Financial Statements should
no longer be relied upon and are to be restated in order to correct the classification error.
The
Company’s accounting for the Private Warrants as components of equity instead of as derivative liabilities did not have any effect
on the Company’s previously reported investments held in trust, cash flows from operations, or cash.
The
Company has not amended its Current Report on Form 8-K filed on July 30, 2020 or its quarterly report for the period affected by the
restatement. The financial information that has been previously filed or otherwise reported is superseded by the information in this
Amendment, and the financial statements and related financial information contained in such previously filed report should no longer
be relied upon.
The
restatement is more fully described in Note 2 of the notes to the financial statements included herein.
In
addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by the Company’s
principal executive officer and principal financial officer are filed as exhibits (in Exhibits 31.1 and 32.1) to this Amendment under
Item 15 of Part IV hereof.
Except
as described above, this Amendment does not amend, update or change any other items or disclosures contained in the Original Filing,
and accordingly, this Amendment does not reflect or purport to reflect any information or events occurring after the original filing
date or modify or update those disclosures affected by subsequent events. Accordingly, this Amendment should be read in conjunction with
the Original Filing and the Company’s other filings with the SEC. Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Original Filing.
Restatement
Background
On
April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a public
statement (the “Public Statement”) on accounting and reporting considerations for warrants issued by special purpose acquisition
companies (“SPACs”). The Public Statement discussed “certain features of warrants issued in SPAC transactions”
that “may be common across many entities.” The Public Statement indicated that when one or more of such features is included
in a warrant, the warrant “should be classified as a liability measured at fair value, with changes in fair value each period reported
in earnings.”
This
Amendment reflects the correction of the errors identified in light of the Public Statement, subsequent to the filing of the Original
Financial Statements (see Item 8 “Financial Statements and Supplementary Data” and Note 2 of the notes to the financial statements
included herein for more details on the impact of the restatement errors on our financial statements).
Internal
Control and Disclosure Controls Considerations
In
connection with this restatement, the Company’s management has concluded that in light of the classification error described above,
a material weakness exists in the Company’s internal control over financial reporting and that the Company’s disclosure controls
and procedures were not effective.
Items
Amended In This Amendment
For
the convenience of the reader, this Annual Report Form 10-K/A sets forth the Original Filing in its entirety, as amended to reflect the
restatement. No attempt has been made in this Form 10-K/A to update other disclosures presented in the Original Filing, except as required
to reflect the effects of the restatement. The following items have been amended as a result of the restatement:
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Part I –
Item 1A. Risk Factors.
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Part II –
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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Part II –
Item 8. Financial Statements and Supplementary Data.
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Part II –
Item 9A. Controls and Procedures.
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Part IV –
Item 15. Exhibits, Financial Statement Schedules.
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This
Amendment does not reflect adjustments for events occurring after March 31, 2021, the date of the filing of the Original Filing, except
to the extent they are otherwise required to be included and discussed herein and did not substantively modify or update the disclosures
herein other than as required to reflect the adjustments described above. This Amendment should be read in conjunction with the Company’s
Current Reports on Form 8-K filed with the SEC since the date of filing of the Original Filing and all of the Company’s filings
after the date hereof.
The
Company is also filing a Consent of Independent Registered Public Accounting Firm as Exhibit 23.1 and currently dated certifications
from our Chief Executive Officer and Chief Financial Officer as Exhibits 31.1 and 32.1 to this Amendment.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS;
RISK FACTORS SUMMARY
This
annual report, including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act
and Section 21E of the Exchange Act. These forward-looking statements can be identified by the use of forward-looking terminology, including
the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,”
“may,” “will,” “potential,” “projects,” “predicts,” “continue,”
or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that
actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating
to our ability to consummate any acquisition or other business combination and any other statements that are not statements of current
or historical facts. These statements are based on management’s current expectations, but actual results may differ materially
due to various factors, including, but not limited to our:
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ability to
complete our initial business combination with FF Intelligent Mobility Global Holdings Ltd., or any other initial business combination;
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success in retaining or
recruiting, or changes required in, our officers, key employees or directors following an initial business combination;
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officers and directors
allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial
business combination, as a result of which they would then receive expense reimbursements;
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potential ability to obtain
additional financing to complete an initial business combination;
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pool of prospective target
businesses;
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failure to maintain the
listing on, or the delisting of our securities from, Nasdaq or another national securities exchange following our initial business
combination;
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the ability of our officers
and directors to generate a number of potential investment opportunities;
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potential change in control
if we acquire one or more target businesses for stock;
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public securities’
potential liquidity and trading;
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lack of a market for our
securities;
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use of proceeds not held
in the trust account or available to us from interest income on the trust account balance; or
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our financial performance.
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The
forward-looking statements contained in this annual report are based on our current expectations and beliefs concerning future developments
and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual
results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and
uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more
of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects
from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These
risks and others described under “Risk Factors” may not be exhaustive.
By
their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that
may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that
our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ
materially from those made in or suggested by the forward-looking statements contained in this annual report. In addition, even if our
results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the
forward-looking statements contained in this annual report, those results or developments may not be indicative of results or developments
in subsequent periods.
Risk
Factors Summary
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Our
Private Warrants are accounted for as liabilities and the changes in value of our Private Warrants could have a material effect
on our financial results.
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We
have identified a material weakness in our internal control over financial reporting as of December 31, 2020. If we are unable
to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report
our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect
our business and operating results.
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We have restated our consolidated
financial statements for the year as of and ended December 31, 2020, which may affect investor confidence, our stock price, our ability
to raise capital in the future, our results of operations and financial condition, our ability to complete the proposed business
combination with FF Intelligent Mobility Global Holdings Ltd. (“FF”), and which may result in stockholder litigation.
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We are an early
stage company and you have no basis on which to evaluate our ability to achieve our business objective.
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Our public
stockholders may not be afforded an opportunity to vote on our proposed business combination.
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If the funds
held in trust are insufficient to allow us to operate for at least 21 months following the initial public offering, we may be
unable to complete a business combination.
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A provision
of our warrant agreement may make it more difficult for us to consummate an initial business combination.
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Since we have
not selected a particular industry or target business with which to complete a business combination, we are unable to currently ascertain
the merits or risks of the industry or business in which we may ultimately operate.
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Our ability
to successfully effect a business combination and to be successful thereafter will be totally dependent upon the efforts of our key
personnel, some of whom may join us following a business combination. Our key personnel may negotiate employment or consulting agreements
with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation
following a business combination and as a result, may cause them to have conflicts of interest in determining whether a particular
business combination is the most advantageous.
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Our officers
and directors may have a conflict of interest in determining whether a particular target business is appropriate for a business combination.
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Our officers
and directors or their affiliates have pre-existing fiduciary and contractual obligations and may in the future become affiliated
with other entities engaged in business activities similar to those intended to be conducted by us. Accordingly, they may have conflicts
of interest in determining to which entity a particular business opportunity should be presented.
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EarlyBirdCapital
may have a conflict of interest in rendering services to us in connection with our initial business combination.
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The ability
of our stockholders to exercise their conversion rights or sell their shares to us in a tender offer may not allow us to effectuate
the most desirable business combination or optimize our capital structure.
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In connection
with any stockholder meeting called to approve a proposed initial business combination, we may require stockholders who wish to convert
their shares in connection with a proposed business combination to comply with specific requirements for conversion that may make
it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights.
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If, in connection
with any stockholder meeting called to approve a proposed business combination, we require public stockholders who wish to convert
their shares to comply with specific requirements for conversion, such converting stockholders may be unable to sell their securities
when they wish to in the event that the proposed business combination is not approved.
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We may be unable
to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target
business, which could compel us to restructure or abandon a particular business combination.
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Our initial
stockholders control a substantial interest in us and thus may influence certain actions requiring a stockholder vote.
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The requirement
that we complete an initial business combination within 21 months from the closing of our initial public offering may give potential
target businesses leverage over us in negotiating a business combination.
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We may not
obtain a fairness opinion with respect to the target business that we seek to acquire and therefore you may be relying solely on
the judgment of our board of directors in approving a proposed business combination.
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Resources could
be spent researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business.
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Compliance
with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and
costs of completing an acquisition.
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There may be
tax consequences to our business combinations that may adversely affect us.
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We may only
be able to complete one business combination with the proceeds of our initial public offering, which will cause us to be solely dependent
on a single business which may have a limited number of products or services.
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If we do not
conduct an adequate due diligence investigation of a target business, we may be required to subsequently take write-downs or
write-offs, restructuring, and impairment or other charges that could have a significant negative effect on our financial condition,
results of operations and our stock price, which could cause you to lose some or all of your investment.
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If we effect
a business combination with a company located in a foreign jurisdiction, we would be subject to a variety of additional risks that
may negatively impact our operations.
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If we effect
a business combination with a company located outside of the United States, the laws applicable to such company will likely
govern all of our material agreements and we may not be able to enforce our legal rights.
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If we acquire
a company servicing the real estate industry, our future operations may be subject to risks associated with this sector.
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If we are unable
to consummate a business combination, our public stockholders may be forced to wait more than 21 months before receiving distributions
from the trust account.
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We may issue
shares of our capital stock or debt securities to complete a business combination, which would reduce the equity interest of our
stockholders and likely cause a change in control of our ownership.
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If third parties
bring claims against us, the proceeds held in trust could be reduced and the per-share redemption price received by stockholders
may be less than $10.00.
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Our stockholders
may be held liable for claims by third parties against us to the extent of distributions received by them.
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Our directors
may decide not to enforce our sponsor’s indemnification obligations, resulting in a reduction in the amount of funds in the
trust account available for distribution to our public stockholders.
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If we do not
file and maintain a current and effective prospectus relating to the common stock issuable upon exercise of the warrants, holders
will only be able to exercise such warrants on a “cashless basis.”
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An investor
will only be able to exercise a warrant if the issuance of shares of common stock upon such exercise has been registered or qualified
or is deemed exempt under the securities laws of the state of residence of the holder of the warrants.
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The private
warrants may be exercised at a time when the public warrants may not be exercised.
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We may amend
the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least a majority of the
then outstanding public warrants.
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Nasdaq may
delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.
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We are an “emerging
growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will
make our shares of common stock less attractive to investors.
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Our outstanding
warrants may have an adverse effect on the market price of our common stock and make it more difficult to effect a business combination.
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We may redeem
your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
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Our management’s
ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares
of common stock upon their exercise of the warrants than they would have received had they been able to exercise their warrants for
cash.
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If our security
holders exercise their registration rights, it may have an adverse effect on the market price of our shares of common stock and the
existence of these rights may make it more difficult to effect a business combination.
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Our independent
registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability
to continue as a “going concern.”
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Provisions
in our amended and restated certificate of incorporation and bylaws and Delaware law may inhibit a takeover of us, which could limit
the price investors might be willing to pay in the future for our common stock and could entrench management.
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You will not
be entitled to protections normally afforded to investors of blank check companies.
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Changes in
laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results
of operations.
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Our amended
and restated certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware
will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability
to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
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PART
I
ITEM
1A. RISK FACTORS
You
should carefully consider all of the following risk factors and all other information contained in this Annual Report on Form 10-K, including
the financial statements. If any of the following risks occur, our business, financial condition or results of operations may be materially
and adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect
to us and our business.
In
addition to the risks and uncertainties set forth below, we face certain material risks and uncertainties related to the Transactions
with FF. If we succeed in effecting the Transactions with FF, we will face additional and different risks and uncertainties related to
the business of FF. Such material risks are to be set forth in a Registration Statement on Form S-4, including a proxy statement/consent
solicitation statement/prospectus included therein, to be filed by the company with the SEC.
The
risks presented below assumes that we will not consummate the Transactions with FF and then seek to find an alternative target with which
to consummate and initial business combination.
Risks
Relating to the Restatement
Our
Private Warrants are accounted for as liabilities and the changes in value of our Private Warrants could have a material effect on our
financial results.
On
April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement
regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff
Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)
(the “SEC Statement”). The SEC Statement advises, among other things, that certain adjustments generally present in SPAC
warrants preclude such warrants from being accounted for as equity. As a result of the SEC Statement, we reevaluated the accounting treatment
of the Private Warrants and determined to classify the Private Warrants as liabilities measured at fair value, with changes in fair value
recognized in the statement of operations in the period of change.
As
a result, included on our consolidated balance sheet as of December 31, 2020 is a derivative liability related to embedded features contained
within our Private Warrants. Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), provides for the
remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the
change in the fair value being recognized in earnings in the statement of operations. As a result of the recurring fair value measurement,
our consolidated financial statements and results of operations may fluctuate quarterly, based on factors, which are outside of our control.
Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our Private Warrants each reporting
period and that the amount of such gains or losses could be material.
We
have identified a material weakness in our internal control over financial reporting as of December 31, 2020. If we are unable to develop
and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial
results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and
operating results.
Following
this issuance of the SEC Statement, on May 20, 2021, the Company’s management and the Audit Committee concluded that the Company’s
financial statements which were included in the Original Filing should no longer be relied upon due to errors in such consolidated financial
statements relating to the Company’s classification the Private Warrants as equity rather than as liabilities. As a result, our
management concluded that our internal control over financial reporting was not effective as of December 31, 2020 due to the existence
of material weaknesses in such controls, and we have also concluded that our disclosure controls and procedures were not effective as
of December 31, 2020 due to material weaknesses in our internal control over financial reporting, all as described in Part II, Item 9A,
“Controls and Procedures” of this Amendment. A material weakness is a deficiency, or a combination of deficiencies, in internal
control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial
statements will not be prevented, or detected and corrected on a timely basis. Effective internal controls are necessary for us to provide
reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures
may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
Moreover,
because of the inherent limitations of any control system, material misstatements due to error or fraud may not be prevented or detected
and corrected on a timely basis, or at all. If we are unable to provide reliable and timely financial reports in the future, our business
and reputation may be further harmed. Restated financial statements and failures in internal control may also cause us to fail to meet
reporting obligations, negatively affect investor confidence in our management and the accuracy of our financial statements and disclosures,
or result in adverse publicity and concerns from investors, any of which could have a negative effect on the price of our securities,
subject us to regulatory investigations and penalties or stockholder litigation, and have a material adverse impact on our financial
condition.
