|
|
As of December 31, 2020
|
|
|
|
As Previously Reported
|
|
|
Restatement Adjustment
|
|
|
As Restated
|
|
Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
261,273,723
|
|
|
$
|
-
|
|
|
$
|
261,273,723
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
210,349
|
|
|
$
|
-
|
|
|
$
|
210,349
|
|
Deferred underwriting commissions
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Derivative warrant liabilities
|
|
|
-
|
|
|
|
22,415,255
|
|
|
|
22,415,255
|
|
Total liabilities
|
|
|
210,349
|
|
|
|
22,415,255
|
|
|
|
22,625,604
|
|
Class A common stock, $0.0001 par value; shares subject to possible redemption
|
|
|
256,063,370
|
|
|
|
(22,415,260
|
)
|
|
|
233,648,110
|
|
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock- $0.0001 par value
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Class A common stock - $0.0001 par value
|
|
|
27
|
|
|
|
224
|
|
|
|
251
|
|
Class B common stock - $0.0001 par value
|
|
|
647
|
|
|
|
-
|
|
|
|
647
|
|
Additional paid-in-capital
|
|
|
5,158,732
|
|
|
|
4,058,122
|
|
|
|
9,216,854
|
|
Accumulated deficit
|
|
|
(159,402
|
)
|
|
|
(4,058,341
|
)
|
|
|
(4,217,743
|
)
|
Total stockholders’ equity
|
|
|
5,000,004
|
|
|
|
5
|
|
|
|
5,000,009
|
|
Total liabilities and stockholders’ equity
|
|
$
|
261,273,723
|
|
|
$
|
-
|
|
|
$
|
261,273,723
|
|
|
|
Period From September 23, 2020 (Inception) Through December 31, 2020
|
|
|
|
As Previously Reported
|
|
|
Restatement Adjustment
|
|
|
As Restated
|
|
Statement of Operations
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
$
|
(159,260
|
)
|
|
$
|
-
|
|
|
$
|
(159,260
|
)
|
Other (expense) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing costs - derivative warrant liabilities
|
|
|
-
|
|
|
|
(168,086
|
)
|
|
|
(168,086
|
)
|
Change in fair value of derivative warrant liabilities
|
|
|
-
|
|
|
|
(3,890,255
|
)
|
|
|
(3,890,255
|
)
|
Net loss from investments held in Trust Acount
|
|
|
(142
|
)
|
|
|
-
|
|
|
|
(142
|
)
|
Total other (expense) income
|
|
|
(142
|
)
|
|
|
(4,058,341
|
)
|
|
|
(4,058,483
|
)
|
Net loss
|
|
$
|
(159,402
|
)
|
|
$
|
(4,058,341
|
)
|
|
$
|
(4,217,743
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted weighted-average Class A common shares outstanding
|
|
|
25,615,056
|
|
|
|
(43,225
|
)
|
|
|
25,571,831
|
|
Basic and Diluted net income per Class A common shares
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Basic and Diluted weighted-average Class B common shares outstanding
|
|
|
5,762,948
|
|
|
|
4,863
|
|
|
|
5,767,811
|
|
Basic and Diluted net loss per Class B common shares
|
|
$
|
(0.03
|
)
|
|
$
|
(0.70
|
)
|
|
$
|
(0.73
|
)
|
|
|
Period From September 23, 2020 (Inception) Through December 31, 2020
|
|
|
|
As Previously Reported
|
|
|
Restatement Adjustment
|
|
|
As Restated
|
|
Statement of Cash Flows
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(812,522
|
)
|
|
|
-
|
|
|
|
(812,522
|
)
|
Net cash used in investing activities
|
|
|
(258,750,000
|
)
|
|
|
-
|
|
|
|
(258,750,000
|
)
|
Net cash provided by financing activities
|
|
|
261,326,846
|
|
|
|
-
|
|
|
|
261,326,846
|
|
Net change in cash
|
|
$
|
1,764,324
|
|
|
$
|
-
|
|
|
$
|
1,764,324
|
|
In
addition, the impact to the balance sheet dated December 22, 2020, filed on Form 8-K on December 30, 2020 related to the impact of
accounting for the public and private warrants as liabilities at fair value resulted in a $18.5 million increase to the derivative warrant
liabilities line item at December 22, 2020 and offsetting decrease to the Class A common stock subject to possible redemption
mezzanine equity line item. There was no change to total stockholders’ equity at the reported balance sheet date.
