NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
Note 1 - Description of Organization, Business
Operations and Liquidity
Organization and General
FAST Acquisition Corp. II (the “Company”)
is a blank check company incorporated in Delaware on December 30, 2020. The Company was formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses
(the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the
risks associated with emerging growth companies.
As of March 31, 2023, the Company had not commenced
any operations. All activity for the period from December 30, 2020 (inception) through March 31, 2023 relates to the Company’s
formation, the initial public offering (the “Initial Public Offering”), and since the Initial Public Offering, the search
for an initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business
Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from
the Initial Public Offering.
The Company’s sponsor is FAST Sponsor II
LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public
Offering was declared effective on March 15, 2021. On March 18, 2021, the Company consummated its Initial Public Offering of 20,000,000
units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”)
at $10.00 per Unit, generating gross proceeds of $200.0 million, and incurring offering costs of approximately $11.6 million, inclusive
of $7.0 million in deferred underwriting commissions (see Note 5). The Company granted the underwriter in the Initial Public Offering
(the “underwriter”) a 45-day option to purchase up to 3,000,000 additional units at the Initial Public Offering price to
cover over-allotments, if any. The underwriter exercised the over-allotment option in part and, on March 26, 2021, the Company consummated
the sale of an additional 2,233,687 units at the Initial Public Offering price at $10.00 per Unit, generating additional gross proceeds
of approximately $22.3 million (the “Over-Allotment”), and incurring additional offering costs of approximately $1.2 million,
inclusive of approximately $0.8 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the private placement (“Private Placement”) of 4,000,000 warrants (each, a “Private
Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant
to the Sponsor, generating proceeds of $6.0 million. The Company consummated a second closing (the “Second Closing”) of the
Private Placement simultaneously with the closing of the Over-Allotment on March 26, 2021, for an additional 297,825 Private Placement
Warrants at a price of $1.50 per Private Placement Warrant, generating proceeds of approximately $0.4 million (see Note 4).
Upon the closing of the Initial Public Offering,
the Over-Allotment and the Private Placement, $222.3 million ($10.00 per Unit) of the net proceeds were placed in a trust account (“Trust
Account”) located in the United States at JP Morgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company acting
as trustee, and are invested only in U.S. “government securities,” within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940, as amended (the “Investment Company Act”), having a maturity of 185 days or less or in money market
funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government
treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution
of the Trust Account as described below.
In March 2023, the Company liquidated the U.S. “government securities”
held in the Trust Account. The funds in the trust account will be maintained in cash in an interest-bearing demand deposit account at
a bank until the earlier of consummation of the initial business combination and liquidation.
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 Private Placement Warrants,
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 one or more
initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (excluding
the amount of any deferred underwriting discount held in the Trust Account) at the time of the agreement to enter into the initial Business
Combination. However, 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 business sufficient for
it not to be required to register as an investment company under the Investment Company Act.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company will provide the holders (the “Public
Stockholders”) of the Company’s Public Shares 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, subject to applicable law and stock exchange listing requirements.
The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account.
The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting
commissions the Company will pay to the underwriter (as discussed in Note 5). These Public Shares were recorded at a redemption value
and classified as temporary equity in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting
Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with
a Business Combination only if a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is
not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for
business or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Certificate
of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (the
“SEC”) and file tender offer documents with the SEC 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. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for
or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the initial
stockholders (as defined below) agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during
or after the Initial Public Offering in favor of a Business Combination. In addition, the initial stockholders agreed to waive their
redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.
On March 3, 2023, the Company held a special meeting
of stockholders (the “Stockholder Meeting”), in which the Company’s stockholders voted to approve and adopt an amendment
to the Company’s Certificate of Incorporation (the “Extension Amendment”) to (i) change the date by which the Company
must consummate a business combination from March 18, 2023 (the “Current Outside Date”) to June 18, 2023 (the “Extended
Date”), and (ii) to allow the Company, without another stockholder vote, by resolution of the Company’s board, to elect to
further extend this date in one-month increments (the “Additional Extended Date”), up to four additional times (the “Extension
Amendment Proposal”).
In connection with the Extension Amendment, 15,098,178 shares of the
Company’s issued and outstanding Class A common stock were redeemed for cash at a redemption price of approximately $10.1498 per
share, for an aggregate redemption amount of approximately $153.24 million. Following such redemptions, 7,135,509 shares of the Company’s
Class A common stock remain outstanding and approximately $72.42 million remain in the Company’s Trust Account.
The Certificate of Incorporation provides that
a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert
or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)),
will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the
prior consent of the Company.
The Sponsor and the Company’s officers
and directors (the “initial stockholders”) agreed not to propose an amendment to the Certificate of Incorporation to modify
the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business
Combination within the initial Combination Period (as defined below) or with respect to any other material provisions relating to stockholders’
rights or pre-initial Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem
their Public Shares in conjunction with any such amendment.
If the Company is unable to complete a Business
Combination by June 18, 2023 (taking into account the extension and, as such period may be extended by the Company’s stockholders
or without another stockholder vote, by resolution of the Company’s board, in accordance with the amended Certificate of Incorporation,
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
(net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to
the approval of the remaining stockholders and the board of directors, liquidate and dissolve, subject in each case to the Company’s
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The initial stockholders agreed to waive their
rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business
Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the Initial Public
Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company
fails to complete a Business Combination within the Combination Period. The underwriter agreed to waive its rights to the deferred underwriting
commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination
Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund
the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets
remaining available for distribution (including Trust Account assets) will be only $10.00 or potentially less. In order to protect the
amounts held in the Trust Account, the Sponsor agreed to be liable to the Company if and to the extent any claims by a third party (except
for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective
target business with which the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination
agreement (a “Target”), reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share
and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less
than $10.00 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will
not apply to any claims by a third party or Target that executed a waiver of any and all rights to the monies held in the Trust Account
(whether or not such waiver is enforceable) not will it apply to any claims under the Company’s indemnity of the underwriter of
the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities
Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims
of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent registered public accounting
firm), prospective target businesses and 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.
Going Concern Consideration
As of March 31, 2023, the Company had approximately
$675,000 in its operating bank account and a working capital deficit of approximately $3.7 million (not taking into account approximately
$50,000 of tax liabilities that may be withdrawn from the Trust Account and excluding the working capital loan -related party.)
The Company’s liquidity needs prior to
the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to cover for certain offering
costs on the Company’s behalf in exchange for issuance of Founder Shares (as defined in Note 4), and loan proceeds from the Sponsor
of $100,000 under a promissory note (the “Note” as discussed in Note 4). The Company repaid the Note in full upon closing
of the Initial Public Offering. Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity through
March 31, 2023 has been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement
held outside of the Trust Account and the proceeds from the Working Capital Loan (as defined in Note 4). As of March 31, 2023, a total
of $1.1 million of principal was outstanding under the Working Capital Loan. At any time on or prior to the consummation of the Business
Combination, at the option of the lender, any outstanding amount of the Working Capital Loan may be converted into warrants of the post-Business
Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. The Working Capital
Loan does not bear any interest and will be repayable by the Company to the Sponsor, if not converted, on the effective date of a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and
one or more businesses.
