NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. Description of Organization and Business
Operations
Organization and General
Hyliion Holdings Corp.
(the “Company”) was initially incorporated in Delaware on November 7, 2018 under the name “Tortoise Acquisition
Corp.” 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 “Initial Business Combination”). The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the
“Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
As of September 30,
2020, the Company had not commenced any operations. All activity for the period from November 7, 2018 (date of inception)
to September 30, 2020 related to the Company’s formation and the initial public offering (the “Initial Public Offering”)
described below, and since the closing of the Initial Public Offering, the identification and evaluation of prospective acquisition
targets for the Initial Business Combination and ongoing administrative and compliance matters. The Company did not generate any
operating revenues prior to completion of its Initial Business Combination. The Company generated non-operating income in the form
of interest income earned on investments from the net proceeds derived from the Initial Public Offering through the completion of
the Initial Business Combination. The Company has selected December 31st as its fiscal year end.
On October 1,
2020 (the “Closing Date”), the Company consummated the merger (the “Closing”) pursuant to that
certain Business Combination Agreement and Plan of Reorganization, dated June 18, 2020 (the “Business Combination
Agreement”), by and among the Company, SHLL Merger Sub Inc., a wholly owned subsidiary of the Company incorporated in
the State of Delaware (“Merger Sub”), and Hyliion Inc., a Delaware corporation (“Legacy Hyliion”).
Pursuant to the terms of the Business Combination Agreement, a business combination between the Company and Legacy Hyliion
was effected through the merger of Merger Sub with and into Legacy Hyliion, with Legacy Hyliion surviving as the surviving
company and as a wholly owned subsidiary of the Company (the “Merger” and, collectively with the other
transactions described in the Business Combination Agreement, the “Business Combination”). On the Closing Date,
the Company changed its name from Tortoise Acquisition Corp. to Hyliion Holdings Corp. At the effective time of the Merger
(the “Effective Time”), each share of common stock of Legacy Hyliion (the “Legacy Hyliion Common
Stock”) was converted into and exchanged for 1.45720232 shares (the “Exchange Ratio”) of the
Company’s Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”). Pursuant to the
Amended and Restated Certificate of Incorporation of the Company, each share of Class B Common Stock, par value $0.0001 per
share (the “Class B Common Stock”), converted into one share of Class A Common Stock, par value $0.0001 per share
(the “Class A Common Stock”), at the Closing. After the Closing and following the effectiveness of the Second
Amended and Restated Certificate of Incorporation (the “Second A&R Charter”) of the Company, each share of
Class A Common Stock was automatically reclassified, redesignated and changed into one validly issued, fully paid and
non-assessable share of common stock, par value $0.0001 per share (the “Common Stock”), without any further
action by the Company or any stockholder thereof.
Sponsor and Initial Public Offering
The Company’s
sponsor was Tortoise Sponsor LLC, a Delaware limited liability company (the “Sponsor”). As described in Note 3, on
March 4, 2019, the Company consummated the Initial Public Offering of 23,300,917 of its units (the “Units”), including
800,917 Units that were issued pursuant to the underwriters’ partial exercise of their over-allotment option, generating
gross proceeds of approximately $233.0 million. Each Unit consisted of one share of Class A Common Stock, and one-half of one redeemable
warrant (each, a “Warrant” and, collectively, the “Warrants”). As described in Note 4, on March 4, 2019,
simultaneously with the closing of the Initial Public Offering, TortoiseEcofin Borrower LLC, a Delaware limited liability company
and an affiliate of the Sponsor (f/k/a “Tortoise Borrower LLC” and hereinafter referred to as “Tortoise
Borrower”), purchased an aggregate of 6,660,183 warrants (the “Private Placement Warrants”) at a purchase
price of $1.00 per warrant, generating gross proceeds to the Company of approximately $6.66 million (the “Private Placement”).