Note 3—Summary
of Significant Accounting Policies
Basis
of Presentation
The
accompanying financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United
States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
As
described in Note 2—Restatement of Previously Issued Financial Statements, the Company’s financial statements for the period
as of December 31, 2020, and the Affected Periods, are restated in this Annual Report on Form 10-K/A (Amendment No. 1) (this “Annual
Report”) to correct the misapplication of accounting guidance related to the Company’s warrants in the Company’s previously
issued audited and unaudited condensed financial statements for such periods. The restated financial statements are indicated as
“Restated” in the audited and unaudited condensed financial statements and accompanying notes, as applicable. See Note 2—Restatement
of Previously Issued Financial Statements for further discussion.
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 shareholder 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 an emerging growth 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 an 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 those of another public company that is neither an emerging growth
company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of
the potential differences in accounting standards used.
The
Company will remain an emerging growth company until the earliest of (i) the last day of the first fiscal year (a) following the fifth
anniversary of the completion of the Public Offering, (b) in which the Company’s total annual gross revenue is at least $1.07 billion
or (c) when the Company is deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates
exceeds $700.0 million as of the prior June 30th and (ii) the date on which the Company has issued more than $1.0 billion in non-convertible
debt securities during the prior three-year period.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment.
It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at
the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one
or more future confirming events. Actual results could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company had no cash equivalents at December 31, 2020.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution
which, at times, may exceed the Federal depository insurance coverage of $250,000, and investments held in Trust Account. The Company
has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
The Company’s investments held in the Trust Account as of December 31, 2020 are comprised of investments in U.S. Treasury securities
with an original maturity of 185 days or less or investments in a money market funds that comprise only U.S. treasury securities money
market funds.
Investments
Held in the Trust Account
Upon
the closing of the Initial Public Offering and the Private Placement, approximately $258.8 million, was placed in the Trust Account and
invested in money market funds that invest in U.S. government securities. All of the Company’s investments held in the Trust Account
are classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reporting
period. Gains and losses resulting from the change in fair value of these securities is included in gain on investments held in Trust
Account in the accompanying statement of operations. The estimated fair values of investments held in the Trust Account are determined
using available market information.
Fair
Value of Financial Instruments
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. U.S. 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 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.
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements
and Disclosures,” approximates the carrying amounts represented in the balance sheet.
The fair value
of the Public Warrants (if not market observed) and Private Warrants is estimated using a Binomial Lattice in a risk-neutral framework.
The future stock price of the Company is modeled assuming a Geometric Brownian Motion in a risk-neutral framework. For each modeled future
price, the warrant payoff is calculated based on the contractual terms (incorporating any optimal early exercise / redemption), and then
discounted at the term-matched risk-free rate. The value of the Warrants is calculated as the probability-weighted present value over
all future modeled payoffs.
As
of December 31, 2020, the carrying values of cash, prepaid expenses, accounts payable, accrued expenses, income tax payable and franchise
tax payable approximate their fair values due to the short-term nature of the instruments. The Company’s portfolio of investments
held in the Trust Account is comprised of investments in U.S. Treasury securities with an original maturity of 185 days or less or investments
in money market funds that invest in U.S. government securities, or a combination thereof. The fair value for trading securities is determined
using quoted market prices in active markets (Level 1).
Offering
Costs Associated with the Initial Public Offering
The
Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A – “Expenses of
Offering.” Offering costs consist of legal, accounting, underwriting fees and other costs directly related to the Initial Public
Offering. These costs were charged to additional paid-in capital upon the completion of the Initial Public Offering.
Class
A Common Stock Subject to Possible Redemption
The
Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Common stock subject to mandatory redemption (if any) 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 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 the occurrence
of uncertain future events. Accordingly, at December 31, 2020, 23,364,811 shares of common stock subject to possible redemption is presented
as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.