We
have restated our consolidated financial statements for the year as of and ended December 31, 2020, which may affect investor confidence,
our stock price, our ability to raise capital in the future, our results of operations and financial condition, our ability to complete
the proposed business combination with FF Intelligent Mobility Global Holdings Ltd. (“FF”), and which may result in stockholder
litigation.
This
Amendment includes restated consolidated financial statements as of and for the fiscal year ended December 31, 2020. Such restatement
may have the effect of eroding investor confidence in the Company and our financial reporting and accounting practices and processes,
and may negatively impact the trading price of our securities, could have a material adverse effect on our business, results of operations
and financial condition, may make it more difficult for us to raise capital on acceptable terms, if at all, and may adversely impact
our ability to complete our proposed business combination with FF. The restatement and related material weaknesses in our internal control
over financial reporting may also result in stockholder litigation.
Risks
Related to Searching for and Consummating a Business Combination
We
are an early stage company and you have no basis on which to evaluate our ability to achieve our business objective.
We
are an early stage company with no operating results to date. Since we do not have an operating history, you have no basis upon which
to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses.
We may be unable to complete our initial business combination. If we fail to complete our initial business combination, we will never
generate any operating revenues.
Our
public stockholders may not be afforded an opportunity to vote on our proposed business combination.
We
will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which public
stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination or don’t
vote at all, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide
our public stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a
stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes
payable), in each case subject to the limitations described elsewhere in this Annual Report on Form 10-K. Accordingly, it is possible
that we will consummate our initial business combination even if holders of a majority of our public shares do not approve of the business
combination we consummate. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow
stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety
of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder
approval. For instance, Nasdaq rules currently allow us to engage in a tender offer in lieu of a stockholder meeting but would still
require us to obtain stockholder approval if we were seeking to issue more than 20% of our outstanding shares to a target business as
consideration in any business combination. Therefore, if we were structuring a business combination that required us to issue more than
20% of our outstanding shares, we would seek stockholder approval of such business combination instead of conducting a tender offer.
If
the funds held in trust are insufficient to allow us to operate for at least 21 months following the initial public offering, we
may be unable to complete a business combination.
If
we use all of the funds held outside of the trust account and all interest available to us, we may not have sufficient funds available
with which to structure, negotiate or close an initial business combination. In such event, we would need to borrow funds from our sponsor,
officers or directors or their affiliates to operate or may be forced to liquidate. Our sponsor, initial stockholders, officers, directors
and their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount that they deem
reasonable in their sole discretion for our working capital needs. Each loan would be evidenced by a promissory note. The notes would
either be paid upon consummation of our initial business combination, without interest, or, at holder’s discretion, up to $1,500,000
of the notes may be converted into units at a price of $10.00 per unit.
A
provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
If:
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we issue additional
shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial
business combination at an issue price or effective issue price of less than $9.20 per share of common stock,
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the aggregate
gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the
funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions),
and
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the Market
Value is below $9.20 per share,
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then
the exercise price of the warrants will be adjusted to be equal to 115% of the higher of the market value (as defined in our warrants)
and the price at which we issue the additional shares of common stock or equity-linked securities. This may make it more difficult
for us to consummate an initial business combination with a target business.
Since
we have not selected a particular industry or target business with which to complete a business combination, we are unable to currently
ascertain the merits or risks of the industry or business in which we may ultimately operate.
We
may pursue an acquisition opportunity in any business industry or sector we choose. Accordingly, there is no current basis for you to
evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the target business which we may
ultimately acquire. To the extent we complete a business combination with a financially unstable company or an entity in its development
stage, we may be affected by numerous risks inherent in the business operations of those entities. If we complete a business combination
with an entity in an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that
industry. Although our management will endeavor to evaluate the risks inherent in a particular industry or target business, we cannot
assure you that we will properly ascertain or assess all of the significant risk factors. We also cannot assure you that an investment
in our securities will not ultimately prove to be less favorable to investors than a direct investment, if an opportunity were available,
in a target business.
Our
ability to successfully effect a business combination and to be successful thereafter will be totally dependent upon the efforts of our
key personnel, some of whom may join us following a business combination. While we intend to closely scrutinize any individuals we engage
after a business combination, we cannot assure you that our assessment of these individuals will prove to be correct.
Our
ability to successfully effect a business combination is dependent upon the efforts of our key personnel. We believe that our success
depends on the continued service of our key personnel, at least until we have consummated our initial business combination. We cannot
assure you that any of our key personnel will remain with us for the immediate or foreseeable future. In addition, none of our officers
is required to commit any specified amount of time to our affairs and, accordingly, our officers will have conflicts of interest in allocating
management time among various business activities, including identifying potential business combinations and monitoring the related due
diligence. We do not have employment agreements with, or key-man insurance on the life of, any of our officers. The unexpected loss
of the services of our key personnel could have a detrimental effect on us.
The
role of our key personnel after a business combination, however, cannot presently be ascertained. Although some of our key personnel
serve in senior management or advisory positions following a business combination, it is likely that most, if not all, of the management
of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after a business combination,
we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the
requirements of operating a public company which could cause us to have to expend time and resources helping them become familiar with
such requirements. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect
our operations.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination.
These agreements may provide for them to receive compensation following a business combination and as a result, may cause them to have
conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel will be able to remain with the company after the consummation of a business combination only if they are able to negotiate
employment or consulting agreements or other appropriate arrangements in connection with the business combination. Such negotiations
would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to the company after the consummation of the business
combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target
business.
Our
officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to
how much time to devote to our affairs. This could have a negative impact on our ability to consummate a business combination.
Our
officers and directors will not commit their full time to our affairs. We presently expect each of our officers and directors to devote
such amount of time as they reasonably believe is necessary to our business. We do not intend to have any full-time employees prior
to the consummation of our initial business combination. The foregoing could have a negative impact on our ability to consummate our
initial business combination.
Our
officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for a business
combination.
Our
sponsor has waived its right to convert its founders’ shares or any other shares purchased in in our initial public offering or
thereafter, or to receive distributions from the trust account with respect to its founders’ shares upon our liquidation if we
are unable to consummate a business combination. Accordingly, the shares acquired prior tour initial public offering, as well as the
private units and any warrants purchased by our officers or directors in the aftermarket, will be worthless if we do not consummate a
business combination. The personal and financial interests of our directors and officers may influence their motivation in timely identifying
and selecting a target business and completing a business combination and in determining whether the terms, conditions and timing of
a particular business combination are appropriate and in our stockholders’ best interest.
Our
officers and directors or their affiliates have pre-existing fiduciary and contractual obligations and may in the future become
affiliated with other entities engaged in business activities similar to those intended to be conducted by us. Accordingly, they may
have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Our
officers and directors or their affiliates have pre-existing fiduciary and contractual obligations to other companies. Accordingly,
they may participate in transactions and have obligations that may be in conflict or competition with our consummation of our initial
business combination. As a result, a potential target business may be presented by our management team to another entity prior to its
presentation to us and we may not be afforded the opportunity to engage in a transaction with such target business. Additionally, our
officers and directors may in the future become affiliated with entities that are engaged in a similar business, including another blank
check company that may have acquisition objectives that are similar to ours. Accordingly, they may have conflicts of interest in determining
to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential
target business may be presented to other entities prior to its presentation to us, subject to our officers’ and directors’
fiduciary duties under Delaware law.
Our
officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business
we may seek to acquire.
We
may consummate a business combination with a target business in any geographic location or industry we choose. We cannot assure you that
our officers and directors will have enough experience or have sufficient knowledge relating to the jurisdiction of the target or its
industry to make an informed decision regarding a business combination.
EarlyBirdCapital
may have a conflict of interest in rendering services to us in connection with our initial business combination.
We
have engaged EarlyBirdCapital to assist us in connection with our initial business combination. We will pay EarlyBirdCapital a cash fee
for such services in an aggregate amount equal to up to 3.5% of the total gross proceeds raised in our initial public offering only if
we consummate our initial business combination. The private units purchased by EarlyBirdCapital or its designees and the representative
shares will also be worthless if we do not consummate an initial business combination. These financial interests may result in EarlyBirdCapital
having a conflict of interest when providing the services to us in connection with an initial business combination.
The
ability of our stockholders to exercise their conversion rights or sell their shares to us in a tender offer may not allow us to effectuate
the most desirable business combination or optimize our capital structure.
If
our business combination requires us to use substantially all of our cash to pay the purchase price, because we will not know how many
stockholders may exercise conversion rights or seek to sell their shares to us in a tender offer, we may either need to reserve part
of the trust account for possible payment upon such conversion, or we may need to arrange third party financing to help fund our business
combination. In the event that the acquisition involves the issuance of our stock as consideration, we may be required to issue a higher
percentage of our stock to make up for a shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity
financing or incurring indebtedness at higher than desirable levels. This may limit our ability to effectuate the most attractive business
combination available to us.
In
connection with any vote to approve a business combination, we will offer each public stockholder the option to vote in favor of a proposed
business combination and still seek conversion of his, her or its shares.
In
connection with any vote to approve a business combination, we will offer each public stockholder (but not our sponsor, officers or directors)
the right to have his, her or its shares of common stock converted to cash (subject to the limitations described elsewhere in this Annual
Report on Form 10-K) regardless of whether such stockholder votes for or against such proposed business combination or does not vote
at all. The ability to seek conversion while voting in favor of our proposed business combination may make it more likely that we will
consummate a business combination.
We
do not have a specified maximum conversion threshold. The absence of such a conversion threshold may make it easier for us to consummate
a business combination even where a substantial number of public stockholders seek to convert their shares to cash in connection with
the vote on the business combination.
We
have no specified percentage threshold for conversion in our amended and restated certificate of incorporation. As a result, we may be
able to consummate a business combination even though a substantial number of our public stockholders do not agree with the transaction
and have converted their shares. However, in no event will we consummate an initial business combination unless we have net tangible
assets of at least $5,000,001 immediately prior to or upon consummation of our initial business combination.
In
connection with any stockholder meeting called to approve a proposed initial business combination, we may require stockholders who wish
to convert their shares in connection with a proposed business combination to comply with specific requirements for conversion that may
make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights.
In
connection with any stockholder meeting called to approve a proposed initial business combination, each public stockholder will have
the right, regardless of whether he is voting for or against such proposed business combination or does not vote at all, to demand that
we convert his shares into a pro rata share of the trust account as of two business days prior to the consummation of the initial business
combination. We may require public stockholders who wish to convert their shares in connection with a proposed business combination to
either (i) tender their certificates to our transfer agent or (ii) deliver their shares to the transfer agent electronically
using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holders’ option, in each case
prior to a date set forth in the tender offer documents or proxy materials sent in connection with the proposal to approve the business
combination. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC and our transfer
agent will need to act to facilitate this request. It is our understanding that stockholders should generally allot at least two weeks
to obtain physical certificates from the transfer agent. However, because we do not have any control over this process or over the brokers
or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While we have been advised that it takes
a short time to deliver shares through the DWAC System, we cannot assure you of this fact. Accordingly, if it takes longer than we anticipate
for stockholders to deliver their shares, stockholders who wish to convert may be unable to meet the deadline for exercising their conversion
rights and thus may be unable to convert their shares.
If,
in connection with any stockholder meeting called to approve a proposed business combination, we require public stockholders who wish
to convert their shares to comply with specific requirements for conversion, such converting stockholders may be unable to sell their
securities when they wish to in the event that the proposed business combination is not approved.
If
we require public stockholders who wish to convert their shares to comply with specific requirements for conversion and such proposed
business combination is not consummated, we will promptly return such certificates to the tendering public stockholders. Accordingly,
investors who attempted to convert their shares in such a circumstance will be unable to sell their securities after the failed acquisition
until we have returned their securities to them. The market price for our shares of common stock may decline during this time and you
may not be able to sell your securities when you wish to, even while other stockholders that did not seek conversion may be able to sell
their securities.
Because
of our structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination.
We
expect to encounter intense competition from entities other than blank check companies having a business objective similar to ours, including
venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established
and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors
possess greater technical, human and other resources than we do and our financial resources will be relatively limited when contrasted
with those of many of these competitors. While we believe that there are numerous potential target businesses that we could acquire with
the net proceeds of our initial public offering, our ability to compete in acquiring certain sizable target businesses will be limited
by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain
target businesses. Furthermore, seeking stockholder approval or engaging in a tender offer in connection with any proposed business combination
may delay the consummation of such a transaction. Additionally, our outstanding warrants, and the future dilution they potentially represent,
may not be viewed favorably by certain target businesses. Any of the foregoing may place us at a competitive disadvantage in successfully
negotiating a business combination.
We
may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of
the target business, which could compel us to restructure or abandon a particular business combination.
Although
we believe that the net proceeds of this our initial public offering will be sufficient to allow us to consummate a business combination,
because we have not yet identified any prospective target business, we cannot ascertain the capital requirements for any particular transaction.
If the net proceeds of our initial public offering prove to be insufficient, either because of the size of the business combination,
the depletion of the available net proceeds in search of a target business, or the obligation to convert into cash a significant number
of shares from dissenting stockholders, we will be required to seek additional financing. Such financing may not be available on acceptable
terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a particular business combination,
we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target
business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the operations
or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development
or growth of the target business. None of our sponsor, officers, directors or stockholders is required to provide any financing to us
in connection with or after a business combination.
Our
initial stockholders control a substantial interest in us and thus may influence certain actions requiring a stockholder vote.
Our
initial stockholders own approximately 21% of our issued and outstanding shares of common stock. Our sponsor, officers, directors, initial
stockholders or their affiliates could determine in the future to make such purchases in the open market or in private transactions,
to the extent permitted by law, in order to influence the vote or magnitude of the number of shareholders seeking to tender their shares
to us. In connection with any vote for a proposed business combination, our initial stockholders, as well as all of our officers and
directors, have agreed to vote the shares of common stock owned by them in favor of such proposed business combination. EarlyBirdCapital
has also agreed to vote the representative shares and private shares it is purchasing in favor of such proposed business combination.