The Company financed
its Initial Business Combination with proceeds from the Initial Public Offering, the Private Placement, the private placement of
forward purchase securities (described in Note 5), and from additional issuances, if any, of the Company’s capital stock,
debt or a combination of the foregoing.
HYLIION HOLDINGS CORP.
(f/k/a TORTOISE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Trust Account
Upon the closing of
the Initial Public Offering and the Private Placement, approximately $233.0 million was placed in a trust account (the “Trust
Account”), with Continental Stock Transfer & Trust Company acting as trustee. The proceeds held in the Trust Account
were invested only in U.S. government securities with a maturity of 180 days or less or in money market funds that meet certain
conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, which invest only in direct U.S. government
treasury obligations. Funds remained in the Trust Account until the earlier of (i) the consummation of the Initial Business Combination
or (ii) the distribution of the Trust Account proceeds as described below. The remaining proceeds outside the Trust Account were
able to be used to pay for business, legal and accounting due diligence on prospective acquisitions and general and administrative
expenses. On September 30, 2020, the investments were converted to cash and cash equivalents held in the trust prior
to the Closing.
The Company’s
amended and restated certificate of incorporation that was in effect at September 30, 2020 provided that, except for the withdrawal
of interest to pay franchise and income taxes, none of the funds held in the Trust Account (including the interest earned on the
funds in the Trust Account) would be released from the Trust Account until the earlier of: (i) the completion of the Initial Business
Combination; (ii) the redemption of any shares of Class A Common Stock included in the Units sold in the Initial Public Offering
(the “Public Shares”) that have been properly tendered in connection with a stockholder vote seeking to amend the Company’s
amended and restated certificate of incorporation to affect the substance or timing of its obligation to redeem 100% of such Public
Shares if it has not consummated an Initial Business Combination within 24 months from the closing of the Initial Public Offering
(the “Combination Period”); and (iii) the redemption of 100% of the Public Shares if the Company is unable to complete
an Initial Business Combination within the Combination Period. The proceeds deposited in the Trust Account could become subject
to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public
stockholders. The Company filed the Second A&R Charter on October 1, 2020 upon completion of the Business Combination, which
was the Initial Business Combination.
Initial Business Combination
The Company’s
management had broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering, although
substantially all of the net proceeds of the Initial Public Offering were applied toward consummating the Business Combination.
The New York Stock Exchange (the “NYSE”) rules require that the Initial Business Combination occur with one or more
target businesses that together have a fair market value of at least 80% of the assets held in the Trust Account (excluding the
deferred underwriting discounts and commissions and taxes payable on the interest earned on the Trust Account) at the time of the
agreement to enter into the Initial Business Combination. There Company successfully effected the Initial Business Combination
on October 1, 2020.
The Company sought
stockholder approval of the Business Combination, which was completed following approval of a majority of the outstanding shares
of Class A Common Stock voting in favor.
Stockholders had the
right to redeem such holder’s Public Shares for an amount in cash equal to such holder’s pro rata share of the aggregate
amount on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including
interest not previously released to the Company to pay its franchise and income taxes. As a result, the Public Shares were recorded
as temporary equity upon the completion of the Initial Public Offering, in accordance with the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity.”
Business Combination
On June 18, 2020, the
Company, Merger Sub and Legacy Hyliion, entered into the Business Combination Agreement, pursuant to which Merger Sub merged with
and into Legacy Hyliion, with Legacy Hyliion surviving the Merger as a wholly owned subsidiary of the Company. Hyliion designs,
develops and sells electrified powertrain solutions that can be installed on Class 8 trucks from most major commercial vehicle
original equipment manufacturers. Hyliion’s headquarters are located in Cedar Park, Texas.
At the closing of the
proposed Merger, 100,000,000 shares of the Company’s Class A Common Stock were issued to the securityholders of Legacy Hyllion
(the “Historical Rollover Stockholders”) in the Business Combination in exchange for all outstanding shares of Legacy
Hyliion Common Stock, or reserved for issuance in respect of stock options of New Hyliion issued in exchange for outstanding pre-merger
Legacy Hyliion options.