Derivative
Warrant liabilities
The
Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates
all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain
features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including
whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The
Company issued 12,937,500 warrants in connection with the Initial Public Offering (the “Public Warrants”) 5,587,500 warrants
in a Private Placement (the “Private Placement Warrants”). These warrants are recognized as derivative liabilities in accordance
with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjust the instruments
to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and
any change in fair value is recognized in the Company’s statement of operations. The fair value of the Public Warrants (if not
market observed) and Private Warrants is estimated using a Binomial Lattice in a risk-neutral framework. The future stock price of the
Company is modeled assuming a Geometric Brownian Motion in a risk-neutral framework. For each modeled future price, the Warrant payoff
is calculated based on the contractual terms (incorporating any optimal early exercise / redemption), and then discounted at the term-matched
risk-free rate. The value of the Warrants is calculated as the probability-weighted present value over all future modeled payoffs.
Net
Income (Loss) Per Share of Common Stock
Net
income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding
during the period. The Company has not considered the effect of the warrants sold in the Initial Public Offering and Private Placement,
as well as the warrants issued upon conversion of the Note (as defined in Note 5), to purchase an aggregate of 18,525,000 shares of common
stock in the calculation of diluted loss per common 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. As a result, diluted net loss per common share is the same as basic
net loss per common stock for the period presented.
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 (as defined in Note 5) and non-redeemable shares of Class A 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:
|
|
|
|
|
|
|
For The Period From
September 23, 2020
(inception) through
December 31, 2020
|
|
Class A Common stock subject to possible redemption
|
|
|
|
|
Numerator: Earnings allocable to Common stock subject to possible redemption
|
|
|
|
|
Income from investments held in Trust Account
|
|
$
|
(128
|
)
|
Less: Company's portion available to be withdrawn to pay taxes
|
|
|
128
|
|
Net income attributable
|
|
$
|
-
|
|
Denominator: Weighted average Class A common stock subject to possible redemption
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
|
25,571,831
|
|
Basic and diluted net income per common share, Class A common stock subject to possible redemption
|
|
$
|
-
|
|
|
|
|
|
|
Non-Redeemable Common Stock
|
|
|
|
|
Numerator: Net Loss minus Net Earnings
|
|
|
|
|
Net loss
|
|
$
|
(4,217,743
|
)
|
Net income allocable to Class A common stock subject to possible redemption
|
|
|
-
|
|
Non-redeemable net loss
|
|
$
|
(4,217,743
|
)
|
Denominator: weighted average Non-redeemable common stock
|
|
|
-
|
|
Basic and diluted weighted average shares outstanding, Non-redeemable common stock
|
|
|
5,767,811
|
|
Basic and diluted net loss per common share, Non-redeemable common stock
|
|
$
|
(0.73
|
)
|
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC Topic 740, “Income Taxes.” Deferred
tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period
that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.
FASB
ASC Topic 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. The Company’s general and administrative costs are generally considered start-up costs and
are not currently deductible.
No
amounts were accrued for the payment of interest and penalties as of December 31, 2020 and 2019. 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, President Trump signed the Coronavirus Aid, Relief, and Economic Security “CARES” Act into law. The CARES
Act includes several significant business tax provisions that, among other things, would eliminate the taxable income limit for certain
net operating losses(“NOL) and allow businesses to carry back NOLs arising in 2018, 2019 and 2020 to the five prior years, suspend
the excess business loss rules, accelerate refunds of previously generated corporate alternative minimum tax credits, generally loosen
the business interest limitation under IRC section 163(j) from 30 percent to 50 percent among other technical corrections included in
the Tax Cuts and Jobs Act tax provisions.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have an effect
on the Company’s financial statements.
Note 4—Initial
Public Offering
On
December 22, 2020, the Company consummated its Initial Public Offering of 25,875,000 Units, including 3,375,000 Over-Allotment Units,
at $10.00 per Unit, generating gross proceeds of approximately $258.8 million, and incurring offering costs of approximately $3.1 million.
Each
Unit consists of one share of Class A common stock, and one-half of one redeemable warrant (each, a “Public Warrant”). Each
Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment
(see Note 7).
Note 5—Related
Party Transactions
Founder
Shares
On
October 13, 2020, the Sponsor and Jones & Associates, an affiliate of one of the underwriters of the Initial Public Offering, purchased
4,715,000 and 1,035,000 shares of the Company’s Class B common stock, par value $0.0001 per share, respectively, for an aggregate
of 5,750,000 shares (the “Founder Shares”) for a total purchase price of $25,000. On December 17, 2020, the Company effected
a 1.125-for-1 stock split of its Class B common stock, resulting in an aggregate of 6,468,750 shares of Class B common stock outstanding.