In connection with the Company’s assessment of going concern
considerations in accordance with FASB ASC 205-40, “Presentation of Financial Statements - Going Concern,” management has
determined that liquidity condition, mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s
ability to continue as a going concern. Management intends to complete the proposed Business Combination with Falcon prior to the liquidation
date, June 18, 2023, or such further date as determined by the Company’s board. The Sponsor continues to have cash on hand that
could be available for loans to the Company. The Sponsor has no obligation to provide further funding to the Company. Management believes
it could obtain additional funding from the Sponsor.
No adjustments have been made to the
carrying amounts of assets or liabilities should the Company be required to liquidate after June 18, 2023, or such further date as
determined by the Company’s board. The condensed financial statements do not include any adjustment that might be necessary if
the Company is unable to continue as a going concern.
FAST
ACQUISITION CORP. II
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Proposed
Business Combination
On
July 11, 2022, the Company (or “SPAC” or “Acquiror”) entered into an agreement and plan of merger (as it may
be amended and/or restated from time to time, the “Original Merger Agreement”) with Falcon’s Beyond Global, LLC, a
Florida limited liability company (“Falcon”), Palm Holdco, Inc., a Delaware corporation and a wholly owned subsidiary of
Falcon (“Pubco”), and Palm Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of Pubco (“Merger
Sub”). On January 31, 2023, SPAC, Falcon, Pubco and Merger Sub entered into an Amended and Restated Agreement and Plan of Merger
(the “A&R Merger Agreement”), which amended and restated the Original Merger Agreement in its entirety.
Pursuant
to the Original Merger Agreement, and subject to the terms and conditions contained therein, the business combination will be effected
in two steps: (a) Acquiror will merge with and into Pubco (the “SPAC Merger”), with Pubco surviving as the sole owner of
Merger Sub (sometimes referred to as the “Surviving Corporation”), followed by a contribution by Pubco of all of its cash
to Merger Sub to effectuate the “UP-C” structure; and (b) on the date immediately following the SPAC Merger, Merger Sub will
merge with and into Falcon (the “Acquisition Merger,” and collectively with the SPAC Merger, the “Mergers”),
with Falcon as the surviving entity of such merger. Following the consummation of the transactions contemplated by the Original Merger
Agreement (the “Closing,” and the date on which the Closing occurs, the “Closing Date”), the direct interests
in Falcon will be held by Pubco and the holders of common units of Falcon (the “Falcon Units”) outstanding as of immediately
prior to the Mergers.
The
Original Merger Agreement provides that, among other things and upon the terms and subject to the conditions thereof, the following transactions
will occur:
(i)
At the effective time of the SPAC Merger, (a) each SPAC Unit outstanding immediately prior to the effective time of the SPAC Merger will
be automatically detached and the holder thereof will be deemed to hold one share of SPAC Class A Common Stock and one-quarter of a SPAC
Warrant; (b) each current share of SPAC Class A Common Stock will be automatically exchanged for the right to receive (x) 0.5 shares
of Pubco Class A Common Stock and 0.5 shares of the Series A Preferred Stock of Pubco (“Pubco Preferred Stock”) and (y) 50%
of the Additional SPAC Share Consideration; (c) each share of SPAC Class A Common Stock converted from the SPAC Class B Common Stock
of FAST Sponsor II LLC, a Delaware limited liability company (the “Sponsor”), pursuant to the Class B Exchange (described
below) will automatically be exchanged for one newly issued share of Pubco Class A Common Stock; and (d) each SPAC Warrant outstanding
immediately prior to the SPAC Merger effective time will be assumed by Pubco.
(ii)
Immediately prior to the effective time of the Acquisition Merger, following the SPAC Merger, the Surviving Corporation will contribute
to Merger Sub all of the Closing Surviving Corporation Cash.
(iii)
At the effective time of the Acquisition Merger, (a) each issued and outstanding Falcon Unit
(other than the Cancelled Units and Falcon Financing Units) will be converted into the right
to receive (x) a number of shares of Pubco Class B Common Stock and a number of limited liability
company interests of Falcon (“New Falcon Units”), in each case equal to the Acquisition
Merger Exchange Number (the “Per Unit Consideration”) and (y) the applicable
portion of any Seller Earnout Shares (defined below); (b) each Falcon Unit issued in connection
with the Falcon Financing (the “Falcon Financing Units”) will be converted into
the right to receive (x) the Per Unit Consideration and (y) a number of shares of Pubco Class
B Common Stock and a number of New Falcon Units, in each case equal to the Additional Consideration
Number (the “Additional Falcon Financing Unit Consideration”); (c) each Falcon
Unit held in treasury of the Falcon as of immediately prior to the effective time of the
Acquisition Merger (collectively, the “Cancelled Units”) will be cancelled without
any conversion and no payment or distribution will be made with respect thereto; (d) the
units of Merger Sub that are issued and outstanding will be converted into and become (x)
a number of New Falcon Units equal to the number of shares of Pubco Class A Common Stock
outstanding immediately after the SPAC Merger, (y) a number of Preferred Units equal to the
number of shares of Pubco Preferred Stock outstanding immediately after the SPAC Merger and
(z) a number of warrant units equal to the number of Pubco Warrants outstanding immediately
after the SPAC Merger, in each case of the foregoing clauses (x) through (z) after giving
effect to the redemption of any shares of SPAC Common Stock in connection with the Offer,
the Class B Exchange and the Conversion.
FAST
ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Holders
of Falcon Units immediately before the Closing also will be entitled to receive a pro rata portion of a total of up to (i) 40,000,000
New Company Units and 40,000,000 shares of Class B Common Stock of Pubco (together, the “Seller Earnout Shares”), in each
case that will be deposited into escrow at the Closing and be earned, released and delivered upon satisfaction of certain milestones
related to the volume weighted average closing sale price of shares of Pubco Common Stock (“Pubco Common Share Price”) during
the five-year period beginning on the one-year anniversary of the Acquisition Merger Closing and ending on the six-year anniversary of
the Closing Date (the “Earnout Period”). 15,000,000 of the Seller Earnout Shares will vest and be released from escrow if
the Pubco Common Share Price is at least $20 for 20 trading days during any 30-consecutive trading day period; another 15,000,000 of
the Seller Earnout Shares will vest and be released from escrow if the Pubco Common Share Price is at least $25 for 20 trading days during
any 30-consecutive trading day period; and the final 10,000,000 of the Seller Earnout Shares will vest and be released from escrow if
the Pubco Common Share Price is at least $30 for 20 trading days during any 30-consecutive trading day period, in each case during the
Earnout Period.