Our
board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of
directors being elected in each year. It is unlikely that there will be an annual meeting of stockholders to elect new directors prior
to the consummation of a business combination, in which case all of the current directors will continue in office until at least the
consummation of the business combination. Accordingly, you may not be able to exercise your voting rights under corporate law for up
to 21 months after our initial public offering. If there is an annual meeting, as a consequence of our “staggered” board
of directors, only a minority of the board of directors will be considered for election and our sponsor, because of their ownership position,
will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert control at least
until the consummation of a business combination.
If
we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may
be restricted, which may make it difficult for us to complete a business combination.
A
company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business
of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment
Company Act, as amended, or the Investment Company Act. Since the proceeds of our initial public offering are held in the trust account,
it is possible that we could be deemed an investment company. Notwithstanding the foregoing, we do not believe that our principal activities
will subject us to the Investment Company Act. To this end, the proceeds held in trust may be invested by the trustee only in United States
“government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180 days
or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which
invest only in direct U.S. government treasury obligations. By restricting the investment of the proceeds to these instruments, we intend
to meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act.
If
we are nevertheless deemed to be an investment company under the Investment Company Act, we may be subject to certain restrictions that
may make it more difficult for us to complete a business combination, including:
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restrictions
on the nature of our investments; and
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restrictions
on the issuance of securities.
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In
addition, we may have imposed upon us certain burdensome requirements, including:
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registration
as an investment company;
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adoption of
a specific form of corporate structure; and
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reporting,
record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations.
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Compliance
with these additional regulatory burdens would require additional expense for which we have not allotted.
Our
search for an initial business combination, and any target business with which we ultimately consummate an initial business combination,
may be materially adversely affected by the coronavirus (COVID-19) pandemic and other events, and the status of debt and equity markets.
The
COVID-19 pandemic has adversely affected, and other events (such as terrorist attacks, natural disasters or a significant outbreak
of other infectious diseases) could adversely affect, the economies and financial markets worldwide, and the business of any potential
target business with which we consummate an initial business combination could be materially and adversely affected. Furthermore, we
may be unable to complete an initial business combination if concerns relating to COVID-19 continue to restrict travel, limit the
ability to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable
to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for an initial business
combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may
emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions
posed by COVID-19 or other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases)
continue for an extensive period of time, our ability to consummate an initial business combination, or the operations of a target business
with which we ultimately consummate an initial business combination, may be materially adversely affected.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted
by COVID-19 and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases),
including as a result of increased market volatility, decreased market liquidity in third-party financing being unavailable on terms
acceptable to us or at all.
As
the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may
be more competition for attractive targets. This could increase the cost of our initial business combination and could even result in
our inability to find a target or to consummate an initial business combination.
In
recent years and especially in the last several months, the number of special purpose acquisition companies that have been formed has
increased substantially. Many potential targets for special purpose acquisition companies have already entered into an initial business
combination, and there are still many special purpose acquisition companies seeking targets for their initial business combination, as
well as many such companies currently in registration. As a result, at times, fewer attractive targets may be available, and it may require
more time, more effort and more resources to identify a suitable target and to consummate an initial business combination.
In
addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with available
targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause targets
companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry
sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close business combinations or operate
targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and
consummate an initial business combination, and may result in our inability to consummate an initial business combination on terms favorable
to our investors altogether.
Changes
in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and
complete an initial business combination.
In
recent months, the market for directors and officers liability insurance for special purpose acquisition companies has changed. The premiums
charged for such policies have generally increased and the terms of such policies have generally become less favorable. There can be
no assurance that these trends will not continue.
The
increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive
for us to negotiate an initial business combination. In order to obtain directors and officers liability insurance or modify its coverage
as a result of becoming a public company, the post-business combination entity might need to incur greater expense, accept less favorable
terms or both. However, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the
post-business combination’s ability to attract and retain qualified officers and directors.
In
addition, even after we were to complete an initial business combination, our directors and officers could still be subject to potential
liability from claims arising from conduct alleged to have occurred prior to the initial business combination. As a result, in order
to protect our directors and officers, the post-business combination entity will likely need to purchase additional insurance with respect
to any such claims (“run-off insurance”). The need for run-off insurance would be an added expense for the post-business
combination entity, and could interfere with or frustrate our ability to consummate an initial business combination on terms favorable
to our investors.
The
requirement that we complete an initial business combination within 21 months from the closing of our initial public offering may
give potential target businesses leverage over us in negotiating a business combination.
We
have 21 months from the closing of our initial public offering to complete an initial business combination. Any potential target
business with which we enter into negotiations concerning a business combination will be aware of this requirement. Consequently, such
target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete a business combination
with that particular target business, we may be unable to complete a business combination with any other target business. This risk will
increase as we get closer to the time limit referenced above.
We
may not obtain a fairness opinion with respect to the target business that we seek to acquire and therefore you may be relying solely
on the judgment of our board of directors in approving a proposed business combination.
We
will only be required to obtain a fairness opinion with respect to the target business that we seek to acquire if it is an entity that
is affiliated with any of our sponsor, initial stockholders, officers, directors or their affiliates. In all other instances, we will
have no obligation to obtain an opinion. Accordingly, investors will be relying solely on the judgment of our board of directors in approving
a proposed business combination.
Resources
could be spent researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business.
It
is anticipated that the investigation of each specific target business and the negotiation, drafting, and execution of relevant agreements,
disclosure documents, and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If a decision is made not to complete a specific business combination, the costs incurred up to that point for
the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific target
business, we may fail to consummate the business combination for any number of reasons including those beyond our control. Any such event
will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business.
Because
we must furnish our stockholders with target business financial statements prepared in accordance with U.S. generally accepted accounting
principles or international financial reporting standards, we will not be able to complete a business combination with prospective target
businesses unless their financial statements are prepared in accordance with U.S. generally accepted accounting principles or international
financial reporting standards.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance
tests include historical and/or pro forma financial statement disclosure in periodic reports. These financial statements may be required
to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America,
or GAAP, or international financial reporting standards, or IFRS, depending on the circumstances, and the historical financial statements
may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States),
or PCAOB. We will include the same financial statement disclosure in connection with any tender offer documents we use, whether or not
they are required under the tender offer rules. Additionally, to the extent we furnish our stockholders with financial statements prepared
in accordance with IFRS, such financial statements will need to be audited in accordance with U.S. GAAP at the time of the consummation
of the business combination. These financial statement requirements may limit the pool of potential target businesses we may acquire.
Compliance
with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs
of completing an acquisition.
Section 404
of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls and may require that we
have such system of internal controls audited beginning with our Annual Report on Form 10-K for the year ending December 31,
2021. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties
and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business. Section 404 of the Sarbanes-Oxley Act
also requires that our independent registered public accounting firm report on management’s evaluation of our system of internal
controls. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal
controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase
the time and costs necessary to complete any such acquisition. Furthermore, any failure to implement required new or improved controls,
or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could
harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors
to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
There
may be tax consequences to our business combinations that may adversely affect us.
While
we expect to undertake any merger or acquisition so as to minimize taxes both to the acquired business and/or asset and us, such business
combination might not meet the statutory requirements of a tax-free reorganization, or the parties might not obtain the intended
tax-free treatment upon a transfer of shares or assets. A non-qualifying reorganization could result in the imposition of substantial
taxes.
Risks
Related to the Post Business Combination Company
We
may only be able to complete one business combination with the proceeds of our initial public offering, which will cause us to be solely
dependent on a single business which may have a limited number of products or services.
It
is likely we will consummate a business combination with a single target business, although we have the ability to simultaneously acquire
several target businesses. By consummating a business combination with only a single entity, our lack of diversification may subject
us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit
from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several
business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may
be:
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solely dependent
upon the performance of a single business, or
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dependent upon
the development or market acceptance of a single or limited number of products, processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination.
Alternatively,
if we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each
of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations,
which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple business combinations,
we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations
and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks,
it could negatively impact our profitability and results of operations.
If
we do not conduct an adequate due diligence investigation of a target business, we may be required to subsequently take write-downs or
write-offs, restructuring, and impairment or other charges that could have a significant negative effect on our financial condition,
results of operations and our stock price, which could cause you to lose some or all of your investment.
We
must conduct a due diligence investigation of the target businesses we intend to acquire. Intensive due diligence is time consuming and
expensive due to the operations, accounting, finance and legal professionals who must be involved in the due diligence process. Even
if we conduct extensive due diligence on a target business, this diligence may not reveal all material issues that may affect a particular
target business, and factors outside the control of the target business and outside of our control may later arise. If our diligence
fails to identify issues specific to a target business, industry or the environment in which the target business operates, we may be
forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could
result in our reporting losses. Even though these charges may be non-cash items and not have an immediate impact on our liquidity,
the fact that we report charges of this nature could contribute to negative market perceptions about us or our common stock. In addition,
charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt
held by a target business or by virtue of our obtaining post-combination debt financing.
If
we effect a business combination with a company located in a foreign jurisdiction, we would be subject to a variety of additional risks
that may negatively impact our operations.
If
we consummate a business combination with a target business in a foreign country, we would be subject to any special considerations or
risks associated with companies operating in the target business’ home jurisdiction, including any of the following:
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rules and regulations
or currency conversion or corporate withholding taxes on individuals;
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tariffs and
trade barriers;
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regulations
related to customs and import/export matters;
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tax issues,
such as tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations
and exchange controls;
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challenges
in collecting accounts receivable;
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cultural and
language differences;
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employment
regulations;
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crime, strikes,
riots, civil disturbances, terrorist attacks and wars; and
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deterioration
of political relations with the United States.
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We
cannot assure you that we would be able to adequately address these additional risks. If we were unable to do so, our operations might
suffer.
If
we effect a business combination with a company located outside of the United States, the laws applicable to such company will likely
govern all of our material agreements and we may not be able to enforce our legal rights.
If
we effect a business combination with a company located outside of the United States, the laws of the country in which such company
operates will govern almost all of the material agreements relating to its operations. We cannot assure you that the target business
will be able to enforce any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws
and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States.
The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business
opportunities or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially
all of our assets would be located outside of the United States and some of our officers and directors might reside outside of the
United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect
service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities
and criminal penalties of our directors and officers under federal securities laws.
If
we acquire a company servicing the real estate industry, our future operations may be subject to risks associated with this sector.
While
we may pursue an initial business combination target in any stage of its corporate evolution or in any industry or sector, we currently
intend to concentrate our efforts in identifying businesses that service the real estate industry. Because we have not yet identified
or approached any specific target business, we cannot provide specific risks of any business combination. However, risks inherent in
investments in this sector may include, but are not limited to, the following:
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adverse changes
in international, national, regional or local economic, demographic and market conditions;
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adverse changes
in financial conditions of buyers, sellers and tenants of properties;
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competition
from other companies and businesses that service the real estate industry;
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the ability
to develop successful new products or improve existing ones;
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the disruption
or failure of our networks, systems, platform or technology that frustrate or thwart our users’ ability to access our products
and services, which may cause our users, advertisers, and partners to cut back on or stop using our products and services altogether,
which could harm our business;
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fluctuations
in interest rates, which could adversely affect the ability of buyers and tenants of properties to obtain financing on favorable
terms or at all;
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mobile malware,
viruses, hacking and phishing attacks, spamming, and improper or illegal use of our products, which could harm our business and reputation;
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litigation
and other legal proceedings;
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the ability
to attract and retain highly skilled employees;
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environmental
risks; and
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civil unrest,
labor strikes, acts of God, including earthquakes, floods and other natural disasters and acts of war or terrorism, which may result
in uninsured losses.
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Any
of the foregoing could have an adverse impact on our operations following a business combination. However, our efforts in identifying
prospective target businesses will not be limited to companies that service the real estate industry. Accordingly, if we acquire a target
business in another industry, these risks we will be subject to risks attendant with the specific industry in which we operate or target
business which we acquire, which may or may not be different than those risks listed above.
Risks
Related to our Securities
If
we are unable to consummate a business combination, our public stockholders may be forced to wait more than 21 months before receiving
distributions from the trust account.
We
have 21 months from the closing of the initial public offering in which to complete a business combination. We have no obligation
to return funds to investors prior to such date unless we consummate a business combination prior thereto and only then in cases where
investors have sought to convert or sell their shares to us. Only after the expiration of this full time period will public security
holders be entitled to distributions from the trust account if we are unable to complete a business combination. Accordingly, investors’
funds may be unavailable to them until after such date and to liquidate your investment, public security holders may be forced to sell
their public shares or warrants, potentially at a loss.
We
may issue shares of our capital stock or debt securities to complete a business combination, which would reduce the equity interest of
our stockholders and likely cause a change in control of our ownership.
Our
amended and restated certificate of incorporation authorizes the issuance of up to 50,000,000 shares of common stock, par value
$.0001 per share, and 1,000,000 shares of preferred stock, par value $.0001 per share. We may issue a substantial number of shares
of common stock or shares of preferred stock, or a combination of common stock and preferred stock, to complete a business combination.
The issuance of additional shares of common stock will not reduce the per-share conversion amount in the trust account. The issuance
of shares of common stock or preferred stock:
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may significantly
reduce the equity interest of investors;
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may subordinate
the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded to our
shares of common stock;
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may cause a
change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability
to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and
directors; and
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may adversely
affect prevailing market prices for our shares of common stock.
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Similarly,
if we issue debt securities, it could result in:
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default and
foreclosure on our assets if our operating revenues after a business combination are insufficient to repay our debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants
that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate
payment of all principal and accrued interest, if any, if the debt security is payable on demand; and
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our inability
to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing
while the debt security is outstanding.
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If
we incur indebtedness, our lenders will not have a claim on the cash in the trust account and such indebtedness will not decrease the
per-share conversion amount in the trust account.