All shares and associated amounts have been retroactively restated to reflect the stock split. Of the 6,468,750 Founder Shares outstanding,
up to 843,750 shares are subject to forfeiture to the extent that the over-allotment option was not exercised in full by the underwriters,
so that the Founder Shares would represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering.
The underwriters exercised their over-allotment option in full on December 22, 2020; thus, these 843,750 Founder Shares were no longer
subject to forfeiture.
The
initial stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier
to occur of: (i) one year after the completion of the initial Business Combination and (ii) the date on which the Company completes a
liquidation, merger, capital stock exchange or other similar transaction after the initial Business Combination that results in all of
the stockholders having the right to exchange their Class A common stock for cash, securities or other property; except to certain permitted
transferees and under certain circumstances. Any permitted transferees will be subject to the same restrictions and other agreements
of the initial stockholders with respect to any Founder Shares. Notwithstanding the foregoing, if (1) the closing price of the Class
A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination
or (2) if the Company consummates a transaction after the initial Business Combination which results in the stockholders having the right
to exchange their shares for cash, securities or other property, the Founder Shares will be released from the lock-up.
Private
Placement Warrants
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the Private Placement of 5,587,500 Private Placement Warrants
at a price of $1.00 per Private Placement Warrant to the Sponsor, generating proceeds of approximately $5.6 million.
Each
Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share. A portion of the
proceeds from the sale of the Private Placement Warrants to the Sponsor was 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 Private Placement Warrants
will expire worthless.
The
purchasers of the Private Placement Warrants agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private
Placement Warrants (except to permitted transferees) until 30 days after the completion of the initial Business Combination.
Related
Party Loans
On
October 13, 2020, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public
Offering pursuant to a promissory note (the “Note”). This loan was non-interest bearing and payable upon the completion of
the Initial Public Offering. The Company borrowed $105,000 under the Note and repaid the Note in full on December 22, 2020.
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor,
or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes a Business Combination, the Company 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. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lenders’ discretion,
up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price
of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. Except for the foregoing, the terms of such
Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of December 31,
2020, the Company had no borrowings under the Working Capital Loans.
Service
and Administrative Fees
Commencing
on the date that the Company’s securities were first listed on the Nasdaq through the earlier of consummation of the initial Business
Combination and the Company’s liquidation, the Company agreed to pay an affiliate of the Sponsor a total of $20,000 per month for
office space, secretarial and administrative services provided to members of the management team. For the period from September 23, 2020
through December 31, 2020, the Company incurred $20,000 of such expenses.
In
addition, the Sponsor, executive officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket
expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing
due diligence on suitable business combinations. The audit committee will review on a quarterly basis all payments that were made to
the Sponsor, executive officers or directors, or their affiliates. Any such payments prior to an initial Business Combination will be
made from funds held outside the Trust Account.
Note 6—Commitments
and Contingencies
Registration
Rights
The
holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any
(and any shares of common stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the
Working Capital Loans and upon conversion of the Founder Shares), were entitled to registration rights pursuant to a registration rights
agreement signed upon the consummation of the Initial Public Offering. These holders will be entitled to certain demand and “piggyback”
registration rights. However, the registration rights agreement provides that we will not be required to effect or permit any registration
or cause any registration statement to become effective until termination of the applicable lock-up period. The Company will bear the
expenses incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
The
underwriters were entitled to an underwriting discount of $0.10 per Unit, or approximately $2.6 million, paid upon the closing of the
Initial Public Offering.
Business
Combination Marketing Agreement
The
Company engaged certain underwriters in connection with the Business Combination to assist the Company in holding meetings with the stockholders
to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors
that are interested in purchasing the Company’s securities in connection with the initial Business Combination, assist the Company
in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and public filings in connection
with the Business Combination. The scope of engagement excludes identifying and/or evaluating possible acquisition candidates. Pursuant
to the agreement with underwriters, the marketing fee payable to the underwriters will be 3.5% of the gross proceeds of the Initial Public
Offering. The marketing fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that
the Company completes a Business Combination, subject to the terms of such agreement.