Concurrent with closing
of the Merger, an investor purchased from the Company 1,750,000 Units (the “Forward Purchase Units”), consisting of
1,750,000 shares of the Company’s Class A Common Stock (the “Forward Purchase Shares”) and warrants to purchase
875,000 shares of the Company’s Class A Common Stock (the “Forward Purchase Warrants”), for an aggregate purchase
price of $17,500,000, pursuant to a forward purchase agreement. Additionally, other investors purchased from the Company 30,750,000
shares of the Company’s Class A Common Stock, for an aggregate purchase price of $307,500,000.
HYLIION HOLDINGS CORP.
(f/k/a TORTOISE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The Closing occurred on October 1, 2020
following the satisfaction or waiver of all of the closing conditions.
Stockholder Support Agreement
Contemporaneously with
the execution of the Business Combination Agreement, on June 18, 2020, the Company entered into the Stockholder Support Agreement
(the “Stockholder Support Agreement”) pursuant to which certain of the Hyliion stockholders agreed to vote all of their
shares of Hyliion common stock and Hyliion preferred stock in favor of the approval and adoption of the business combination and
the Business Combination Agreement. Additionally, such Hyliion stockholders agreed not to (a) sell, assign, transfer (including
by operation of law), pledge, dispose of, permit to exist any material lien with respect to or otherwise encumber any of their
shares of Hyliion common stock and Hyliion preferred stock (or enter into any arrangement with respect thereto), subject to certain
exceptions, or (b) deposit any of their shares of Hyliion common stock and Hyliion preferred stock into a voting trust or enter
into any voting arrangement that is inconsistent with the Stockholder Support Agreement.
A&R Registration Rights Agreement
In connection with
the Closing, the Company entered into an amended and restated registration rights agreement (the “A&R Registration Rights
Agreement”) with the Sponsor, Tortoise Borrower and certain of the Historical Rollover Stockholders (collectively, the
“Holders”), pursuant to which the Holders are entitled to registration rights. Pursuant to the A&R Registration
Rights Agreement, the Company filed with the SEC (at its sole cost and expense) a registration statement registering the resale
of certain of the Holders’ securities of the Company (collectively, the “Registrable Securities”), and the Company
agreed to use its reasonable best efforts to have such registration statement declared effective by the SEC as soon as reasonably
practicable after the filing thereof. Certain of the Holders were granted demand underwritten offering registration rights and
all of the Holders were granted piggyback registration rights.
The A&R Registration
Rights Agreement will terminate upon the earlier of (a) ten years following the Closing or (b) the date as of which the Holders
cease to hold any Registrable Securities.
Lock-Up Agreement
In connection with
the Closing, certain existing Hyliion investors agreed, subject to certain exceptions, not to (a) sell, offer to sell, contract
or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or
indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning
of Section 16 of the Exchange Act and the rules and regulations of the SEC promulgated thereunder, any shares of Class A Common
Stock held by them immediately after the Effective Time, or issuable upon the exercise of options to purchase shares of Class A
Common Stock held by them immediately after the Effective Time, or securities convertible into or exercisable or exchangeable for
Class A Common Stock held by them immediately after the Effective Time, (b) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership of any of such shares of Class A Common Stock or
securities convertible into or exercisable or exchangeable for Class A Common Stock, whether any such transaction is to be settled
by delivery of such securities, in cash or otherwise or (c) publicly announce any intention to effect any transaction specified
in clause (a) or (b) until 180 days after the closing date. Thereafter until two years after the closing date, subject to certain
exceptions, Thomas Healy also agreed not to transfer more than 10% of the number of shares of Class A Common Stock held by him
immediately after the Effective Time, or issuable upon the exercise of options to purchase shares of Class A Common Stock held
by him immediately after the Effective Time.