If
third parties bring claims against us, the proceeds held in trust could be reduced and the per-share redemption price received by
stockholders may be less than $10.00.
Our
placing of funds in trust may not protect those funds from third party claims against us. Although we will seek to have all vendors and
service providers we engage and prospective target businesses we negotiate with execute agreements with us waiving any right, title,
interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, they may not
execute such agreements. Furthermore, even if such entities execute such agreements with us, they may seek recourse against the trust
account. A court may not uphold the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims which
could take priority over those of our public stockholders. If we are unable to complete a business combination and distribute the proceeds
held in trust to our public stockholders, our sponsor has agreed (subject to certain exceptions described elsewhere in this Annual Report
on Form 10-K) that it will be liable to ensure that the proceeds in the trust account are not reduced below $10.00 per share by the claims
of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products
sold to us. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified
whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities
of our company. Therefore, we believe it is unlikely that our sponsor will be able to satisfy its indemnification obligations if it is
required to do so. As a result, the per-share distribution from the trust account may be less than $10.00, plus interest, due to
such claims.
Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds
held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust
account, we may not be able to return to our public stockholders at least $10.00.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them.
Our
amended and restated certificate of incorporation provides that we will continue in existence only until 21 months from the closing
of the initial public offering. If we do not complete a business combination by such date, we will (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100%
of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust
account, including any interest not previously released to us but net of franchise and income taxes payable, divided by the number of
then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate,
subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and
the requirements of other applicable law. We cannot assure you that we will properly assess all claims that may be potentially brought
against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but
no more) and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly,
we cannot assure you that third parties will not seek to recover from our stockholders amounts owed to them by us.
If
we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer”
or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders.
Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after expiration
of the time we have to complete an initial business combination, this may be viewed or interpreted as giving preference to our public
stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed
as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company
to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot
assure you that claims will not be brought against us for these reasons.
Our
directors may decide not to enforce our sponsor’s indemnification obligations, resulting in a reduction in the amount of funds
in the trust account available for distribution to our public stockholders.
In
the event that the proceeds in the trust account are reduced below $10.00 per public share and our sponsor asserts that it is unable
to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would
determine whether to take legal action against our sponsor to enforce such indemnification obligations. It is possible that our independent
directors in exercising their business judgment may choose not to do so in any particular instance. Additionally, each of our independent
directors is a member of our sponsor. As a result, they may have a conflict of interest in determining whether to enforce our sponsor’s
indemnification obligations. If our independent directors choose not to enforce these indemnification obligations, the amount of funds
in the trust account available for distribution to our public stockholders may be reduced below $10.00 per share.
If
we do not file and maintain a current and effective prospectus relating to the common stock issuable upon exercise of the warrants, holders
will only be able to exercise such warrants on a “cashless basis.”
If
we do not file and maintain a current and effective prospectus relating to the common stock issuable upon exercise of the warrants at
the time that holders wish to exercise such warrants, they will only be able to exercise them on a “cashless basis” provided
that an exemption from registration is available. As a result, the number of shares of common stock that holders will receive upon exercise
of the warrants will be fewer than it would have been had such holder exercised his warrant for cash. Further, if an exemption from registration
is not available, holders would not be able to exercise on a cashless basis and would only be able to exercise their warrants for cash
if a current and effective prospectus relating to the common stock issuable upon exercise of the warrants is available. Under the terms
of the warrant agreement, we have agreed to use our best efforts to meet these conditions and to file and maintain a current and effective
prospectus relating to the common stock issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot
assure you that we will be able to do so. If we are unable to do so, the potential “upside” of the holder’s investment
in our company may be reduced or the warrants may expire worthless.
An
investor will only be able to exercise a warrant if the issuance of shares of common stock upon such exercise has been registered or
qualified or is deemed exempt under the securities laws of the state of residence of the holder of the warrants.
No
warrants will be exercisable and we will not be obligated to issue shares of common stock unless the shares of common stock issuable
upon such exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the
holder of the warrants. If the shares of common stock issuable upon exercise of the warrants are not qualified or exempt from qualification
in the jurisdictions in which the holders of the warrants reside, the warrants may be deprived of any value, the market for the warrants
may be limited and they may expire worthless if they cannot be sold.
The
private warrants may be exercised at a time when the public warrants may not be exercised.
Once
the private warrants become exercisable, such warrants may immediately be exercised on a cashless basis, at the holder’s option,
so long as they are held by the initial purchasers or their permitted transferees. The public warrants, however, will only be exercisable
on a cashless basis at the option of the holders if we fail to register the shares issuable upon exercise of the warrants under the Securities
Act within 90 days following the closing of our initial business combination. Accordingly, it is possible that the holders of the
private warrants could exercise such warrants at a time when the holders of public warrants could not.
We
may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least a majority
of the then outstanding public warrants.
Our
warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as
warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder
to cure any ambiguity or correct any defective provision. The warrant agreement requires the approval by the holders of at least a majority
of the then outstanding public warrants in order to make any change that adversely affects the interests of the registered holders.
Nasdaq
may delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.
Our
securities are listed on Nasdaq, a national securities exchange. Although we expect to meet on a pro forma basis Nasdaq’s minimum
initial listing standards, which generally only requires that we meet certain requirements relating to stockholders’ equity, market
capitalization, aggregate market value of publicly held shares and distribution requirements, we cannot assure you that our securities
will continue to be listed on Nasdaq in the future prior to an initial business combination. Additionally, in connection with our initial
business combination, it is likely that Nasdaq will require us to file a new initial listing application and meet its initial listing
requirements as opposed to its more lenient continued listing requirements. We cannot assure you that we will be able to meet those initial
listing requirements at that time. Nasdaq will also have discretionary authority to not approve our listing if Nasdaq determines that
the listing of the company to be acquired is against public policy at that time.
If
Nasdaq delists our securities from trading on its exchange, or we are not listed in connection with our initial business combination,
we could face significant material adverse consequences, including:
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a limited availability
of market quotations for our securities;
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reduced liquidity
with respect to our securities;
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a determination
that our shares of common stock are “penny stock” which will require brokers trading in our shares of common stock to
adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our
shares of common stock;
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a limited amount
of news and analyst coverage for our company; and
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a decreased
ability to issue additional securities or obtain additional financing in the future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the
sale of certain securities, which are referred to as “covered securities.” Because we expect that our units and eventually
our common stock and warrants will be listed on Nasdaq, our units, common stock and warrants will be covered securities. Although the
states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if
there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered
securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities
issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might use these powers,
or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer
listed on Nasdaq, our securities would not be covered securities and we would be subject to regulation in each state in which we offer
our securities.
We
are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth
companies will make our shares of common stock less attractive to investors.
We
are an “emerging growth company,” as defined in the JOBS Act. We will remain an “emerging growth company” for
up to five years. However, if our non-convertible debt issued within a three year period or revenues exceeds $1.07 billion,
or the market value of our shares of common stock that are held by non-affiliates exceeds $700 million on the last day of the
second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an
emerging growth company, we are not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,
we have reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and we are exempt
from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised
accounting standards that have different effective dates for public and private companies until those standards apply to private companies.
As such, our financial statements may not be comparable to companies that comply with public company effective dates. We cannot predict
if investors will find our shares of common stock less attractive because we may rely on these provisions. If some investors find our
shares of common stock less attractive as a result, there may be a less active trading market for our shares and our share price may
be more volatile.
Our
outstanding warrants may have an adverse effect on the market price of our common stock and make it more difficult to effect a business
combination.
We
issued warrants to purchase 22,977,568 shares of common stock as part of the units in our initial public offering and private warrants
included within the private units to purchase 594,551 shares of common stock. We may also issue other units to our sponsor, initial stockholders,
officers, directors or their affiliates in payment of working capital loans made to us. To the extent we issue shares of common stock
to effect a business combination, the potential for the issuance of a substantial number of additional shares upon exercise of these
warrants could make us a less attractive acquisition vehicle in the eyes of a target business. Such securities, when exercised, will
increase the number of issued and outstanding shares of common stock and reduce the value of the shares issued to complete the business
combination. Accordingly, our warrants may make it more difficult to effectuate a business combination or increase the cost of acquiring
the target business. Additionally, the sale, or even the possibility of sale, of the shares underlying the warrants could have an adverse
effect on the market price for our securities or on our ability to obtain future financing. If and to the extent these warrants are exercised,
you may experience dilution to your holdings.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We
have the ability to redeem outstanding warrants (excluding the private warrants and any warrants underlying additional units issued to
our sponsor, officers or directors in payment of working capital loans made to us) at any time after they become exercisable and prior
to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of the common stock equals or exceeds
$18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within
a 30 trading-day period commencing at any time after the warrants become exercisable and ending on the third business day prior
to proper notice of such redemption provided that on the date we give notice of redemption and during the entire period thereafter until
the time we redeem the warrants, we have an effective registration statement under the Securities Act covering the shares of common stock
issuable upon exercise of the warrants and a current prospectus relating to them is available. If and when the warrants become redeemable
by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all
applicable state securities laws. Redemption of the outstanding warrants could force you (i) to exercise your warrants and pay the
exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market
price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the
outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants. None of the
private warrants are redeemable by us so long as they are held by the initial purchasers or their permitted transferees.
Our
management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive
fewer shares of common stock upon their exercise of the warrants than they would have received had they been able to exercise their warrants
for cash.
If
we call our public warrants for redemption after the redemption criteria described elsewhere in this Annual Report on Form 10-K have
been satisfied, our management will have the option to require any holder that wishes to exercise his warrant (including any private
warrants) to do so on a “cashless basis.” If our management chooses to require holders to exercise their warrants on a cashless
basis, the number of shares of common stock received by a holder upon exercise will be fewer than it would have been had such holder
exercised his warrant for cash. This will have the effect of reducing the potential “upside” of the holder’s investment
in our company.
If
our security holders exercise their registration rights, it may have an adverse effect on the market price of our shares of common stock
and the existence of these rights may make it more difficult to effect a business combination.
Our
initial stockholders are entitled to make a demand that we register the resale of the founders’ shares at any time commencing three
months prior to the date on which their shares may be released from escrow. Additionally, the holders of representative shares, the private
units and any units and warrants our sponsor, initial stockholders, officers, directors, or their affiliates may be issued in payment
of working capital loans made to us, are entitled to demand that we register the resale of the representative shares, private units and
any other units and warrants we issue to them (and the underlying securities) commencing at any time after we consummate an initial business
combination. The presence of these additional securities trading in the public market may have an adverse effect on the market price
of our securities. In addition, the existence of these rights may make it more difficult to effectuate a business combination or increase
the cost of acquiring the target business, as the stockholders of the target business may be discouraged from entering into a business
combination with us or will request a higher price for their securities because of the potential effect the exercise of such rights may
have on the trading market for our shares of common stock.
General
Risks
Our
independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about
our ability to continue as a “going concern.”
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 31, 2020 are not sufficient to complete its planned activities. We cannot assure you that our plans to consummate an initial
business combination will be successful. These factors raise substantial doubt about the Company’s ability to continue as a going
concern. The financial statements contained in this Annual Report on Form 10-K do not include any adjustments that might result from
the outcome of this uncertainty.
Provisions
in our amended and restated certificate of incorporation and bylaws and Delaware law may inhibit a takeover of us, which could limit
the price investors might be willing to pay in the future for our common stock and could entrench management.
Our
amended and restated certificate of incorporation and bylaws contain provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. Our board of directors is divided into three classes, each of which will generally
serve for a term of three years with only one class of directors being elected in each year. As a result, at a given annual meeting only
a minority of the board of directors may be considered for election. Since our “staggered board” may prevent our stockholders
from replacing a majority of our board of directors at any given annual meeting, it may entrench management and discourage unsolicited
stockholder proposals that may be in the best interests of stockholders. Moreover, our board of directors has the ability to designate
the terms of and issue new series of preferred stock.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these
provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of
a premium over prevailing market prices for our securities.
You
will not be entitled to protections normally afforded to investors of blank check companies.
Since
the net proceeds of our initial public offering and the sale of the private units are intended to be used to complete a business combination
with a target business that has not been identified, we may be deemed to be a “blank check” company under the United States
securities laws. However, since we will have net tangible assets in excess of $5,000,000 we are exempt from rules promulgated by the
SEC to protect investors of blank check companies such as Rule 419. Accordingly, investors are not afforded the benefits or protections
of those rules which would, for example, require us to complete a business combination within 21 months of the effective date of
the initial public offering registration statement and restrict the use of interest earned on the funds held in the trust account.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results
of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply
with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult,
time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and
those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to
comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results
of operations.
Our
amended and restated certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of
Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability
to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in
our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought only
in the Court of Chancery in the State of Delaware, except any action (A) as to which the Court of Chancery in the State of Delaware
determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party
does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which
is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery
does not have subject matter jurisdiction, or (D) any action arising under the Securities Act, as to which the Court of Chancery
and the federal district court for the District of Delaware shall have concurrent jurisdiction. Any person or entity purchasing or otherwise
acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our
amended and restated certificate of incorporation.
This
choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes
with us or any of our directors, officers or employees, which may discourage lawsuits with respect to such claims, although our stockholders
will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder and may therefore
bring a claim in another appropriate forum. We cannot be certain that a court will decide that this provision is either applicable or
enforceable, and if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation
to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions,
which could harm our business, operating results and financial condition.
Our
amended and restated certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest extent
permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce
any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision
will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal
courts have exclusive jurisdiction.
PART
II
Item
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction
with our audited financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary
Data” of this Annual Report on Form 10-K/A. Certain information contained in the discussion and analysis set forth below includes
forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a
result of many factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements; Risk Factors Summary,”
“Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K/A.
Overview
We
are a blank check company formed under the laws of the State of Delaware on February 11, 2020 for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses.
We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the sale of
the private units, our shares, debt or a combination of cash, equity and debt.
We
expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete
a business combination will be successful.