Note 7—
Derivative Warrant Liabilities
The
Company has 12,937,500 public warrants and 5,587,500 private warrants outstanding as of December 31, 2020.
Public
Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units
and only whole Public Warrants will trade. 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; provided in each case that the Company has
an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the
Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants
on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as
soon as practicable, but in no event later than 15 business days after the closing of its initial Business Combination, the Company will
use its commercially reasonable efforts to file with the SEC and have an effective registration statement covering the shares of Class
A common stock issuable upon exercise of the warrants and will use its commercially reasonable efforts to cause the same to become effective
within 60 business days after the closing of the Company’s initial Business Combination and to maintain a current prospectus relating
to those shares of Class A common stock until the warrants expire or are redeemed. If the shares issuable upon exercise of the warrants
are not registered under the Securities Act in accordance with the above requirements, the Company will be required to permit holders
to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and the Company
will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such
exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration
is available. Notwithstanding the above, if the Company’s shares of Class A common stock are at the time of any exercise of a warrant
not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section
18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do
so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects,
it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will
use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is
not available.
The
warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business
Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional shares of Class A common stock
or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue
price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to
be determined in good faith by the board of directors and, in the case of any such issuance to the initial stockholders or their affiliates,
without taking into account any Founder Shares held by the initial stockholders or such affiliates, as applicable, prior to such issuance)
(the “Newly Issued Price”) (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity
proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the
initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Class A common stock during
the 20 trading day period starting on the trading day after the day on which the Company consummates the initial Business Combination
(such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest
cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price
described under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00” will be
adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share
redemption trigger price described under “Redemption of warrants when the price per share of Class A common stock equals or exceeds
$10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
The
Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A
common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after
the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be
non-redeemable (except as described below in “Redemption of warrants when the price per share of Class A common stock equals or
exceeds $10.00”) so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held
by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and
exercisable by such holders on the same basis as the Public Warrants.
Redemption
of warrants when the price per share of Class A common stock equals or exceeds $18.00:
Once the warrants
become exercisable, the Company may redeem the outstanding warrants for cash:
•
in whole and not in part;
•
at a price of $0.01 per Warrant;
•
upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and
•
if, and only if, the last reported sale price (the “closing price”) of the Class A common stock equals or exceeds $18.00
per share (as adjusted) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which
the Company sends the notice of redemption to the warrant holders.
The
Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the issuance
of the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those
shares of Class A common stock is available throughout the 30-day redemption period. If and when the warrants become redeemable by the
Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale
under all applicable state securities laws.
Redemption
of warrants for when the price per share of Class A common stock equals or exceeds $10.00:
Once the warrants
become exercisable, the Company may redeem the outstanding warrants:
•
in whole and not in part;
•
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to
exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed
table based on the redemption date and the “fair market value” of Class A common stock;
•
if, and only if, the closing price of the Class A common stock equals or exceeds $10.00 per Public Share (as adjusted) for any 20 trading
days within the 30-trading day period ending three trading days before the Company sends notice of redemption to the warrant holders;
and
•
if the closing price of the shares of Class A common stock for any 20 trading days within a 30- trading day period ending on the third
trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $18.00 per share
(as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public
Warrants, as described above.
The
“fair market value” of Class A common stock shall mean the volume-weighted average price of the Class A common stock during
the ten trading days ending on the third trading day immediately following the date on which the notice of redemption is sent to the
holders of warrants. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 shares
of Class A common stock per warrant (subject to adjustment).
In
no event will the Company be required to net cash settle any warrant. 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.
Note 8—Stockholders’
Equity
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such
designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.
As of December 31, 2020, there were no shares of preferred stock issued or outstanding.
Class
A Common Stock — The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001
per share. As of December 31, 2020, there were 25,875,000 shares of Class A common stock issued or outstanding including 23,364,811 shares
subject to possible redemption.
Class
B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001
per share. On October 13, 2020, the Company issued 5,750,000 shares of Class B common stock to the Sponsor and Jones & Associates
for an aggregate price of $25,000. On December 17, 2020, the Company effected a 1.125-for-1 stock split of its Class B common stock,
resulting in an aggregate of 6,468,750 shares of Class B common stock outstanding. All shares and associated amounts have been retroactively
restated to reflect the stock split. Of the 6,468,750 shares of Class B common stock outstanding, up to 843,750 shares were subject to
forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the initial
stockholders would collectively own 20% of the Company’s issued and outstanding common stock after the Initial Public Offering.