Second Amended and Restated Charter
Pursuant to the terms
of the Business Combination Agreement, upon the Closing, the Company amended and restated its certificate of incorporation to,
among other things, (a) increase the number of authorized shares of Class A Common Stock from 200,000,000 shares to 250,000,000
shares, (b) reclassify the Company’s board of directors, (c) eliminate certain provisions in the certificate of incorporation
relating to an Initial Business Combination that are no longer applicable following the Closing, (d) change the post-combination
company’s name to “Hyliion Holdings Corp.” and (e) make certain other changes that the Company’s board
of directors deems appropriate for a public operating company. Following the effectiveness of the Second A&R Charter, each
share of Class A Common Stock was automatically reclassified, redesignated and changed into one validly issued, fully paid and
non-assessable share of common stock.
HYLIION HOLDINGS CORP.
(f/k/a TORTOISE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Subscription Agreements
In connection with
the execution of the Business Combination Agreement, on June 18, 2020, the Company entered into separate subscription agreements
(collectively, the “Subscription Agreements”) with a number of investors (each a “Subscriber”), pursuant
to which the Subscribers agreed to purchase, and the Company agreed to sell to the Subscribers, an aggregate 30,750,000 shares
of Class A Common Stock issued in the PIPE Financing (“PIPE Shares”), for a purchase price of $10.00 per share and
an aggregate purchase price of $307,500,000 million in the private offering o certain investors in connection with the Business
Combination (“PIPE Financing”). The Company agreed to give certain customary registration rights to the Subscribers
with respect to the PIPE Shares pursuant to the Subscription Agreements.
Pursuant to the registration
rights granted to the Subscribers in connection with the Subscription Agreements, the Company filed a registration statement registering
for resale under the Securities Act all of the PIPE Shares acquired by the Subscribers, and agreed to use commercially reasonable
efforts to have such registration statement declared effective as soon as practicable after the filing thereof, but no later than
the earlier of (a) the 60th day following the Closing and (b) the tenth business day after the date it is notified by the SEC that
such registration statement will not be reviewed or will not be subject to further review.
The closing of the
sale of the PIPE Shares pursuant to the Subscription Agreements occurred immediately prior to the Closing. The purpose of the PIPE
Financing was to raise additional capital for use by the post-combination company following the Closing.
Stockholders Rights Agreement
On June 18, 2020, Vincent
T. Cubbage, Stephen Pang, certain stockholders of Hyliion and the Company entered into the Stockholder Rights Agreement (the “Stockholders
Rights Agreement”), pursuant to which the Company agreed to take all necessary action so that immediately after the Effective
Time, the board of directors, including its committees, is comprised of the individuals set forth in the Business Combination Agreement.
Pursuant to the Stockholders Rights Agreement, the Surviving Corporation also took all necessary action to cause its board of directors
to nominate and recommend for election at its annual meeting of stockholders in 2021 Vincent T. Cubbage and Thomas Healy. The stockholders
party to the Stockholders Rights Agreement agreed to vote in favor of Messrs. Cubbage and Healy at the annual meeting of stockholders
in 2021.
Amendment to IPO Forward Purchase Agreement
On June 18, 2020, Atlas
Point Energy Infrastructure Fund, LLC (“Atlas Point Fund”), the Company and Sponsor entered into the First Amendment
to Amended and Restated Forward Purchase Agreement, which amends the IPO Forward Purchase Agreement (the “FPA Amendment”).