Recent
Developments
On
January 27, 2021, we entered into the Merger Agreement with Merger Sub and FF. Pursuant to the Merger Agreement, Merger Sub will merge
with and into FF, with FF surviving the merger. As a result of the Transactions, FF will become a wholly-owned subsidiary of the Company,
with the stockholders of FF becoming stockholders of the Company, which will be renamed “Faraday Future Intelligent Electric, Inc.”
Under
the Merger Agreement, the outstanding FF shares and the outstanding FF converting debt will be converted into a number of shares of our
new Class A common stock following the Transactions and, for FF Top, shares of our New FF common stock following the Transactions based
on the Exchange Ratio.
Additionally,
each FF option or FF warrant that is outstanding immediately prior to the closing of the Merger (and by its terms will not terminate
upon the closing of the Merger) will remain outstanding and convert into the right to purchase a number of shares of our Class A common
stock equal to the number of FF ordinary shares subject to such option or warrant multiplied by the Exchange Ratio at an exercise price
per share equal to the current exercise price per share for such option or warrant divided by the Exchange Ratio.
The
Merger Agreement contains customary representations, warranties and covenants by the parties thereto and the closing is subject to certain
conditions as further described in the Merger Agreement.
On
February 28, 2021, we entered into a convertible promissory note with the sponsor pursuant to which the sponsor agreed to loan us up
to an aggregate principal amount of $500,000 (the “Note”). The Note is non-interest bearing and due on the date on which
we consummate a business combination. If we do not consummate a business combination, we may use a portion of any funds held outside
the Trust Account to repay the Note; however, no proceeds from the Trust Account may be used for such repayment. Up to $500,000 of the
Note may be converted into units at a price of $10.00 per unit at the option of the sponsor. The units would be identical to the Private
Units. There is no outstanding balance under the Note.
Restatement
of Previously Issued Financial Statements
This
Management’s Discussion and Analysis of Financial Condition and Results of Operations has been amended and restated to give effect
to the restatement of our Original Financial Statements. We are restating our historical financial results to reclassify our Private
Warrants as derivative liabilities pursuant to ASC 815-40 rather than as a component of equity as we had previously treated the
Private Warrants. The impact of the restatement is reflected in the Management’s Discussion and Analysis of Financial Condition
and Results of Operations below. Other than as disclosed in the Explanatory Note and with respect to the impact of the restatement, no
other information in this Item 7 has been amended and this Item 7 does not reflect any events occurring after the Original Filing. The
impact of the restatement is more fully described in Note 2 to our financial statements included in Item 15 of Part IV of this Amendment
and Item 9A: Controls and Procedures, both contained herein.
Results
of Operations
We
have neither engaged in any operations nor generated any revenues to date. Our only activities from February 11, 2020 (inception) through
December 31, 2020 were organizational activities, those necessary to prepare for the initial public offering, described below, and, subsequent
to the initial public offering, identifying a target company for a business combination. We do not expect to generate any operating revenues
until after the completion of our business combination. We generate non-operating income in the form of interest income on marketable
securities held after the initial public offering. We incur expenses as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence expenses.
As
a result of the restatement described in Note 2 of the notes to the financial statements included herein, we classify the Private Warrants
issued in connection with our IPO as liabilities at their fair value and adjust the Private Warrants to fair value at each reporting
period. This warrant liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value
is recognized in our statement of operations.
For
the period from February 11, 2020 (inception) through December 31, 2020, we had a net loss of $2,585,377, which consists of operating
costs of $2,218,182, a change in the fair value of the warrant liability resulting in a loss of $475,641, and transaction costs incurred
in connection with the IPO of $353, offset by interest earned on marketable securities held in the Trust Account of $99,990 and an unrealized
gain on marketable securities held in our Trust Account of $8,809.
Liquidity
and Capital Resources
On
July 24, 2020, we consummated the initial public offering of 22,977,568 Units, which included the partial exercise by the underwriters
of their over-allotment option on July 31, 2020, in the amount of 2,977,568 additional Units, at $10.00 per Unit, generating gross proceeds
of $229,775,680. Simultaneously with the closing of the initial public offering and the partial exercise of the over-allotment option,
we consummated the sale of 594,551 Private Units at a price of $10.00 per Private Unit in a private placement to our stockholders, generating
gross proceeds of $5,945,510.
Following
the initial public offering, the partial exercise of the over-allotment option by the underwriters’ and the sale of the Private
Units, a total of $229,775,680 was placed in the Trust Account and we had $813,980 of cash held outside of the Trust Account, after payment
of costs related to the initial public offering, and available for working capital purposes. We incurred $5,117,030 in transaction costs,
including $4,595,510 of underwriting fees and $521,520 of other offering costs.
For
the period from February 11, 2020 (inception) through December 31, 2020, cash used in operating activities was $304,885. Net loss of
$2,585,377 was affected by interest earned on marketable securities held in the Trust Account of $99,990, an unrealized gain on marketable
securities held in our Trust Account of $8,809, a non-cash charge for the change in the fair value of warrant liabilities of $475,641,
and transaction costs incurred in connection with the IPO of $353. Changes in operating assets and liabilities, which provided $1,913,297
of cash from operating activities.
As
of December 31, 2020, we had cash and marketable securities held in the trust account of $229,884,479. We intend to use substantially
all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account to complete our business
combination. We may withdraw interest to pay franchise and income taxes. During the period ended December 31, 2020, we did not withdraw
any interest earned on the Trust Account. To the extent that our capital stock or debt is used, in whole or in part, as consideration
to complete our business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the
operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As
of December 31, 2020, we had cash of $549,395 outside of the Trust Account. We intend to use the funds held outside the Trust Account
primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and
from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents
and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.
In
order to fund working capital deficiencies or finance transaction costs in connection with a business combination, the sponsor, or certain
of our officers and directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete a business
combination, we would repay such loaned amount out of the proceeds of the Trust Account released to us. Otherwise, such loans would be
repaid only out of funds held outside the Trust Account. In the event that a business combination does not close, we may use a portion
of proceeds held outside the Trust Account to repay such loaned amounts, but no proceeds held in the Trust Account would be used to repay
such loaned amounts. Up to $1,500,000 of such loans may be convertible into units, at a price of $10.00 per unit at the option of the
lender. The units would be identical to the Private Units. Except for the foregoing, the terms of such loans, if any, have not been determined
and no written agreements exist with respect to such loans. The loans would be repaid upon consummation of a business combination, without
interest.
We
monitor the adequacy of our working capital in order to meet the expenditures required for operating our business prior to our initial
business combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and
negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available
to operate our business prior to our business combination. Moreover, we may need to obtain additional financing either to complete our
business combination or because we become obligated to redeem a significant number of our public shares upon completion of our business
combination, in which case we may issue additional securities or incur debt in connection with such business combination. If we are unable
to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations
and liquidate the Trust Account.
Off-Balance
Sheet Arrangements
We
did not have any off-balance sheet arrangements as of December 31, 2020.
Contractual
Obligations
We
do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement
to pay an affiliate of the Company’s executive officers a monthly fee of $10,000 for office space and related services to the Company.
We began incurring these fees on July 21, 2020 and will continue to incur these fees monthly until the earlier of the completion of the
business combination and the Company’s liquidation.
We
have engaged EarlyBirdCapital as an advisor in connection with a business combination to assist us in holding meetings with its shareholders
to discuss the potential business combination and the target business’ attributes, introduce us to potential investors that are
interested in purchasing our securities in connection with a business combination, assist us in obtaining shareholder approval for the
business combination and assist us with its press releases and public filings in connection with the business combination. We 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 initial public offering (exclusive of any applicable finders’ fees which might become payable); provided that up to
33% of the fee may be allocated at our sole discretion to other third parties who are investment banks or financial advisory firms not
participating in our initial public offering that assist us in identifying and consummating a business combination.
Critical
Accounting Policies
The
preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual
results could materially differ from those estimates. We have identified the following critical accounting policies:
Warrant
Liability
We
account for the Private Warrants in accordance with the guidance contained in ASC 815-40-15-7D and 7F under which the Private Warrants
do not meet the criteria for equity treatment due to certain settlement provisions and must be recorded as liabilities. Accordingly,
we classify the Private Warrants as liabilities at their fair value and adjust the Private Warrants to fair value at each reporting period.
This warrant liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized
in our statement of operations. The Private Warrants for periods where no observable traded price was available are valued using a lattice
model and Monte Carlo simulation.
Common
Stock Subject to Possible Redemption
We
account for our common stock subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability
instrument and measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights
that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our
control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common
stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future
events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the
stockholders’ equity section of our balance sheet.
Net
Loss Per Common Share
We
apply the two-class method in calculating earnings per share. Net income (loss) per common share, basic and diluted for common stock
subject to possible redemption is calculated by dividing the interest income earned on the Trust Account, net of applicable taxes, if
any, by the weighted average number of shares of common stock subject to possible redemption outstanding for the period. Net income (loss)
per common share, basic and diluted for and non-redeemable common stock is calculated by dividing net loss less income attributable to
common stock subject to possible redemption, by the weighted average number of shares of non-redeemable common stock outstanding for
the period presented.
Recent
Accounting Standards
Management
does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
Item 9A. CONTROLS AND
PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Disclosure
controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed
under the Exchange Act, such as this Annual Report on Form 10-K/A, is recorded, processed, summarized, and reported within the time period
specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information
is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate
to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive
officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures
as of December 31, 2020, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers
concluded that, solely due to the events that led to the Company’s restatement of its financial statements to reclassify the Company’s
Private Warrants as described in the Explanatory Note to this Amendment, as of December 31, 2020, our disclosure controls and procedures
were not effective.
We
do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and
procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there
are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure
controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all
our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions.
Management’s
Annual Report on Internal Controls Over Financial Reporting
This
Annual Report on Form 10-K/A does not include a report of management’s assessment regarding internal control over financial reporting
or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the
SEC for newly public companies.
Restatement
of Previously Issued Financial Statements
On
May 20, 2021, we revised our prior position on accounting for the Private Warrants and concluded that our previously issued financial
statements as of and for the period ended December 31, 2020; as of July 24, 2020; and as of and for the period ended September 30, 2020,
should not be relied on because of a misapplication in the guidance on warrant accounting. However, the non-cash adjustments to the financial
statements do not impact the amounts previously reported for our cash and cash equivalents, total assets, or cash flows from operating
activities.
Changes
in Internal Control over Financial Reporting
Other
than as noted below, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f)
and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting. Due solely to the events that led to the restatement of our financial statements,
management has identified a material weakness in internal controls related to the accounting for warrants issued in connection with our
initial public offering, as described in Note 2 to the Notes to our Consolidated Financial Statements. Management did not design and
maintain effective controls to address the identification of and accounting for certain non-routine, unusual or complex transactions,
including the proper application of U.S. GAAP of such transactions. Specifically, management did not design and maintain controls to
timely identify and account for the classification of the Private Warrants as liabilities instead of components of equity.
In
light of the restatement of our Original Financial Statements included in this Amendment, we plan to enhance our processes to identify
and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards
that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials
and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting
applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives
will ultimately have the intended effects.
PART
IV
ITEM
15. EXHIBITS, FINANCIAL STATEMENTS, AND SCHEDULES
|
(a)
|
The
following documents are filed as part of this report:
|
|
(1)
|
Financial
Statements:
|
|
(2)
|
Financial
Statement Schedules:
|
None.
We
hereby file as part of this Annual Report on Form 10-K the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated
herein by reference can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E.,
Washington, D.C. 20549, at prescribed rates or on the SEC website at www.sec.gov.
Exhibit No.
|
|
Description of Exhibit
|
1.1
|
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Underwriting Agreement between the Company and EarlyBirdCapital, Inc., as representative of the underwriters. (1)
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1.2
|
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Business Combination Marketing Agreement between the Company and EarlyBirdCapital, Inc. (1)
|
2.1
|
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Agreement
and Plan of Merger, Dated as of January 27, 2021, by and among the Company, PSAC Merger Sub Ltd. and FF Intelligent Mobility
Global Holdings Ltd. (2)
|
3.1
|
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Amended and Restated Certificate of Incorporation. (1)
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4.1
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Warrant Agreement between Continental Stock Transfer & Trust Company and the Company. (1)
|
10.1
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Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Company. (1)
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10.2
|
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Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company and the Company’s Initial Stockholders. (1)
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10.3
|
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Registration Rights Agreement between the Company and certain security holders. (1)
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10.4
|
|
Administrative Services Agreement between the Company and InterPrivate LLC. (1)
|
10.5.1
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Subscription Agreement between the Company and Property Solutions Acquisition Sponsor, LLC. (1)
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10.5.2
|
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Subscription Agreement between the Company and EarlyBirdCapital, Inc. (1)
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10.6
|
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Form of Indemnification Agreement. (1)
|
10.7
|
|
Form of Subscription Agreement (2)
|
31.1*
|
|
Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2*
|
|
Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1**
|
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2**
|
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS*
|
|
XBRL Instance Document
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed herewith.
|
**
|
Furnished.
|
(1)
|
Previously filed as an
exhibit to our Current Report on Form 8-K filed on July 24, 2020 and incorporated by reference herein.
|
(2)
|
Previously filed as an
exhibit to our Current Report on Form 8-K filed on January 28, 2021 and incorporated by reference herein.
|
SIGNATURES
Pursuant
to the requirements of the Section 13 or 15 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized on the 26th day of May 2021.
PROPERTY SOLUTIONS ACQUISITION CORP.
|
|
|
|
By:
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/s/ Jordan
Vogel
|
|
|
Jordan Vogel
|
|
|
Co-Chief Executive Officer
|
|
In
accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Jordan
Vogal
|
|
Chairman, Co- Chief Executive Officer
|
|
May 26, 2021
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Jordan Vogal
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Aaron
Feldman
|
|
Co-Chief Executive Officer, Treasurer
|
|
May 26, 2021
|
Aaron Feldman
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ David
Amsterdam
|
|
Director
|
|
May 26, 2021
|
David Amsterdam
|
|
|
|
|
|
|
|
|
|
/s/ Avi Savar
|
|
Director
|
|
May 26, 2021
|
Avi Savar
|
|
|
|
|
|
|
|
|
|
/s/ Eduardo
Abush
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Director
|
|
May 26, 2021
|
Eduardo Abush
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|
|
|
|
PROPERTY
SOLUTIONS ACQUISITION CORP.