The underwriter exercised its over-allotment option in full on December 22, 2020; thus, these 843,750 Founder Shares were no longer subject
to forfeiture.
Holders
of record of the Class A common stock and holders of record of the Class B common stock will vote together as a single class on all matters
submitted to a vote of the stockholders, with each share of common stock entitling the holder to one vote except as required by law.
The
Class B common stock will automatically convert into Class A common stock concurrently with or immediately following the consummation
of the initial Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations,
recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common
stock or equity-linked securities are issued or deemed issued in connection with the initial Business Combination, the number of shares
of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of
the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares
of Class A common stock by Public Stockholders), including the total number of shares of Class A common stock issued, or deemed issued
or issuable upon conversion or exercise of any equity- linked securities or rights issued or deemed issued, by the Company in connection
with or in relation to the consummation of the initial Business Combination, excluding any shares of Class A common stock or equity-linked
securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the
initial Business Combination and any private placement warrants issued to the Sponsor, officers or directors upon conversion of Working
Capital Loans, provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.
Note 9—Fair
Value Measurements
The
following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of December 31,
2020 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
December 31, 2020
|
|
|
|
|
|
|
|
|
|
Description
|
|
Quoted Prices in Active
Markets
(Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant Other
Unobservable Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account
|
|
$
|
275,000,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative warrant liabilities - Public warrants
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
15,654,375
|
|
Derivative warrant liabilities - Private warrants
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,760,880
|
|
Transfers
to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There was no transfer in or out of Level 3 measurements
in the period from September 23 (inception) through December 31, 2020.
Level
1 instruments include investments in mutual funds invested in government securities. The Company uses inputs such as actual trade data,
benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.
Level 3 instruments are comprised of derivative warrant liabilities measured at fair value using a Binomial Lattice model and Black-Scholes.
The
fair value of the Public Warrants issued in connection with the Public Offering have been measured at fair value using a Binomial Lattice
model. The fair value of the warrants issued in the Private Placement were estimated using Black-Scholes.
The
estimated fair value of the Private Placement Warrants and the Public Warrants is determined using Level 3 inputs. Inherent in a Binomial
Lattice model and Black-Scholes are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and
dividend yield. The Company estimates the volatility of its common stock warrants based on implied volatility from the Company’s
traded warrants and from historical volatility of select peer company’s common stock that matches the expected remaining life of
the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar
to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual
term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
The
following table provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates:
|
|
|
|
|
|
|
|
|
As of December 22, 2020
|
|
|
As of December 31, 2020
|
|
Volatility
|
|
|
19.5
|
%
|
|
|
21.0
|
%
|
Stock price
|
|
$
|
9.50
|
|
|
$
|
9.75
|
|
Expected life of the options to convert
|
|
|
5.33
|
|
|
|
5.33
|
|
Risk-free rate
|
|
|
0.55
|
%
|
|
|
0.53
|
%
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
The
change in the fair value of the derivative warrant liabilities for the period from September 23, 2020 (inception) through December 31,
2020 is summarized as follows:
Derivative warrant liabilities at September 23, 2020 (inception)
|
|
$
|
-
|
|
Issuance of Public and Private Warrants
|
|
|
18,525,000
|
|
Change in fair value of derivative warrant liabilities
|
|
|
3,890,255
|
|
Derivative warrant liabilities at December 31, 2020
|
|
$
|
22,415,255
|
|
Note 10—Income
Taxes
The Company’s
general and administrative costs are generally considered start-up costs and are not currently deductible.
The income
tax provision (benefit) consists of the following:
|
|
Period from September 23, 2020
|
|
|
|
(inception) through
December 31, 2020
|
|
Current
|
|
|
|
|
Federal
|
|
$
|
-
|
|
State
|
|
|
-
|
|
Deferred
|
|
|
|
|
Federal
|
|
|
(33,474
|
)
|
State
|
|
|
-
|
|
Valuation allowance
|
|
|
33,474
|
|
Income tax (benefit) provision
|
|
$
|
-
|
|
The Company’s net deferred tax assets
are as follows:
|
|
December 31, 2020
|
|
Deferred tax assets:
|
|
|
|
|
Net-operating loss carryforward
|
|
$
|
15,716
|
|
Start-up/Organization costs
|
|
|
17,758
|
|
Total deferred tax assets
|
|
|
33,474
|
|
Valuation allowance
|
|
|
(33,474
|
)
|
Deferred tax asset, net of allowance
|
|
$
|
-
|
|
In
assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or 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 assets, 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.