The
obligations of the parties to consummate the transactions contemplated by the Merger Agreement (together with the other agreements and
transactions contemplated by the Business Combination Agreement, the “Merger”) are subject to the satisfaction or waiver
of certain customary closing conditions. Either party may terminate the Merger under certain circumstances. Upon termination of the Merger
Agreement, in certain circumstances, Falcon will pay to the Company a termination fee equal to (i) $12,500,000 if the Company’s
redeemed public share percentage is less than 90% or is unknown or (ii) $6,250,000 if the Company’s redeemed public share percentage
is known and is equal to or greater than 90%.
On
September 13, 2022, the Company, Falcon, Pubco and Merger Sub entered into that certain Amendment No. 1 to the Original Merger Agreement
(“Amendment No. 1”), pursuant to which the parties thereto extended the date by which Falcon is required to deliver to the
Company PCAOB Audited Financial Statements from August 15, 2022 to September 28, 2022, and the date on which the Company could terminate
the Merger Agreement if the PCAOB Audited Financial Statements have not been delivered from September 14, 2022 to September 28, 2022.
In
connection with the execution of the Original Merger Agreement, the Sponsor, Falcon, Pubco and Acquiror entered into an agreement (the
“Original Sponsor Support Agreement”), pursuant to which the Sponsor has agreed to waive its conversion and anti-dilution
rights with respect to its shares of SPAC Common Stock in connection with the transactions contemplated by the Original Merger Agreement,
vote (or cause to be voted), or execute and deliver a written consent (or cause a written consent to be executed and delivered) covering,
all of its SPAC Common Stock (i) in favor of the Mergers and each other proposal related to the Mergers and the other transactions contemplated
thereby, (ii) against any merger agreement or merger (other than the Original Merger Agreement and the Mergers), consolidation, combination,
sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by Acquiror, (iii) against
any change in the business, management or the board of directors of Acquiror (other than in connection with the Mergers and the other
transactions contemplated by the Original Merger Agreement), and (iv) against any proposal, action or agreement that would (w) impede,
frustrate, prevent or nullify the Original Merger Agreement or any Merger, (x) result in a breach in any respect of any covenant, representation,
warranty or any other obligation or agreement of Acquiror or the Merger Sub under the Original Merger Agreement, (y) result in any of
the conditions set forth in the Original Merger Agreement not being fulfilled or (z) change in any manner the dividend policy or capitalization
of, including the voting rights of any class of capital stock of, Acquiror.
The
Sponsor further agreed to, immediately prior to the closing of the Acquisition Merger, deliver to Acquiror for cancellation and for no
consideration the Sponsor Redemption Forfeited Shares, which is calculated as 40% of Sponsor’s SPAC Class B Common Stock multiplied
by the SPAC Redeemed Share Percentage, and the Additional Incentive Forfeited Shares. Thereafter, the Sponsor Earnout Shares, which is
50% of the difference between (i) 40% of Sponsor’s SPAC Class B Common Stock and (ii) the Sponsor Redemption Forfeited Shares,
are to be deposited into one or more escrow accounts, and will vest and be released from escrow to the Sponsor upon satisfaction of certain
milestones related to the Pubco Common Share Price during the Earnout Period. Any Sponsor Earnout Shares that do not so vest prior to
the Earnout Period End Date will be delivered to Pubco and cancelled for no consideration.
See
the Company’s Current Reports on Form 8-K filed with the SEC on July 12, 2022 and September 16, 2022 including the Original Merger
Agreement, Amendment No. 1, and related supporting agreements.
FAST
ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Amended
Merger Agreement
On
January 31, 2023, the Company, Falcon, Pubco and Merger Sub entered into the A&R Merger Agreement, which amended and restated the
Original Merger Agreement in its entirety to, among other things, provide for the following:
| ● | Changes to Acquisition Merger Consideration: The number of shares of Pubco Class B Common Stock and New Falcon’s Units to be issued in exchange for current Falcon Units (excluding Falcon Financing Units) in the Acquisition Merger has been reduced from 88,653,263 to 48,587,077. |
| ● | EBITDA and Revenue Earnouts: In addition to the 40 million Seller Earnout Shares earned based on the Pubco Common Share Price provided for in the Original Merger Agreement, the holders of Falcon Units immediately before the Closing (other than the holders of Falcon Financing Units in their capacity as holders of Falcon Financing Units) will now be entitled to receive a pro rata portion of a total of up to 40 million additional Seller Earnout Shares based on Pubco’s achievement of specified EBITDA and revenue targets in 2023 and 2024. Up to 2% of the 80 million Seller Earnout Shares will be allocated to each the Sponsor and Jefferies LLC if they are earned. |
|
● |
Changes
to Sponsor Consideration: |
| ● | 80% of the Founder Shares held by the Sponsor are now subject to forfeiture pro rata based on the amount of funds available at the Acquisition Merger Closing that are primarily sourced by the Company and the Sponsor (including funds in the Trust Account after redemptions) (the “SPAC Capital Received”), measured against a target amount of $222,336,870; provided the Sponsor will retain a minimum of 1,250,000 Founder Shares. The Sponsor will continue to forfeit the remaining 20% of its Founder Shares but will now have the opportunity to earn them back (as well as any shares forfeited based on SPAC Capital Received) based on achievement of the Pubco Common Share Price, Pubco revenue and Pubco EBITDA earnout targets. |
| ● | The Sponsor further agreed to forfeit 50% of its Private Placement Warrants if SPAC Capital Received is less than $50 million and to amend the warrant agreement to provide that its Private Placement Warrants are redeemable (subject to the concurrent redemption of other warrants) at a redemption price of $0.01 per warrant if the Reference Value (as defined below) is at least $18 per share (the “Warrant Agreement Amendment”). “Reference Value” means the last reported sales price of the shares of the Company’s Class A Common Stock for any twenty (20) trading days within the thirty (30) trading-day period ending on the third trading day prior to the date on which notice of the redemption is given. |
| ● | Extension: The Company agreed to take certain actions to extend the date by which it has to complete a Business Combination to October 18, 2023 (the “Extension”). Infinite Acquisitions LLLP, a majority equity holder of Falcon (“Infinite”), agreed to fund up to $2,000,000 of expenses related to the Extension pursuant to the Promissory Note, described in more detail below. |
|
● |
Termination:
The termination date (the “Termination Date”) was extended from April 11, 2023 to September 30, 2023. The Company’s
termination right if fails to deliver its audited financial statements by a specified date was eliminated. Termination rights in
favor of the Company were added in the case where Infinite defaults under the Promissory Note or if Falcon enters into certain specified
interim financing arrangements (the “Interim Financing Termination”). Mutual termination rights were added in the case
where, following a cure period, the Company is not listed on an approved exchange or is in default of the listing requirements of
the exchange it is listed on (the “Delisting Termination”) or if the closing condition related to the listing of Pubco
shares on an approved exchange is not satisfied following the satisfaction of all other closing conditions (the “Pubco Listing
Termination”). |
FAST
ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
| ● | Termination Fee: The Company will be entitled to a termination fee of $12,500,000 (minus 50% of any amounts funded by Infinite under the Promissory Note) at the time of termination if the A&R Merger Agreement is terminated for any reason specified in the A&R Merger Agreement other than: (i) mutual agreement of Falcon and the Company; (ii) the Company’s breach of the A&R Merger Agreement in a manner that causes the failure of a condition to Closing under the A&R Merger Agreement (when Falcon is not also in breach); (iii) the consummation of either Merger is permanently enjoined or prohibited by the terms of a final, non-appealable governmental order or other law if the final, non-appealable governmental order or other law is generally applicable to all special purpose acquisition companies or primarily caused by any action or inaction of the Company; (iv) stockholders fail to approve the Business Combination at the special meeting of stockholders called for such purpose; (v) if the Company’s board changes its recommendation to stockholders or fails to recommend the Merger in the proxy statement; (vi) pursuant to the Delisting Termination; or (vii) failure to close by the Termination Date or two days after the Special Meeting (when the Falcon is not in breach). In addition, no termination fee will be payable at any time Falcon could terminate the A&R Merger Agreement pursuant to the Delisting Termination or because of the Company’s breach of the A&R Merger Agreement in a manner that causes the failure of a condition to Closing under the Merger Agreement. The termination fee will be reduced by 50% and payable at any time within 12 months of termination instead of at the time of termination if the A&R Merger Agreement is terminated pursuant to the Interim Financing Termination or the Pubco Listing Termination or is terminated at a time when the Company or Falcon could terminate the A&R Merger Agreement pursuant to the Pubco Listing Termination. |