INDEX
TO FINANCIAL STATEMENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Shareholders and the Board of Directors of
Property Solutions Acquisition Corp.
Opinion
on the Financial Statements
We
have audited the accompanying balance sheet of Property Solutions Acquisition Corp. (the “Company”) as of December 31, 2020,
the related statements of operations, changes in stockholder’s equity and cash flows for the period from February 11, 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 financial position of the Company as of December 31, 2020, and
the results of its operations and its cash flows for the period from February 11, 2020 (inception) through December 31, 2020, in conformity
with accounting principles generally accepted in the United States of America.
Explanatory
Paragraph – Going Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described
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 31, 2020 are not sufficient to complete its planned activities. These conditions
raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. Management’s
plans in regard to these matters are also described in Notes 1 and 10. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Restatement
of the 2020 Financial Statements
As
discussed in Note 2 to the financial statements, the accompanying financial statements as of December 31, 2020 and for the period from
February 11, 2020 (inception) through December 31, 2020 have been restated.
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 audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (“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 audit 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 audit,
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
audit 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 audit 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 audit provides
a reasonable basis for our opinion.
/s/
Marcum LLP
Marcum
LLP
We
have served as the Company’s auditor since 2020.
Houston,
TX
March 31, 2021, except for the effects of the restatement discussed in Note 2 as to which the date is May 26, 2021
PROPERTY
SOLUTIONS ACQUISITION CORP.
BALANCE
SHEET
DECEMBER
31, 2020 (RESTATED)
ASSETS
|
|
|
|
Current Assets
|
|
|
|
|
Cash
|
|
$
|
549,395
|
|
Prepaid expenses and other current assets
|
|
|
128,561
|
|
Total Current Assets
|
|
|
677,956
|
|
Cash and marketable securities held in Trust Account
|
|
|
229,884,479
|
|
TOTAL ASSETS
|
|
$
|
230,562,435
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
Current liabilities - accrued expenses
|
|
$
|
2,041,838
|
|
Warrant liability
|
|
|
630,224
|
|
TOTAL LIABILITIES
|
|
$
|
2,672,062
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
Common stock subject to possible redemption 22,289,037 shares at redemption value
|
|
|
222,890,370
|
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding
|
|
|
—
|
|
Common stock, $0.0001 par value; 50,000,000 shares authorized; 7,227,474 issued and outstanding (excluding 22,289,037 shares subject to possible redemption)
|
|
|
723
|
|
Additional paid-in capital
|
|
|
7,584,657
|
|
Accumulated deficit
|
|
|
(2,585,377
|
)
|
Total Stockholders’ Equity
|
|
|
5,000,003
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
230,562,435
|
|
The
accompanying notes are an integral part of these financial statements.
PROPERTY
SOLUTIONS ACQUISITION CORP.
STATEMENT
OF OPERATIONS
FOR
THE PERIOD FROM FEBRUARY 11, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020 (RESTATED)
Formation and operational costs
|
|
$
|
2,218,182
|
|
Loss from operations
|
|
|
(2,218,182
|
)
|
|
|
|
|
|
Other expense:
|
|
|
|
|
Change in fair value of warrants
|
|
|
(475,641
|
)
|
Transaction costs incurred in connection with the IPO
|
|
|
(353
|
)
|
Interest earned on marketable securities held in Trust Account
|
|
|
99,990
|
|
Unrealized gain on marketable securities held in Trust Account
|
|
|
8,809
|
|
Other expense (net):
|
|
|
(367,195
|
)
|
|
|
|
|
|
Loss before provision for income taxes
|
|
|
(2,585,377
|
)
|
Net loss
|
|
$
|
(2,585,377
|
)
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption
|
|
|
21,779,604
|
|
|
|
|
|
|
Basic and diluted net income per share, Common stock subject to possible redemption
|
|
$
|
0.00
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Non-redeemable common stock
|
|
|
6,452,794
|
|
|
|
|
|
|
Basic and diluted net loss per share, Non-redeemable common stock
|
|
$
|
(0.40
|
)
|
The
accompanying notes are an integral part of these financial statements.
PROPERTY
SOLUTIONS ACQUISITION CORP.
STATEMENT
OF CHANGES IN STOCKHOLDER’S EQUITY
FOR
THE PERIOD FROM FEBRUARY 11, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020 (RESTATED)
|
|
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total
Stockholder’s
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance – February 11, 2020 (Inception)
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Founder Shares to Sponsor
|
|
|
5,750,000
|
|
|
|
575
|
|
|
|
24,425
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Representative Shares
|
|
|
200,000
|
|
|
|
20
|
|
|
|
800
|
|
|
|
—
|
|
|
|
820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of 22,977,568 Units, net of underwriting discount and offering expenses
|
|
|
22,977,568
|
|
|
|
2,298
|
|
|
|
224,656,352
|
|
|
|
—
|
|
|
|
224,658,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of 594,551 Private Placement Units, net of warrant liability
|
|
|
594,551
|
|
|
|
60
|
|
|
|
5,791,220
|
|
|
|
—
|
|
|
|
5,791,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeiture of Founder Shares
|
|
|
(5,608
|
)
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock subject to possible redemption
|
|
|
(22,289,037
|
)
|
|
|
(2,229
|
)
|
|
|
(222,888,141
|
)
|
|
|
—
|
|
|
|
(222,890,370
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,585,377
|
)
|
|
|
(2,585,377
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – December 31, 2020
|
|
|
7,227,474
|
|
|
$
|
723
|
|
|
$
|
7,584,657
|
|
|
$
|
(2,585,377
|
)
|
|
$
|
5,000,003
|
|
The
accompanying notes are an integral part of these financial statements.
PROPERTY
SOLUTIONS ACQUISITION CORP.
STATEMENT
OF CASH FLOWS
FOR
THE PERIOD FROM FEBRUARY 11, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020 (RESTATED)
Cash Flows from Operating Activities:
|
|
|
|
Net loss
|
|
$
|
(2,585,377
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
Interest earned on marketable securities held in Trust Account
|
|
|
(99,990
|
)
|
Change in fair value of warrant liability
|
|
|
475,641
|
|
Transaction costs incurred in connection with IPO
|
|
|
353
|
|
Unrealized gain on marketable securities held in Trust Account
|
|
|
(8,809
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(128,541
|
)
|
Accrued expenses
|
|
|
2,041,838
|
|
Net cash used in operating activities
|
|
|
(304,885
|
)
|
Cash Flows from Investing Activities:
|
|
|
|
|
Investment in Trust Account
|
|
|
(229,775,680
|
)
|
Net cash used in investing activities
|
|
|
(229,775,680
|
)
|
Cash Flows from Financing Activities:
|
|
|
|
|
Proceeds from sale of Units, net of underwriting discounts paid
|
|
|
225,180,170
|
|
Proceeds from sale of Private Placement Units
|
|
|
5,945,510
|
|
Advances from related party
|
|
|
75,000
|
|
Repayment of advances from related party
|
|
|
(75,000
|
)
|
Proceeds from promissory note – related party
|
|
|
133,000
|
|
Repayment of promissory note – related party
|
|
|
(133,000
|
)
|
Payment of offering costs
|
|
|
(495,720
|
)
|
Net cash provided by financing activities
|
|
|
230,629,960
|
|
Net Change in Cash
|
|
|
549,395
|
|
Cash – Beginning of period
|
|
|
—
|
|
Cash – End of period
|
|
$
|
549,395
|
|
|
|
|
|
|
Non-Cash investing and financing activities:
|
|
|
|
|
Initial classification of common stock subject to possible redemption
|
|
$
|
219,345,620
|
|
|
|
|
|
|
Change in value of common stock subject to possible redemption
|
|
$
|
3,544,750
|
|
|
|
|
|
|
Offering costs paid directly by Sponsor from proceeds from issuance of common stock
|
|
$
|
25,000
|
|
|
|
|
|
|
Issuance of Representative Shares
|
|
$
|
820
|
|
Forfeiture of Founder Shares
|
|
$
|
(1
|
)
|
The
accompanying notes are an integral part of these financial statements.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
NOTE
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Property
Solutions Acquisition Corp. (the “Company”) was incorporated in Delaware on February 11, 2020. The Company is a blank check
company formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization
or other similar business combination with one or more businesses or entities (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 real estate industry. The Company is an early stage and emerging growth company and,
as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
The
Company has one subsidiary, PSAC Merger Sub, Ltd., a wholly-owned subsidiary of the Company an exempted company with limited liability
incorporated under the laws of the Cayman Islands on January 27, 2021. (“Merger Sub”) (see Note 12).
As
of December 31, 2020, the Company had not commenced any operations. All activity for the period from February 11, 2020 (inception) through
December 31, 2020 relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which
is described below, identifying a target company for a Business Combination, and activities in connection with the proposed acquisition
of FF Intelligent Mobility Global Holdings Ltd., an exempted company with limited liability incorporated under the laws of the Cayman
Islands (“FF”) (see Note 12). The Company will not generate any operating revenues until after the completion of a Business
Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived
from the Initial Public Offering.
The
registration statement for the Company’s Initial Public Offering was declared effective on July 21, 2020. On July 24, 2020, the
Company consummated the Initial Public Offering of 20,000,000 units (the “Units” and, with respect to the shares of common
stock included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $200,000,000, which
is described in Note 4.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 535,000 units (the “Private Units”)
at a price of $10.00 per Private Unit in a private placement to Property Solutions Acquisition Sponsor, LLC (the “Sponsor”)
and EarlyBirdCapital, Inc. (“EarlyBirdCapital”), generating gross proceeds of $5,350,000, which is described in Note 5.
Following
the closing of the Initial Public Offering on July 24, 2020, an amount of $200,000,000 ($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 Units was placed in a trust account (the “Trust Account”)
located in the United States and invested only 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 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, as described below.
On
July 29, 2020, the underwriters notified the Company of their intent to partially exercise their over-allotment option on July 31, 2020.
As such, on July 31, 2020, the Company consummated the sale of an additional 2,977,568 Units, at $10.00 per Unit, and the sale of an
additional 59,551 Private Units, at $10.00 per Private Unit, generating total gross proceeds of $30,371,190. A total of $29,775,680 of
the net proceeds was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $229,775,680.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
Transaction
costs amounted to $5,117,030 consisting of $4,595,510 of underwriting fees and $521,520 of other offering costs.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering
and the sale of the Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating
a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company
must complete a Business Combination having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding
taxes payable on income earned on the Trust Account) at the time of the agreement to enter into an initial Business Combination. The
Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting
securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act.
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
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 shares voted 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 and EarlyBirdCapital have agreed to vote their Founder
Shares (as defined in Note 6), Representative Shares (as defined in Note 8), Private Shares (as defined in Note 5) and any Public Shares
purchased during or after the Initial Public Offering (a) in favor of approving a Business Combination and (b) not to convert
any shares in connection with a stockholder vote to approve a Business Combination or sell any shares to the Company in a tender offer
in connection with a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective
of whether they vote for or against the Initial transaction or don’t vote at all.
The
Sponsor and EarlyBirdCapital have agreed (a) to waive their redemption rights with respect to their Founder Shares, Private Shares
and Public Shares held by them in connection with the completion of a Business Combination, (b) to waive their rights to liquidating
distributions from the Trust Account with respect to the Founder Shares, Representative Shares and Private Shares if the Company fails
to consummate a Business Combination, and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation
that would affect a public stockholders’ ability to convert or sell their shares to the Company in connection with a Business Combination
or affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete
a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction
with any such amendment.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
The
Company will have until April 24, 2022 to complete a Business Combination (the “Combination Period”). If the Company is unable
to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on
the funds held in the Trust Account and not previously released to the Company to pay taxes, 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 each case to the Company’s obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s
warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
In
order to protect the amounts held in the Trust Account, the Sponsor has agreed 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 $10.00 per Public Share, except as to
any claims by a third party who executed a valid and enforceable agreement with the Company waiving any right, title, interest or claim
of any kind they may have in or to any monies held in the Trust Account and except as to any claims under the Company’s indemnity
of the underwriters of Initial Public Offering 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 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 Going Concern
As
of December 31, 2020, the Company had $549,395 in its operating bank accounts, $229,884,479 in cash and securities held in the Trust
Account to be used for a Business Combination or to repurchase or redeem its common stock in connection therewith and a working capital
deficit of $1,222,111, which excludes $141,771 of franchise taxes payable. As of December 31, 2020, $108,799 of the amount on deposit
in the Trust Account represented interest income, which is available to pay the Company’s tax obligations.
On
February 28, 2021, the Company entered into a convertible promissory note with the Sponsor pursuant to which the Sponsor agreed to loan
the Company up to an aggregate principal amount of $500,000 (See Note 11).
The
Company will need to raise additional capital through loans or additional investments from its Sponsor, stockholders, officers, directors,
or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time
to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital
needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital,
it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing
operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance
that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about
the Company’s ability to continue as a going concern through April 24, 2022, the date that the Company will be required to cease
all operations, except for the purpose of winding up, if a Business Combination is not consummated. These financial statements do not
include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary
should the Company be unable to continue as a going concern.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
NOTE
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
The
Company previously accounted for its outstanding Private Placement Warrants (as defined in Note 5) issued in connection with its Initial
Public Offering as components of equity instead of as derivative liabilities. The warrant agreement governing the Private Placement Warrants
includes a provision that provides for potential changes to the settlement amounts of the Private Placement Warrants which are dependent
upon the characteristics of the holder of the warrant.
On
April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the Securities and Exchange
Commission together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition
companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition
Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement
terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in
the warrant agreement (the “Warrant Agreement”).