There
were no unrecognized tax benefits as of December 31, 2020. No amounts were accrued for the payment of interest and penalties at 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.
A reconciliation
of the statutory federal income tax rate (benefit) to the Company’s effective tax rate (benefit) is as follows:
|
|
December 31, 2020
|
|
Statutory federal income tax rate
|
|
|
21.0
|
%
|
Change in fair value of derivative warrant liabilities
|
|
|
(19.4
|
)%
|
Financing costs – derivative warrant liabilities
|
|
|
(0.8
|
)%
|
Change in valuation allowance
|
|
|
(0.8
|
)%
|
Income tax provision expense
|
|
|
0.0
|
%
|
Note 11—Subsequent
Events
Management
has evaluated subsequent events to determine if events or transactions occurring through June 3, 2021, the date the financial
statements were issued required potential adjustment to or disclosure in the financial statements and has concluded that all such events
that would require recognition or disclosure have been recognized or disclosed.
Exhibit
|
|
Description
|
3.1
|
|
Amended
and Restated Certificate of Incorporation (Incorporated by reference to the corresponding exhibit to the Company’s Current
Report on Form 8-K (File No. 001-39817), filed with the SEC on December 23, 2020).
|
|
|
|
3.2
|
|
Bylaws
(Incorporated by reference to Exhibit 3.3 to Amendment No. 1 to the Company’s Registration Statement on Form S-l (File No.
333-251062), filed with the SEC on December 11, 2020).
|
|
|
|
4.1
|
|
Specimen
Unit Certificate (Incorporated by reference to the corresponding exhibit to Amendment No. 1 to the Company’s Registration Statement
on Form S-l (File No. 333-251062), filed with the SEC on December 11, 2020).
|
|
|
|
4.2
|
|
Specimen
Class A common stock Certificate (Incorporated by reference to the corresponding exhibit to Amendment No. 1 to the Company’s
Registration Statement on Form S-l (File No. 333-251062), filed with the SEC on December 11, 2020).
|
|
|
|
4.3
|
|
Specimen
Warrant Certificate (Incorporated by reference to the corresponding exhibit to Amendment No. 1 to the Company’s Registration
Statement on Form S-l (File No. 333-251062), filed with the SEC on December 11, 2020).
|
|
|
|
4.4
|
|
Warrant
Agreement between the Company and Continental Stock Transfer & Trust Company, dated as of December 17, 2020 (Incorporated by
reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-39817), filed with the SEC
on December 23, 2020).
|
|
|
|
4.5(1)
|
|
Description of Securities
|
|
|
|
10.1
|
|
Letter
Agreement, dated December 17, 2020, by and among the Company, Seven Oaks Sponsor LLC, Jones & Associates, Inc. and each of the
initial stockholders of the Company (Incorporated by reference to the corresponding exhibit to the Company’s Current Report
on Form 8-K (File No. 001-39817), filed with the SEC on December 23, 2020).
|
|
|
|
10.2
|
|
Investment
Management Trust Agreement, dated December 17, 2020, by and between the Company and Continental Stock Transfer & Trust Company,
as trustee. (Incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-39817),
filed with the SEC on December 23, 2020).
|
|
|
|
10.3
|
|
Registration
Rights Agreement, dated December 17, 2020, by and among the Company, Seven Oaks Sponsor LLC and the other holders party thereto (Incorporated
by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-39817), filed with the
SEC on December 23, 2020).
|
|
|
|
10.4
|
|
Private
Placement Warrants Purchase Agreement, dated December 17, 2020, by and among the Company and Seven Oaks Sponsor LLC (Incorporated
by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-39817), filed with the
SEC on December 23, 2020).
|
|
|
|
31.1
|
|
Certification
of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification
of Principal Financial and Accounting Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934,
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 and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
|
(1) Incorporated by reference to the Initial 10-K filed on March 31, 2021.