|
● |
Alternative
Financing: The Company may enter into one or more agreements with any investor to effect certain Pre-Approved Financing Arrangements
(as defined in the A&R Merger Agreement) without any consent or approval required from Falcon. |
The
A&R Merger Agreement also makes certain technical and other changes to the Original Merger Agreement. The foregoing description of
the A&R Merger Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the A&R
Merger Agreement. The A&R Merger Agreement contains representations, warranties, and covenants that the parties to the A&R Merger
Agreement made to each other as of the date of the A&R Merger Agreement or other specific dates. The assertions embodied in those
representations, warranties, and covenants were made for purposes of the contract among the parties and are subject to important qualifications
and limitations agreed to by the parties in connection with negotiating the A&R Merger Agreement. In particular, the representations,
warranties, covenants and agreements contained in the A&R Merger Agreement, which were made only for purposes of the A&R Merger
Agreement and as of specific dates, were solely for the benefit of the parties to the A&R Merger Agreement, may be subject to limitations
agreed upon by the contracting parties (including being qualified by confidential disclosures made for the purposes of allocating contractual
risk between the parties to the A&R Merger Agreement instead of establishing these matters as facts) and may be subject to standards
of materiality applicable to the contracting parties that differ from those applicable to investors and reports and documents filed with
the SEC. In addition, the representations, warranties, covenants, and agreements and other terms of the A&R Merger Agreement may
be subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations and warranties
and other terms may change after the date of the A&R Merger Agreement, which subsequent information may or may not be fully reflected
in the Company’s public disclosures.
On
January 31, 2023, in connection with the A&R Merger Agreement, the Company, Sponsor, Falcon and Pubco entered into an Amended and
Restated Sponsor Support Agreement whereby, among other things, the Sponsor agreed (i) to exchange its shares of the Company’s
Class B Common Stock for shares of Class A Common Stock in accordance with the Company’s amended and restated certificate of incorporation
such that, prior to the Merger Effective Time, there shall cease to be outstanding any shares of the Company’s Class B Common Stock,
(ii) to forfeit a portion of its founder shares and private placement warrants to the extent and as described above and (iii) to support
the Warrant Agreement Amendment.
FAST
ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 2
- Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally
accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations
of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the
unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair
statement of the balances and results for the period presented. Operating results for the three months ended March 31, 2023, are not
necessarily indicative of the results that may be expected through December 31, 2023, or any future period.
The
accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto
included in the Annual Report on Form 10-K filed by the Company with the SEC on March 29, 2023.
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 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 statement with 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.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial
institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage limits of $250,000. Any loss incurred or
a lack of access to such funds could have a significant adverse impact on the Company’s financial condition.
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 held outside the Trust Account as of March 31, 2023 and December 31, 2022.
FAST
ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Investments
Held in Trust Account
In
March 2023, the Company liquidated the U.S. “government securities” held in the Trust Account. The funds in the trust account
will be maintained in cash in an interest-bearing demand deposit account at a bank until the earlier of consummation of the initial business
combination and liquidation. Prior to liquidating the U.S. “government securities”, the Company’s portfolio of investments
was comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity
of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable
fair value, or a combination thereof. When the Company’s investments held in the Trust Account were comprised of U.S. government
securities, the investments were classified as trading securities. When the Company’s investments held in the Trust Account were
comprised of money market funds, the investments were recognized at fair value. Trading securities and investments in money market funds
were presented on the condensed balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the
change in fair value of these securities were included in income (loss) from investments held in the Trust Account in the accompanying
condensed statement of operations. The estimated fair values of investments held in the Trust Account were determined using available
market information.
Use of Estimates
The
preparation of condensed 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
condensed financial statements and the reported amounts of income 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 condensed 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.
Fair
Value of Financial Instruments
The
carrying value of the Company’s assets and liabilities which qualify as financial instruments under FASB ASC 820, “Fair Value
Measurements and Disclosures,” equals or approximates the fair values for such assets and liabilities either because the short-term
nature of the instruments or because the instrument is recognized at fair value (See Note 9).
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 consist of:
| ● | 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.
FAST
ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Working
Capital Loan - Related Party and Convertible Promissory Note
The
Company has elected the fair value option to account for its working capital loan-related party with its Sponsor as defined and more
fully described in Note 4, in addition to its Promissory Note with Infinite as described in Note 5. As a result of applying the fair
value option, the Company records each draw at fair value with a gain or loss recognized at issuance, and subsequent changes in fair
value are recorded as change in the fair value of working capital loan-related party and convertible promissory note on the
unaudited condensed statements of operations. The fair value is based on prices or valuation techniques that require inputs that are
both unobservable and significant to the overall fair value measurement. These inputs reflect management’s and, if applicable,
an independent third-party valuation firm’s own assumption about the assumptions a market participant would use in pricing the
asset or liability.
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 Topic 815, “Derivatives and Hedging” (“ASC
815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as
equity, is re-assessed at the end of each reporting period.
The
Company accounts for the warrants issued in connection with its Initial Public Offering and the Private Placement Warrants as derivative
warrant liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value
and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet
date until exercised, and any change in fair value is recognized in the Company’s statement of operations. The fair value of the
Public Warrants issued in connection with the Initial Public Offering and Private Placement Warrants were initially measured at fair
value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using
a Black-Scholes Merton model. The fair value of Public Warrants issued in connection with the Initial Public Offering have subsequently
been measured based on the listed market price of such warrants. The determination of the fair value of the warrant liabilities may be
subject to change as more current information becomes available and accordingly, the actual results could differ significantly. Derivative
warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current
assets or require the creation of current liabilities.