In
further consideration of the SEC Statement, the Company’s management further evaluated the Warrants under Accounting Standards
Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. ASC Section 815-40-15 addresses equity
versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may
be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s common stock. Under
ASC Section 815-40-15, a warrant is not indexed to the issuer’s common stock if the terms of the warrant require an adjustment
to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on management’s
evaluation, the Company’s audit committee, in consultation with management, concluded that the Company’s Private Placement
Warrants are not indexed to the Company’s common stock in the manner contemplated by ASC Section 815-40-15 because the holder of
the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares.
As
a result of the above, the Company should have classified the Private Placement Warrants as derivative liabilities in its previously
issued financial statements. Under this accounting treatment, the Company is required to measure the fair value of the Private Placement
Warrants at the end of each reporting period as well as re-evaluate the treatment of the warrants (including on July 24, 2020, September
30, 2020 and December 31, 2020) and recognize changes in the fair value from the prior period in the Company’s operating results
for the current period.
The
Company’s accounting for the Private Placement Warrants as a component of equity instead of as derivative liabilities did not have
any effect on the Company’s previously reported investments held in trust, operating expenses or cash.
|
|
As
Previously
Reported
|
|
|
Adjustments
|
|
|
As
Restated
|
|
Balance Sheet as of:
|
|
|
|
|
|
|
|
|
|
July 24, 2020 (audited)
|
|
|
|
|
|
|
|
|
|
Warrant liability
|
|
$
|
-
|
|
|
$
|
154,583
|
|
|
$
|
154,583
|
|
Total Liabilities
|
|
|
-
|
|
|
|
154,583
|
|
|
|
154,583
|
|
Common Stock Subject to Possible Redemption
|
|
|
225,628,970
|
|
|
|
(154,583
|
)
|
|
|
225,474,387
|
|
Common Stock
|
|
|
696
|
|
|
|
1
|
|
|
|
697
|
|
Additional Paid-in Capital
|
|
|
5,000,314
|
|
|
|
352
|
|
|
|
5,000,666
|
|
Accumulated deficit
|
|
|
(1,000
|
)
|
|
|
(353
|
)
|
|
|
(1,353
|
)
|
Total Shareholders’ Equity
|
|
|
5,000,010
|
|
|
|
-
|
|
|
|
5,000,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares subject to redemptions
|
|
|
22,562,897
|
|
|
|
(15,458
|
)
|
|
|
22,547,439
|
|
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
|
|
|
As
Previously
Reported
|
|
|
|
Adjustments
|
|
|
|
As
Restated
|
|
September 30, 2020 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability
|
|
$
|
-
|
|
|
$
|
219,984
|
|
|
$
|
219,984
|
|
Total Liabilities
|
|
|
51,267
|
|
|
|
219,984
|
|
|
|
271,251
|
|
Common Stock Subject to Possible Redemption
|
|
|
225,527,000
|
|
|
|
(219,984
|
)
|
|
|
225,307,016
|
|
Common Stock
|
|
|
696
|
|
|
|
2
|
|
|
|
698
|
|
Additional Paid-in Capital
|
|
|
5,102,284
|
|
|
|
65,752
|
|
|
|
5,168,036
|
|
Accumulated deficit
|
|
|
(102,977
|
)
|
|
|
(65,754
|
)
|
|
|
(168,731
|
)
|
Total Shareholders’ Equity
|
|
|
5,000,003
|
|
|
|
-
|
|
|
|
5,000,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares subject to redemptions
|
|
|
22,552,700
|
|
|
|
(21,998
|
)
|
|
|
22,530,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 (audited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability
|
|
$
|
-
|
|
|
$
|
630,224
|
|
|
$
|
630,224
|
|
Total Liabilities
|
|
|
2,041,838
|
|
|
|
630,224
|
|
|
|
2,672,062
|
|
Common Stock Subject to Possible Redemption
|
|
|
223,520,590
|
|
|
|
(630,220
|
)
|
|
|
222,890,370
|
|
Common Stock
|
|
|
716
|
|
|
|
7
|
|
|
|
723
|
|
Additional Paid-in Capital
|
|
|
7,108,674
|
|
|
|
475,983
|
|
|
|
7,584,657
|
|
Accumulated deficit
|
|
|
(2,109,383
|
)
|
|
|
(475,994
|
)
|
|
|
(2,585,377
|
)
|
Total Shareholders’ Equity
|
|
|
5,000,007
|
|
|
|
(4
|
)
|
|
|
5,000,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares subject to redemptions
|
|
|
22,352,059
|
|
|
|
(63,022
|
)
|
|
|
22,289,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(101,977
|
)
|
|
$
|
(65,754
|
)
|
|
$
|
(167,731
|
)
|
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption
|
|
|
22,552,700
|
|
|
|
-
|
|
|
|
22,552,700
|
|
Basic and diluted net income per share, Common stock subject to possible redemption
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Basic and diluted weighted average shares outstanding, Non-redeemable common stock
|
|
|
6,496,149
|
|
|
|
-
|
|
|
|
6,496,149
|
|
Basic and diluted net loss per share, Non-redeemable common stock
|
|
|
(0.02
|
)
|
|
|
(0.01
|
)
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from February 11, 2020 (inception) to September 30, 2020 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of initial public offering costs
|
|
$
|
-
|
|
|
$
|
(353
|
)
|
|
$
|
(353
|
)
|
Change in fair value of warrant liability
|
|
|
-
|
|
|
|
(65,401
|
)
|
|
|
(65,401
|
)
|
Net loss
|
|
|
(102,977
|
)
|
|
|
(65,754
|
)
|
|
|
(168,731
|
)
|
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption
|
|
|
-
|
|
|
|
22,552,700
|
|
|
|
22,552,700
|
|
Basic and diluted net income per share, Common stock subject to possible redemption
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Basic and diluted weighted average shares outstanding, Non-redeemable common stock
|
|
|
5,713,990
|
|
|
|
-
|
|
|
|
5,713,990
|
|
Basic and diluted net loss per share, Non-redeemable common stock
|
|
|
(0.02
|
)
|
|
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
|
|
|
As
Previously
Reported
|
|
|
|
Adjustments
|
|
|
|
As
Restated
|
|
Period from February 11, 2020 (inception) to December 31, 2020 (audited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of initial public offering costs
|
|
$
|
-
|
|
|
$
|
(353
|
)
|
|
$
|
(353
|
)
|
Change in fair value of warrant liability
|
|
|
-
|
|
|
|
(475,641
|
)
|
|
|
(475,641
|
)
|
Net loss
|
|
|
(2,109,383
|
)
|
|
|
(475,994
|
)
|
|
|
(2,585,377
|
)
|
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption
|
|
|
22,557,034
|
|
|
|
(777,430
|
)
|
|
|
21,779,604
|
|
Basic and diluted net income per share, Common stock subject to possible redemption
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Basic and diluted weighted average shares outstanding, Non-redeemable common stock
|
|
|
6,068,878
|
|
|
|
383,916
|
|
|
|
6,452,794
|
|
Basic and diluted net loss per share, Non-redeemable common stock
|
|
|
(0.35
|
)
|
|
|
(0.05
|
)
|
|
|
(0.40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Changes in Stockholder’s Equity for the:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of 594,551 Private Units
|
|
$
|
5,945,510
|
|
|
$
|
(154,230
|
)
|
|
$
|
5,791,280
|
|
Common stock subject to possible redemption
|
|
|
(225,527,000
|
)
|
|
|
219,990
|
|
|
|
(225,307,010
|
)
|
Net loss
|
|
|
(101,977
|
)
|
|
|
(65,754
|
)
|
|
|
(167,731
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from February 11, 2020 (inception) to September 30, 2020 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of 594,551 Private Units
|
|
$
|
5,945,510
|
|
|
$
|
(154,230
|
)
|
|
$
|
5,791,280
|
|
Common stock subject to possible redemption
|
|
|
(225,527,000
|
)
|
|
|
219,990
|
|
|
|
(225,307,010
|
)
|
Net loss
|
|
|
(102,977
|
)
|
|
|
(65,754
|
)
|
|
|
(168,731
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from February 11, 2020 (inception) to December 31, 2020 (audited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of 594,551 Private Units
|
|
$
|
5,945,510
|
|
|
$
|
(154,230
|
)
|
|
$
|
5,791,280
|
|
Common stock subject to possible redemption
|
|
|
(223,520,590
|
)
|
|
|
630,220
|
|
|
|
(222,890,370
|
)
|
Net loss
|
|
|
(2,109,383
|
)
|
|
|
(475,994
|
)
|
|
|
(2,585,377
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows for the:
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from February 11, 2020 (inception) to September 30, 2020 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(102,977
|
)
|
|
$
|
(65,754
|
)
|
|
$
|
(168,731
|
)
|
Change in fair value of warrant liability
|
|
|
-
|
|
|
|
65,401
|
|
|
|
65,401
|
|
Transaction costs incurred in connection with IPO
|
|
|
-
|
|
|
|
353
|
|
|
|
353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from February 11, 2020 (inception) to December 31, 2020 (audited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,109,383
|
)
|
|
$
|
(475,994
|
)
|
|
$
|
(2,585,377
|
)
|
Change in fair value of warrant liability
|
|
|
-
|
|
|
|
475,641
|
|
|
|
475,641
|
|
Transaction costs incurred in connection with IPO
|
|
|
-
|
|
|
|
353
|
|
|
|
353
|
|
The
restatement to the previously issued financial statements did not have any impact on the cashflows from operating, investing, or financing
activities on the Statement of Cash Flows for the periods from February 11, 2020 (inception) to September 30, 2020 or from February 11,
2020 (inception) to December 31, 2020.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
NOTE
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (RESTATED)
Basis
of Presentation
The
accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America
(“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, 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 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 periods.
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.
The Company did not have any cash equivalents as of December 31, 2020.
Cash
and Marketable Securities Held in Trust Account
At
December 31, 2020 and 2019, substantially all of the assets held in the Trust Account were held in money market funds, which primarily
invest in U.S. Treasury securities. The Company accounts for its securities held in the trust account in accordance with the guidance
in Accounting Standards Codification (“ASC”) Topic 320 “Debt and Equity Securities.” These securities are classified
as trading securities with unrealized gains or losses, if any, recognized through the statement of operations. At December 31, 2020,
substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
Common
Stock Subject to Possible Redemption
The
Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” 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 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, 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 sheet.
Warrant
Liability
The
Company accounts for the Private Warrants in accordance with the guidance contained in ASC 815-40-15-7D and 7F under which the Private
Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Private
Warrants as liabilities at their fair value and adjusts the Private Warrants to fair value at each reporting period. This warrant liability
is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement
of operations. The Private Warrants for periods where no observable traded price was available are valued using a lattice model and Monte
Carlo simulation.
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes” (“ASC 740”).
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 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.
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.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
Net
Loss per Common Share
Net
income (loss) per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during
the period, excluding shares of common stock subject to forfeiture. The Company has not considered the effect of the warrants sold in
the Initial Public Offering and private placement to purchase an aggregate of 23,572,119 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
Company’s statement of operations includes a presentation of income (loss) per share for common shares subject to possible redemption
in a manner similar to the two-class method of income (loss) per share. Net income (loss) per common share, basic and diluted, for Common
stock subject to possible redemption is calculated by dividing the proportionate share of income or loss on marketable securities held
by the Trust Account, net of applicable franchise and income taxes, by the weighted average number of Common stock subject to possible
redemption outstanding since original issuance.
Net
income (loss) per share, basic and diluted, for non-redeemable common stock is calculated by dividing the net income (loss), adjusted
for income or loss on marketable securities attributable to Common stock subject to possible redemption, by the weighted average number
of non-redeemable common stock outstanding for the period.
Non-redeemable
common stock includes Founder Shares and non-redeemable shares of common stock as these shares do not have any redemption features. Non-redeemable
common stock participates in the income or loss on marketable securities based on non-redeemable shares’ proportionate interest.
The
following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts):
|
|
For the Period
from
February 11,
2020
(Inception)
Through
December 31,
2020
|
|
Common stock subject to possible redemption
|
|
|
|
|
Numerator: Earnings allocable to Common stock subject to possible redemption
|
|
|
|
|
Interest earned on marketable securities held in Trust Account
|
|
$
|
97,270
|
|
Unrealized gain on marketable securities held in Trust Account
|
|
|
8,569
|
|
Less: interest available to be withdrawn for payment of taxes
|
|
|
(105,839
|
)
|
Less: interest available to be withdrawn for working capital
|
|
|
—
|
|
Net income allocable to Common stock subject to possible redemption
|
|
$
|
—
|
|
Denominator: Weighted Average Common stock subject to possible redemption
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption
|
|
|
21,779,604
|
|
Basic and diluted net income per share, Common stock subject to possible redemption
|
|
$
|
0.00
|
|
|
|
|
|
|
Non-Redeemable Common Stock
|
|
|
|
|
Numerator: Net Loss minus Net Earnings
|
|
|
|
|
Net loss
|
|
$
|
(2,585,377
|
)
|
Less: Net income allocable to Common stock subject to possible redemption
|
|
|
—
|
|
Non-Redeemable Net Loss
|
|
$
|
(2,585,377
|
)
|
Denominator: Weighted Average Non-redeemable common stock
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Non-redeemable common stock
|
|
|
6,452,794
|
|
Basic and diluted net loss per share, Non-redeemable common stock
|
|
$
|
(0.40
|
)
|
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution,
which, at times, may exceed the Federal Deposit Insurance Corporation coverage of $250,000. The Company has not experienced losses on
this account.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value
Measurement,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term
nature.
Fair
Value Measurements
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
|
●
|
Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
|
●
|
Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices
for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and
|
|
●
|
Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
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
Management
does not believe that any recently issued, but not yet effective, accounting standards update, if currently adopted, would have a material
effect on the Company’s financial statements.