Offering
Costs Associated with the Initial Public Offering
Offering
costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly
related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public
Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities
are expensed as incurred, presented as non-operating expenses in the accompanying statement of operations. Offering costs associated
with the Class A common stock issued were charged against the carrying value of the shares of Class A common stock upon the completion
of the Initial Public Offering and Over-Allotment. The Company classifies deferred underwriting commissions as non-current liabilities
as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Class
A Common Stock Subject to Possible Redemption
Class
A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally
redeemable Class A common stock (including shares of Class A common stock that feature redemption rights that are either within the control
of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified
as temporary equity. At all other times, Class A common stock are classified as stockholders’ equity. The Company’s Class
A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence
of uncertain future events, accordingly, at March 31, 2023 and December 31, 2022, 7,135,509 and 22,233,687 shares of Class A common stock
subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ deficit section
of the Company’s condensed balance sheets, respectively.
FAST
ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Under
ASC 480-10-S99, the Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying
value of the security to equal the redemption value at the end of each reporting period. This method would view the end of the reporting
period as if it were also the redemption date for the security.
Effective
with the closing of the Initial Public Offering (including the exercise of the over-allotment option), the Company recognized the accretion
from initial book value to redemption amount value, which resulted in charges against additional paid-in capital (to the extent available)
and accumulated deficit. Subsequently, the Company recognized changes in the redemption value as an increase in redemption value of Class
A common stock subject to possible redemption as reflected on the accompanying unaudited condensed statements of changes in stockholders’
deficit.
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred
tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period
that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized. As of March 31, 2023 and December 31, 2022, the Company had deferred tax assets with a full valuation allowance against
them.
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. There were no unrecognized tax benefits and no amounts accrued for interest and penalties
as of March 31, 2023 and December 31, 2022. The Company recognizes accrued interest and penalties related to unrecognized tax benefits
as income tax expense. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
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.
Share-Based
Compensation
Share-based
payment awards issued to employees and nonemployees are measured at grant-date fair value of the awards and recognized as expense on
a straight-line basis over the requisite service period of the award. For awards that have a performance condition, compensation cost
is measured based on the grant date fair value and recognized when the performance condition becomes probable. The Company assesses the
probability of the performance conditions being met on a continuous basis. Forfeitures are recognized when they occur. No compensation
expense for share-based payment awards has been recognized to-date.
Net
Income Per Share of Common Stock
The
Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has
two classes of shares, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata
between the two classes of shares. Net income per share of common stock is calculated by dividing the net income by the weighted average
shares of common stock outstanding for the respective period.
FAST
ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
calculation of diluted net income per share of common stock does not consider the effect of the warrants issued in connection with the
Initial Public Offering (including exercise of the over-allotment option) and the Private Placement to purchase an aggregate of 9,856,247
shares of common stock in the calculation of diluted income per share, because their exercise is contingent upon future events. The Company
has considered the effect of Class B shares of common stock that were excluded from the weighted average number of basic shares outstanding
as they were contingent on the exercise of over-allotment option by the underwriters. Accretion associated with the redeemable Class
A common stock is excluded from earnings per share as the redemption value approximates fair value.
The
following table reflects the calculation of basic and diluted net income per share of common stock:
| |
For
The Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
| |
Class
A | | |
Class
B | | |
Class
A | | |
Class
B | |
Basic and diluted
net income per common share: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation
of net income | |
$ | 2,083,711 | | |
$ | 624,609 | | |
$ | 4,013,550 | | |
$ | 1,003,388 | |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average common shares outstanding | |
| 18,543,021 | | |
| 5,558,422 | | |
| 22,233,687 | | |
| 5,558,422 | |
Basic and diluted net income per common share | |
$ | 0.11 | | |
$ | 0.11 | | |
$ | 0.18 | | |
$ | 0.18 | |
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect
on the accompanying financial statement.
Note 3
- Initial Public Offering
On
March 18, 2021, the Company consummated its Initial Public Offering of 20,000,000 Units at $10.00 per Unit, generating gross proceeds
of $200.0 million, and incurring offering costs of approximately $11.6 million, inclusive of $7.0 million in deferred underwriting commissions.
Each
Unit consists of one share of Class A common stock, and one-quarter 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 8).
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company granted the underwriter a 45-day
option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 3,000,000 additional Units to
cover over-allotments, if any, at the Initial Public Offering price, less underwriting discounts and commissions. The underwriter exercised
the over-allotment option in part, and on March 26, 2021, purchased additional 2,233,687 units at the Initial Public Offering price at
$10.00 per Unit, generating additional gross proceeds of approximately $22.3 million, and incurring additional offering costs of approximately
$1.2 million, inclusive of approximately $0.8 million in deferred underwriting commissions.
Note 4 - Related Party Transactions
Founder Shares
On January 6, 2021, the Sponsor purchased 5,750,000
shares of the Company’s Class B common stock, par value $0.0001 per share, (the “Founder Shares”) for an aggregate
price of $25,000. The initial stockholders agreed to forfeit up to 750,000 Founder Shares to the extent that the over-allotment option
was not exercised in full by the underwriter, so that the Founder Shares would represent 20.0% of the Company’s issued and outstanding
shares after the Initial Public Offering. On March 26, 2021, the underwriter exercised the option to purchase 2,233,687 additional units,
for a total of 22,233,687 Units; thus, the initial stockholders forfeited 191,578 shares of Class B common stock accordingly. As of March
31, 2023 and December 31, 2022, there were 5,558,422 shares of Class B common stock outstanding, none 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 following the completion of the initial Business Combination on which the Company
completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders
having the right to exchange their common stock for cash, securities or other property. Notwithstanding the foregoing, if (1) the last
reported sales 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 Company’s 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 4,000,000 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant to the Sponsor, generating proceeds of $6.0 million. On March 26, 2021, the Sponsor purchased an additional 297,825
Private Placement Warrants at a price of $1.50 per Private Placement Warrant in a Second Closing, generating proceeds of approximately
$0.4 million.
Each whole 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 Private Placement
Warrants will be non-redeemable for cash and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted
transferees.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Sponsor and the Company’s officers
and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30
days after the completion of the initial Business Combination.
Related Party Loans
On January 6, 2021, 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 the Note. This loan was
non-interest bearing and payable upon the completion of the Initial Public Offering. The Company borrowed $100,000 under the Note and
repaid the Note in full upon closing of the Initial Public Offering. Upon closing of the Initial Public Offering, the loan was no longer
available.
In addition, in order to fund working capital
deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain
of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes a Business Combination, the Company may repay the Working Capital Loans out of the proceeds
of the Trust Account released to the Company. Otherwise, the Working Capital Loans 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
$1.50 per warrant. The warrants would be identical to the Private Placement Warrants.