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 these financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
NOTE
4. INITIAL PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company sold 20,000,000 Units, at $10.00 per Unit. On July 31, 2020, in connection with the underwriters’
partial exercise of their over-allotment option, the Company sold an additional 2,977,568 Units at a price of $10.00 per Unit. Each Unit
consists of one share of common stock and one warrant (“Public Warrant”). Each Public Warrant entitles the holder to purchase
one share common stock at a price of $11.50 per share, subject to adjustment (see Note 9).
NOTE
5. PRIVATE PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, the Sponsor and EarlyBirdCapital purchased an aggregate of 535,000 Private Units at
a price of $10.00 per Private Unit, for an aggregate purchase price of $5,350,000. On July 31, 2020, in connection with the underwriters’
partial exercise of their over-allotment option, the Company sold an additional 59,551 Private Units at a price of $10.00 per Private
Unit. The Sponsor purchased 483,420 Private Units and EarlyBirdCapital purchased 111,131 Private Units. Each Private Unit consists of
one share of common stock (“Private Share”) and one warrant (“Private Warrant”). Each Private Warrant entitles
the holder to purchase one share of common stock at a price of $11.50 per full share, subject to adjustment (see Note 8). The proceeds
from the Private Units were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not
complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Units will be used to fund the
redemption of the Public Shares (subject to the requirements of applicable law).
NOTE
6. RELATED PARTY TRANSACTIONS
Founder
Shares
On
February 11, 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 included an aggregate of up to 750,000 shares subject to forfeiture
by the Sponsor to the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the Sponsor would
collectively own 20% of the Company’s issued and outstanding shares after the Initial Public Offering (excluding the Private Shares).
As a result of the underwriters’ election to partially exercise their over-allotment option on July 31, 2020 and the expiration
of the remaining over-allotment option, 5,608 Founder Shares were forfeited and 744,392 Founder’s Shares are no longer subject
to forfeiture, resulting in there being 5,744,392 Founder Shares issued and outstanding.
The
Sponsor has agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until (1) with
respect to 50% of the Founder Shares, the earlier of one year after the completion of a Business Combination and the date on which the
closing price of the common stock equals or exceeds $12.50 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 after a Business Combination and
(2) with respect to the remaining 50% of the Founder Shares, one year after the completion of a Business Combination, or earlier,
in either case, if, subsequent to a Business Combination, the Company completes a liquidation, merger, stock exchange or other similar
transaction which results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash,
securities or other property.
Administrative
Services Agreement
The
Company entered into an agreement whereby, commencing on July 21, 2020, through the earlier of the Company’s consummation of a
Business Combination and its liquidation, the Company will pay an affiliate of the Company’s executive officers a total of $10,000
per month for office space and related services. For the period from February 11, 2020 (inception) through December 31, 2020, the Company
incurred and paid $50,000 in fees for these services.
Advances — Related
Party
The
Sponsor advanced the Company an aggregate of $75,000 to cover expenses related to the Initial Public Offering. The advances were non-interest
bearing and due on demand. The outstanding advances of $75,000 were repaid upon the consummation of the Initial Public Offering on July
24, 2020.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
Promissory
Note — Related Party
On
February 14, 2020, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which
the Company may borrow up to an aggregate principal amount of $150,000. The Promissory Note was non-interest bearing and payable on the
earlier of (i) December 31, 2020, (ii) the consummation of the Initial Public Offering or (ii) the date on which the Company
determines not to proceed with the Initial Public Offering. The outstanding balance under the Promissory Note of $133,000 was repaid
upon the consummation of the Initial Public Offering on July 24, 2020.
Related
Party Loans
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, or certain of the Company’s
officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital
Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds
of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the
Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust
Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
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.
NOTE
7. COMMITMENTS
Registration
Rights
Pursuant
to a registration rights agreement entered into on July 21, 2020, 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, will be entitled
to registration rights. 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 Initial
Public Offering. 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 Initial Public Offering. The Company will bear
the expenses incurred in connection with the filing of any such registration statements.
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 shareholders 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 shareholder 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 Initial Public Offering, or $8,042,149 (exclusive of any
applicable finders’ fees which might become payable); provided that up to 33% of the fee may be allocated at the Company’s
sole discretion to other third parties who are investment banks or financial advisory firms not participating in this offering that assist
the Company in identifying and consummating a Business Combination.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
NOTE
8. STOCKHOLDERS’ EQUITY (RESTATED)
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such
designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.
At December 31, 2020, there were no shares of preferred stock issued or outstanding.
Common
Stock — The Company is authorized to issue 50,000,000 shares of common stock with a par value of $0.0001 per share. At
December 31, 2020, there were 7,227,474 shares of common stock issued and outstanding, excluding 22,289,037 shares of common stock subject
to possible redemption.
NOTE
9. WARRANTS
Warrants — The
Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months
from the closing of the Initial Public Offering. 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;
|
|
●
|
if, and only if, the reported
last sale price of the shares of common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends,
reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing at any time after
the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and
|
|
●
|
if, and only if, there
is a current registration statement in effect with respect to the shares 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.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
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, except
as described above, 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 sold in the Initial Public Offering, except that the Private
Warrants and the common stock issuable upon the exercise of the Private Warrants will not be transferable, assignable or saleable until
30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private 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 Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will
be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
Representative
Shares
On
February 11, 2020, the Company issued to the designees of EarlyBirdCapital 200,000 shares of common stock (the “Representative
Shares”). The Company accounted for the Representative Shares as an offering cost of the Initial Public Offering, with a corresponding
credit to stockholders’ equity. The Company estimated the fair value of Representative Shares to be $820 based upon the price of
the Founder Shares issued to the Sponsor. 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.
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 Initial Public Offering 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 Initial Public Offering, 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 Initial Public Offering except to any underwriter and selected dealer participating in
the Initial Public Offering and their bona fide officers or partners.
NOTE
10. INCOME TAX (RESTATED)
The
Company’s net deferred tax assets are as follows:
|
|
December 31,
2020
|
|
Deferred tax assets (liabilities)
|
|
|
|
|
Net operating loss carryforward
|
|
$
|
129,221
|
|
Startup and organizational expenses
|
|
|
436,047
|
|
Unrealized gain on marketable securities
|
|
|
(22,848
|
)
|
Total deferred tax assets
|
|
|
542,420
|
|
Valuation Allowance
|
|
|
(542,420
|
)
|
Deferred tax assets, net valuation allowance
|
|
$
|
—
|
|
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
The
income tax provision consists of the following:
|
|
For the period
from
February 11,
2020
(inception)
through
December 31,
2020
|
|
Federal
|
|
|
|
|
Current
|
|
$
|
—
|
|
Deferred
|
|
|
(542,420
|
)
|
|
|
|
|
|
State and Local
|
|
|
|
|
Current
|
|
|
—
|
|
Deferred
|
|
|
—
|
|
|
|
|
|
|
Change in valuation allowance
|
|
|
542,420
|
|
|
|
|
|
|
Income tax provision
|
|
$
|
—
|
|
As
of December 31, 2020, the Company had $139,342 of U.S. federal net operating loss carryovers available to offset future taxable income.
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 February 11, 2020 (inception) through December 31, 2020, the change in the valuation allowance was $442,461.
A
reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows:
|
|
December 31,
2020
|
|
Statutory federal income tax rate
|
|
|
21.0
|
%
|
Valuation allowance
|
|
|
(21.0
|
)%
|
Income tax provision
|
|
|
0.0
|
%
|
The
Company files income tax returns in the U.S. federal jurisdiction and is subject to examination by the various taxing authorities. The
Company’s tax returns since inception remain open to examination by the taxing authorities. The Company considers New York to be
a significant state tax jurisdiction.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
NOTE
11. FAIR VALUE MEASUREMENTS (RESTATED)
The
Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each
reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company
seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is
used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and
liabilities:
|
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
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 that are measured at fair value on a recurring basis at December
31, 2020, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
|
December 31,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
Cash and marketable securities held in Trust Account
|
|
1
|
|
|
$
|
229,884,479
|
|
Liabilities:
|
|
|
|
|
|
|
|
Warrant Liability – Private Placement Warrants
|
|
3
|
|
|
$
|
630,224
|
|
The
Private Placement Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities
on our balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair
value presented within change in fair value of warrant liabilities in the consolidated statement of operations.
The
Private Placement Warrants were initially valued using a binomial lattice model, which is considered to be a Level 3 fair value measurement.
The binomial lattice model’s primary unobservable input utilized in determining the fair value of the Private Placement Warrants
is the expected volatility of the common stock. The expected volatility as of the IPO date was derived from observable public warrant
pricing on comparable ‘blank-check’ companies without an identified target. The expected volatility as of subsequent valuation
dates will be implied from the Company’s own public warrant pricing.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
The
key inputs into the binomial lattice simulation model for the Private Placement Warrants were as follows at initial measurement, September
30, 2020, and December 31, 2020:
Input
|
|
July 24,
2020
(Initial Measurement)
|
|
|
September 30,
2020
|
|
|
December 31,
2020
|
|
Risk-free interest rate
|
|
|
0.34
|
%
|
|
|
0.34
|
%
|
|
|
0.34
|
%
|
Trading days per year
|
|
|
252
|
|
|
|
252
|
|
|
|
252
|
|
Expected volatility
|
|
|
27.0
|
%
|
|
|
27.0
|
%
|
|
|
27.0
|
%
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Stock Price
|
|
$
|
10.00
|
|
|
$
|
10.00
|
|
|
$
|
10.00
|
|
The
following table presents the changes in the fair value of the Private Placement Warrants:
|
|
Warrant Liability
|
|
Fair value as of February 11, 2020 (inception)
|
|
$
|
—
|
|
Initial measurement on July 24, 2020
|
|
|
154,583
|
|
Change in valuation inputs or other assumptions
|
|
|
475,641
|
|
Fair value as of December 31, 2020
|
|
$
|
630,224
|
|
There
were no transfers in or out of Level 3 from other levels in the fair value hierarchy.
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. Based upon this review, other than as described below or in these financial statements, the Company did not identify any
subsequent events that would have required adjustment or disclosure in the financial statements.
Merger
agreement
On
January 27, 2021, the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) by and among the Company,
Merger Sub and FF. FF is a global mobility technology company that designs and engineers next-generation smart electric connected vehicles.
Pursuant
to the Merger Agreement, Merger Sub will merge with and into FF, with FF surviving the merger (the “Merger” and, together
with the other transactions contemplated by the Merger Agreement, the “Transactions”). As a result of the Transactions, FF
will become a wholly-owned subsidiary of the Company, with the stockholders of FF becoming stockholders of the Company, which will be
renamed “Faraday Future Intelligent Electric, Inc.” (“New FF”).
Under
the Merger Agreement, the outstanding FF shares and the outstanding FF converting debt will be converted into a number of shares of new
Class A common stock of the Company following the Transactions and, for FF Top Holdings Ltd. (“FF Top”), shares of new Class
B common stock of the Company (“New FF common stock”) following the Transactions based on an exchange ratio (the “Exchange
Ratio”), the numerator of which is equal to (i)(A) the number of shares of the Company common stock equal to $2,716,000,000 (plus
net cash of FF, less debt of FF, plus debt of FF that will be converted into shares of the Company common stock, plus any additional
bridge loan in an amount not to exceed $100,000,000), (B) divided by $10, minus (ii) an additional 25,000,000 shares which may be issuable
to FF stockholders as additional consideration upon certain price thresholds, and the denominator of which is equal to the number of
outstanding shares of FF, including shares issuable upon exercise of vested FF options and vested FF warrants (in each case assuming
cashless exercise) and upon conversion of outstanding convertible notes.
PROPERTY
SOLUTIONS ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2020
Additionally,
each FF option or FF warrant that is outstanding immediately prior to the closing of the Merger (and by its terms will not terminate
upon the closing of the Merger) will remain outstanding and convert into the right to purchase a number of shares of the Company Class
A common stock equal to the number of FF ordinary shares subject to such option or warrant multiplied by the Exchange Ratio at an exercise
price per share equal to the current exercise price per share for such option or warrant divided by the Exchange Ratio.
The
Merger Agreement contains customary representations, warranties and covenants by the parties thereto and the closing is subject to certain
conditions as further described in the Merger Agreement.
In
connection with the execution of the Merger Agreement, the Company entered into separate Subscription Agreements with certain accredited
investors or qualified institutional buyers (collectively, the “Subscription Investors”) concurrently with the execution
of the Merger Agreement on January 27, 2021. Pursuant to the Subscription Agreements, the Subscription Investors agreed to subscribe
for and purchase, and the Company agreed to issue and sell, to the Subscription Investors an aggregate of 77,500,000 shares of common
stock of the Company for a purchase price of $10.00 per share, or an aggregate of approximately $775 million, in a private placement.
17,500,000 of such shares ($175 million in net proceeds) will be issued to an anchor investor and the issuance of such shares is subject
to certain regulatory approvals. The Subscription Agreements further require the Company to have an effective shelf registration statement
registering the resale of the shares of the Company’s common stock held by the Subscription Investors within 60 calendar days (or
90 calendar days if the SEC notifies the Company that it will review the registration statement) following the closing of the Transactions.
Subscription
agreement
Also
on January 27, 2021, the Company entered into additional Subscription Agreements with Subscription Investors in the amount of 2,000,000
shares of common stock of the Company for a purchase price of $10.00 per share, or an aggregate of approximately $20 million, which increases
the total amount of the private placement pursuant to the Subscription Agreements to 79,500,000 shares of common stock of PSAC for a
purchase price of $10.00 per share, or an aggregate of approximately $795 million.
Related
Party Loans
On
February 28, 2021, the Company entered into a convertible promissory note with the Sponsor pursuant to which the Sponsor agreed to loan
the Company up to an aggregate principal amount of $500,000 (the “Note”). The Note is non-interest bearing and due on the
date on which the Company consummates a Business Combination. If the Company does not consummate a Business Combination, the Company
may use a portion of any funds held outside the Trust Account to repay the Note; however, no proceeds from the Trust Account may be used
for such repayment. Up to $500,000 of the Note may be converted into units at a price of $10.00 per unit at the option of the Sponsor.
The units would be identical to the Private Units. As of the date of these financial statements, there is a $500,000 balance outstanding
under the Note.
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