On May 4, 2022, the Sponsor provided a $600,000 Working Capital Loan
to the Company in the form of a convertible promissory note that is due upon the completion of a Business Combination. At any time on
or prior to the consummation of the Business Combination, at the option of the lender, any outstanding amount of the Working Capital Loan
may be converted into warrants of the post-Business Combination entity at a price of $1.50 per warrant. The warrants would be identical
to the Private Placement Warrants. On July 20, 2022, the Company borrowed an additional $500,000 from the Sponsor and amended the convertible
promissory note to increase the principal balance to $1.1 million. The Working Capital Loan does not bear any interest and will be repayable
by the Company to the Sponsor, if not converted, on the effective date of a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination, involving the Company and one or more businesses. Due to the conversion feature within
the Working Capital Loan, the estimated fair value of the Working Capital Loan was $1,082,597 and $1,094,749, as of March 31, 2023 and
December 31, 2022, respectively (Note 9).
Administrative Service Agreement
Commencing on the date that the Company’s securities were first
listed on the New York Stock Exchange and continuing until the earlier of the Company’s consummation of a Business Combination and
the Company’s liquidation, to the Company agreed to pay the Sponsor a total of $15,000 per month for office space, utilities, secretarial
and administrative support services provided to members of the Company’s management team. The Company incurred approximately $45,000
in administrative expenses under the agreement, which is recognized in the accompanying unaudited condensed statements of operations for
each of the three months ended March 31, 2023 and 2022, within general and administrative expense - related party. As of March 31, 2023
and December 31, 2022, $15,000 reported in accounts payable with related party was outstanding in the accompanying condensed balance sheets.
The Sponsor, 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 Company’s
audit committee will review on a quarterly basis all payments that were made to the Sponsor, officers or directors, or their affiliates.
As of March 31, 2023 and December 31, 2022, there was no such outstanding balance presented in the accompanying balance sheets, respectively.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 5 - 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 Class A common stock issuable
upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon
conversion of the Founder Shares), were entitled to registration rights pursuant to a registration rights agreement. These holders were
entitled to certain demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection
with the filing of any such registration statements.
Underwriting Agreement
The underwriter was entitled to an underwriting
discount of $0.20 per unit, or $4.0 million in the aggregate, paid upon the closing of the Initial Public Offering. $0.35 per unit, or
$7.0 million in the aggregate will be payable to the underwriter for deferred underwriting commissions. The deferred fee will become
payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination,
subject to the terms of the underwriting agreement.
In connection with the consummation of the Over-Allotment
on March 26, 2021, the underwriter was entitled to an additional fee of approximately $447,000 paid upon closing, and an approximately
$782,000 in deferred underwriting commissions.
On January 31, 2023, the engagement letter between the Company and the underwriter was amended to provide that in lieu of the fees under
the original engagement letter and underwriting agreement, at the closing of the business combination with Falcon described in Note 1,
the underwriter will be entitled to a fee $7,775,000 (inclusive of amounts owed as deferred underwriting commission from the Initial Public
Offering and for acting as financial and capital markets advisor to the Company), an additional one-time discretionary fee of $1,000,000
under certain circumstances, and the right to receive a portion of the Seller Earnout Shares. A portion of the fees may be deferred until
up to two years after the closing of the business combination with Falcon.
Consulting Agreement
On June 13, 2022, the Company engaged a contractor
(the “Contractor”) to perform technical diligence in exchange for a cash consideration of $125,000, with $50,000 paid upon
execution and $75,000 payable upon the consummation of the Business Combination, and the Sponsor’s agreement to issue membership
interest in the Sponsor that, in aggregate, represent an indirect economic interest in 25,000 Founder Shares, upon completion of the
services. The grant date fair value of the Sponsor membership interests issued to the Contractor is compensation expense for the Company,
and a contribution from the Sponsor to the Company for the same amount and is recognized upon completion of the services by the Contractor.
Management estimated that the grant date fair value of the indirect economic interest in 25,000 Founder Shares was de minimis.
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic on the industry and concludes 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 business, the specific impact is not
readily determinable as of the date of these unaudited condensed financial statements. These unaudited condensed financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and
Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States,
have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions
on the world economy are not determinable as of the date of these unaudited condensed financial statements and the specific impact on
the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these unaudited
condensed financial statements.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
On
August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for,
among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and
certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed
on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally
1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise
tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value
of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the
Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the
abuse or avoidance of the excise tax. Any share redemption or other share repurchase that occurs after December 31, 2022, in connection
with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would
be subject to the excise tax in connection with a Business Combination, extension vote or otherwise will depend on a number of factors,
including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise,
(ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection
with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year
of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise
tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not
been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s
ability to complete a Business Combination. On December 27, 2022, the Treasury Department and Internal Revenue Service (“IRS”)
issued a Notice 2023-2 (“Notice”), which provided interim guidance regarding the application of the corporate stock repurchase
excise tax until the issuance of proposed regulations. The Notice excluded the distributions complete liquidation of a corporation from
the base of the excise tax. The Notice also excludes from the scope of the excise tax any distribution made during the taxable year in
which a corporation fully liquidates and dissolves, even if a distribution precedes the formal decision to liquidate.
On March 1, 2023, the Company’s stockholders redeemed 15,098,178
shares of Class A shares of common stock for a total of $153,243,487. The Company evaluated the classification and accounting of the stock
redemption under ASC 450, “Contingencies”. ASC 450 states that when a loss contingency exists the likelihood that the future
event(s) will confirm the loss or impairment of an asset or the incurrence of a liability can range from probable to remote. A contingent
liability must be reviewed at each reporting period to determine appropriate treatment. The Company evaluated the current status and probability
of completing a Business Combination as of March 31, 2023 and concluded that it is probable that a contingent liability should be recorded.
As of March 31, 2023, the Company recorded $1,532,435 of excise tax liability calculated as 1% of shares redeemed on March 1, 2023.
Stockholder Meeting, Amendments, Redemptions and Trust Deposits
On March 3, 2023, the Company held a special
meeting of stockholders (the “Stockholder Meeting”), in which the Company’s stockholders voted on the following proposals
at the Stockholder Meeting, each of which were approved.
|
● |
Proposal
1. To approve and adopt an amendment to the Company’s Certificate of Incorporation
(the “Extension Amendment”) to (i) change the date by which the Company must
consummate a business combination from the Current Outside Date to the Extended Date, and
(ii) to allow the Company, without another stockholder vote, by resolution of the Company’s
board, to elect to further extend this date in one-month increments, up to four additional
times (the “Extension Amendment Proposal”). |
|
● |
Proposal
2. To approve and adopt an amendment to the Company’s Certificate of Incorporation to provide for the right of a holder of
SPAC Class B Common Stock of to convert into SPAC Class A Common Stock on a one-for-one basis prior to the closing of a Business
Combination at the election of the holder (the “Founder Share Amendment Proposal”). |
| ● | Proposal 3. To approve and adopt an amendment to the Company’s Certificate of Incorporation to delete: (i) the limitation that the Company shall not consummate a Business Combination if it would cause the Company’s net tangible assets to be less than $5,000,001; and (ii) the limitation that the Company shall not redeem public shares that would cause the Company’s net tangible assets to be less than $5,000,001 following such redemptions (the “Redemption Limitation Amendment Proposal”). |
On March 10, 2023, the Company filed amendments
to its Certificate of Incorporation to reflect the proposals.
In connection with the Extension Amendment, 15,098,178 shares of the
Company’s issued and outstanding Class A common stock were redeemed for cash at a redemption price of approximately $10.1498 per
share, for an aggregate redemption amount of approximately $153.24 million. Following such redemptions, 7,135,509 shares of the Company’s
Class A common stock remain outstanding.
Also, in connection with approval of the Extension
Amendment and the extension of the date by which the Company must consummate a Business Combination to June 18, 2023, the Company caused
$750,000, or approximately $0.1051 per share of the Company’s Class A common stock outstanding after giving effect to the redemptions
disclosed above, to be deposited in the Company’s Trust Account. Such funds were provided by Infinite Acquisitions LLLP pursuant
to the Promissory Note as described below.
Without approval of the Public Stockholders,
the Company may, by resolution of the Board, if requested by the Sponsor, and upon 2 business days’ advance notice prior to the
Extended Date or Additional Extended Date, as applicable, extend the Extended Date up to four additional times until October 18, 2023,
or a total of up to seven months after the Current Outside Date, provided that we deposit into the Trust Account, for each such additional
month, an amount determined by multiplying $0.05 by the number of public shares then outstanding, up to a maximum of $250,000, which
the Company shall deposit into the Trust Account at the beginning of each month (the “Monthly Deposit”), for an aggregate
deposit of up to $1.75 million (if all additional extensions are exercised). For so long as the Merger Agreement has not been terminated
in accordance with its terms and the Business Combination has not been consummated, our Board will extend the Extended Date for the next
calendar month.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED
FINANCIAL STATEMENTS
To fund the extension payment and other expenses, the Company and Infinite
entered into an unsecured convertible promissory note (the “Promissory Note”) pursuant to which Infinite agreed to advance
up to $2,000,000 to the Company, with any advances under the Promissory Note to be used by the Company to pay certain expenses of the
Extension. The Promissory Note is non-interest bearing and repayable, in cash, or, at Pubco’s option, in shares of Pubco Class A
Common Stock at a conversion price of $10.00 per share, at the effective time of the Acquisition Merger and will be forgiven without payment
if the A&R Merger Agreement is terminated. In connection with the Extension Amendment, Infinite deposited an aggregated of $1,250,000
into the Company’s operating account. As March 31, 2023 and December 31, 2022, the Promissory Note was outstanding in the amount
of $1,250,000 and $0, respectively.
Note 6 - Common Stock Subject to Possible
Redemption
The Company’s Class A common stock features
certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events.
The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s
Class A common stock are entitled to one vote for each share. As of March 31, 2023 and December 31, 2022, there were 7,135,509 and 22,233,687
shares of Class A common stock issued and outstanding, which were all subject to redemption and are classified outside of permanent equity
in the condensed balance sheets.
Class A common stock subject to possible redemption
reflected on the accompanying condensed balance sheets is reconciled on the following table:
Gross proceeds | |
$ | 222,336,870 | |
Less: | |
| | |
Fair value of Public Warrants at issuance | |
| (7,670,620 | ) |
Offering costs allocated to Class A common stock subject to possible redemption | |
| (12,331,812 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 22,128,356 | |
Class A common stock subject to possible redemption as of December 31, 2022 | |
| 224,462,794 | |
Less: | |
| | |
Redemptions | |
| (153,242,918 | ) |
Plus: | |
| | |
Increase in redemption value of Class A common stock subject to possible redemption | |
| 2,305,194 | |
Class A common stock subject to possible redemption as of March 31, 2023 | |
$ | 73,525,070 | |
Note 7 - Stockholders’ Deficit
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 March 31, 2023 and December 31,
2022, 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 March 31, 2023 and December
31, 2022, there were 7,135,509 and 22,233,687 shares of Class A common stock issued and outstanding, all subject to possible redemption
and therefore classified as temporary equity on the accompanying condensed balance sheets, respectively (See Note 6).
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. At March 31, 2023 and December 31, 2022, 5,558,422
shares of Class B common stock were issued and outstanding, none subject to forfeiture.
FAST ACQUISITION CORP.
II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Stockholders of record are entitled to one vote
for each share held on all matters to be voted on by stockholders. Holders of shares of Class A common stock and holders of shares of
Class B common stock will vote together as a single class on all matters submitted to a vote of the stockholders except as required by
law.
The Class B common stock will automatically convert
into Class A common stock at the time of the initial Business Combination on a one-for-one basis, subject to adjustment for stock splits,
stock dividends, reorganizations, recapitalizations and the like. 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 8 - Warrants
As of March 31, 2023 and December 31, 2022, there
were 5,558,422 Public Warrants and 4,297,825 Private Warrants outstanding. Public Warrants may only be exercised in whole and only 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 and (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 issuance of 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 agreed that as soon as practicable, but
in no event later than 15 business days after the closing of the initial Business Combination, the Company will use its best 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 to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are
redeemed. If a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the
60th business day after the closing of the initial Business Combination, warrant holders may, until such time as there is
an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement,
exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. 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 elect, 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 best efforts to register or qualify
the shares under applicable blue sky laws to the extent an exemption is not available. The Public Warrants will expire five years after
the completion of a Business Combination or earlier upon redemption or liquidation.
The warrants have an exercise price of $11.50
per share, subject to adjustments. 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 Company’s
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 its initial Business Combination
(such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest
cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price
described below 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.
FAST ACQUISITION CORP.
II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 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 (except as described herein with respect to the Private Placement Warrants):
|
● |
in
whole and not in part; |
|
● |
at
a price of $0.01 per warrant; |
|
● |
upon
a minimum of 30 days’ prior written notice of redemption; 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 “fair market value” per share
of Class A common stock for the above purpose shall mean the volume-weighted average price per share of 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).
Redemption of warrants when the price per
share of Class A common stock equals or exceeds $10.00:
Once the warrants become exercisable, the Company
may redeem the outstanding warrants:
|
● |
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, but only 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 Class A common stock equals or exceeds $10.00 per share (as adjusted) for any 20 trading days within
the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and |
|
● |
if
the closing price 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. |
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.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 9 - Fair Value Measurements
The following table presents information about
the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2023 and December
31, 2022 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
| |
Fair Value Measured as of March 31, 2023 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Liabilities: | |
| | |
| | |
| | |
| |
Derivative warrant liabilities - Public warrants | |
$ | 2,556,870 | | |
$ | — | | |
$ | — | | |
$ | 2,556,870 | |
Derivative warrant liabilities - Private warrants | |
| — | | |
| — | | |
| 1,977,000 | | |
| 1,977,000 | |
Working capital loan—related party | |
| — | | |
| — | | |
| 1,082,597 | | |
| 1,082,597 | |
Convertible promissory note | |
| | | |
| | | |
| 1,013,295 | | |
| 1,013,295 | |
Total fair value | |
$ | 76,171,977 | | |
$ | — | | |
$ | 4,072,892 | | |
$ | 80,244,869 | |
| |
Fair Value Measured as of December 31, 2022 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Assets | |
| | |
| | |
| | |
| |
Investments held in Trust Account - U.S. Treasury Securities (1) | |
$ | 224,655,926 | | |
$ | — | | |
$ | — | | |
$ | 224,655,926 | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Derivative warrant liabilities - Public warrants | |
| 3,724,140 | | |
| — | | |
| — | | |
| 3,724,140 | |
Derivative warrant liabilities - Private warrants | |
| — | | |
| — | | |
| 2,879,540 | | |
| 2,879,540 | |
Working capital loan—related party | |
| | | |
| | | |
| 1,094,749 | | |
| 1,094,749 | |
Total fair value | |
$ | 228,380,066 | | |
$ | — | | |
$ | 3,974,289 | | |
$ | 232,354,355 | |
(1) | Includes $25 in cash as of December 31, 2022. |
Transfers to/from Level 3 measurements are recognized
at the beginning of the reporting period. The fair value measurement of the derivative warrant liabilities - Public warrants transferred
from a Level 3 measurement to a Level 1 measurement as they became separately listed and traded in May 2021.
As of March 31, 2023 and December 31, 2022 Level
1 assets included investments in U.S. Treasury. The Company uses inputs such as actual trade data, quoted market prices from dealers
or brokers, and other similar sources to determine the fair value of its investments.
Derivative Warrant Liabilities
For periods where no observable traded price
was available, the fair value of the Public Warrants and Private Placement Warrants were estimated using a Monte-Carlo simulation to
estimate the fair value of the warrants at each reporting period, with changes in fair value recognized in the unaudited condensed
statements of operations. The estimated fair value of the Private Placement Warrants, and the Public Warrants prior to being
separately listed and traded, was determined using Level 3 inputs. As of March 31, 2023, the fair value of the Public Warrants was
determined by their listed trading price and the fair value of Private Placement Warrants was estimated by employing a Black-Scholes
Merton formula and a Monte Carlo simulation analysis.
FAST ACQUISITION CORP. II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
For the period ended March 31, 2023 and
December 31, 2022, the Company recognized income of approximately $2.1 million and $5.4 million, respectively, from a decrease in
the derivative warrant liabilities, presented as change in fair value of derivative warrant liabilities on the accompanying
unaudited condensed statements of operations.
Inherent in the Monte Carlo simulations and Black-Scholes
Merton model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. If
factors or assumptions change, the estimated fair values could be materially different. The Company estimated 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. As of March 31, 2023, the Company estimated the volatility of
its Private Warrants based on the implied volatility of the Company’s Public Warrants determined running simulations of the Public
Warrant price. A significant increase or decrease in volatility alone could have a significant impact on the valuation. 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 the Level 3 fair value measurements inputs at their measurement dates:
| |
As of March 31, | | |
As of December 31, | |
| |
2023 | | |
2022 | |
Exercise price | |
$ | 11.50 | | |
$ | 11.50 | |
Stock price | |
$ | 10.21 | | |
$ | 10.01 | |
Option term (in years) | |
| 5.25 | | |
| 5.08 | |
Volatility | |
| 26.40 | % | |
| 3.3 | % |
Risk-free interest rate | |
| 3.60 | % | |
| 3.99 | % |
The change in the fair value of the derivative
warrant liabilities measured with Level 3 inputs for the three months ended March 31, 2023 and 2022, is summarized as follows:
Derivative warrant liabilities at January 1, 2023 - Level 3 | |
$ | 2,879,540 | |
Change in fair value of derivative warrant liabilities | |
| (902,540 | ) |
Derivative warrant liabilities at March 31, 2023 - Level 3 | |
$ | 1,977,000 | |
| |
| | |
Derivative warrant liabilities at January 1, 2022 – Level 3 | |
$ | 3,825,060 | |
Change in fair value of derivative warrant liabilities | |
| (2,406,780 | ) |
Derivative warrant liabilities at March 31, 2022 - Level 3 | |
$ | 1,418,280 | |
FAST ACQUISITION CORP.
II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Working Capital Loan
The change in the fair value of the working capital
loan-related party measured with Level 3 inputs for the three months ended March 31, 2023 is summarized as follows:
Fair value of working capital loans—related party, December 31, 2022 | |
$ | 1,094,749 | |
Change in fair value of working capital loans - related party | |
| (12,152 | ) |
Fair value of working capital loans—related party, March 31, 2023 | |
$ | 1,082,597 | |
The estimated fair value of the Working Capital
Loan was estimated utilizing a simulation model similar to the one employed in the Public and Private Placement Warrant valuation with
Level 3 inputs.
For the period ended March 31, 2023, the Company
recognized a gain of approximately $12,000 from a decrease in the fair value of working capital loans, presented as change in fair value
of working capital loan on the accompanying unaudited condensed statements of operations.
The following table provides the quantitative
information regarding the inputs utilized for the fair value measurement of the Working Capital Loan as of their measurement dates:
| |
As of March 31, | | |
As of December 31, | |
| |
2023 | | |
2022 | |
Conversion price | |
$ | 11.50 | | |
$ | 11.50 | |
Stock price | |
$ | 10.21 | | |
$ | 10.01 | |
Maturity | |
| 0.25 | | |
| 0.08 | |
Volatility | |
| 26.40 | % | |
| 3.30 | % |
Risk-free interest rate | |
| 3.60 | % | |
| 3.99 | % |
Straight debt yield | |
| 6.61 | % | |
| 5.80 | % |
Promissory Note
The change in the fair value of the Promissory
Note measured with Level 3 inputs for the three months ended March 31, 2023 is summarized as follows:
Fair value of convertible promissory note, December 31, 2022 | |
$ | — | |
Issuance of Promissory Note | |
| 1,250,000 | |
Change in fair value of convertible promissory note | |
| (236,705 | ) |
Fair value of convertible promissory note, March 31, 2023 | |
$ | 1,013,295 | |
For the period ended March 31, 2023, the Company
recognized a gain of approximately $0.2 million from a decrease in the fair value of the Promissory Note, presented as change in fair
value of convertible promissory note on the accompanying unaudited condensed statements of operations.
The following table provides the quantitative
information regarding the inputs utilized for the fair value measurement of the Promissory Note as of its measuring date:
| |
As of March 31, | |
| |
2023 | |
Conversion price | |
$ | 10.00 | |
Stock price | |
$ | 10.21 | |
Maturity | |
| 0.25 | |
Volatility | |
| 2.1 | % |
Risk-free interest rate | |
| 4.85 | % |
Probability of DeSPAC | |
| 80.00 | % |
Straight debt yield | |
| 6.61 | % |
Note 10 - Subsequent Events
The Company evaluated subsequent events and transactions
that occurred up to the date unaudited condensed financial statements were issued. Based upon this review, the Company did not identify
any subsequent events that have occurred that would require adjustment or disclosures in the unaudited condensed financial statements.