Pursuant to the FPA Amendment, Atlas Point Fund purchased 1,750,000 units (“Forward Purchase Units”), consisting of
1,750,000 shares of Class A Common Stock and warrants (“Forward Purchase Warrants”) to purchase 875,000 shares of Class
A Common Stock, for an aggregate purchase price of $17,500,000. The shares of Class A Common Stock purchased as part of the Forward
Purchase Units were identical to the shares of Class A Common Stock included in the units sold in the Initial Public Offering,
except the shares comprising the Forward Purchase Units are subject to transfer restrictions and certain registration rights. Each
whole Forward Purchase Warrant is exercisable to purchase one share of Common Stock at $11.50 per share. The Forward Purchase Warrants
will have the same terms as the public warrants, except that the Forward Purchase Warrants are subject to transfer restrictions
and certain registration rights.
2. Summary of Significant Accounting
Policies
Basis of Presentation
The accompanying unaudited
condensed consolidated financial statements of the Company have been prepared in accordance with United States generally accepted
accounting principles (“GAAP”) for interim financial information and Article 8 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by GAAP. In the opinion of management, all adjustments (consisting
of normal accruals) considered for a fair presentation have been included. Operating results for the nine months ended September
30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or any future period.
The accompanying unaudited
condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto
included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with U.S. Securities and
Exchange Commission (the “SEC”) on March 23, 2020.
HYLIION HOLDINGS CORP.
(f/k/a TORTOISE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Emerging Growth Company
Section 102(b)(1) of
the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not
have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies, but any such election to opt out is irrevocable. The Company has elected not
to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application
dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the
time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements
with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using
the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Net Income (Loss) Per Share of Common
Stock
The Company’s
unaudited condensed consolidated statement of operations includes a presentation of income per share for common stock subject to
redemption in a manner similar to the two-class method of income per share.
Basic and diluted net
income per share of Class A Common Stock for the three months ended September 30, 2020 and 2019 is calculated by dividing the investment
income earned on the investments held in the Trust Account (approximately $17,000 and $1.2 million, respectively, net of funds
available to be withdrawn from the Trust Account for payment of franchise and income taxes, resulting in a total of $0 and $894,000,
respectively), by the weighted average number of approximately 23.3 million shares of Class A Common Stock outstanding for the
periods. Basic and diluted net loss per share of Class B Common Stock for the three months ended September 30, 2020 and 2019 is
calculated by dividing the net loss of approximately $2.8 million and net income of $740,000, respectively, less income attributable
to Class A Common Stock in the amount of approximately $0 and $894,000, respectively, resulting in a net loss of approximately
$2.8 million and $0.2 million, respectively, by the weighted average number of 5.8 million shares of Class B Common Stock outstanding
for the periods.
Basic and diluted net
income per share of Class A Common Stock for the nine months ended September 30, 2020, and 2019 is calculated by dividing the investment
income earned on the investments held in the Trust Account (approximately $886,000 and $2.9 million, respectively, net of funds
available to be withdrawn from the Trust Account for payment of franchise and income taxes, resulting in a total of approximately
$574,000 and $2.2 million, respectively), by the weighted average number of approximately 23.3 million shares of Class A Common
Stock outstanding for the periods. Basic and diluted net loss per share of Class B Common Stock for the nine months ended September
30, 2020 and 2019 is calculated by dividing the net loss of approximately $4.7 million and net income of $1.7 million respectively,
less income attributable to Class A Common Stock in the amount of approximately $886,000 and $2.2 million respectively, resulting
in a net loss of approximately $5.3 million and $0.4 million respectively, by the weighted average number of 5.8 million shares
of Class B Common Stock outstanding for the periods.
The Company has not
considered the effect of the Warrants sold in the Initial Public Offering and the Private Placement Warrants to purchase an aggregate
18,310,641 shares of Class A Common Stock in the calculation of diluted loss per share because inclusion would be anti-dilutive
under the treasury stock method as of September 30, 2020 and 2019.
Concentration of Credit Risk
Financial instruments
that potentially subject the Company to credit risk consist principally of cash and investments held in the Trust Account. Cash
is maintained in accounts with financial institutions, which, at times may exceed the federal depository insurance coverage of
$250,000. The Company has not experienced losses on its cash accounts and management believes, based upon the quality of the financial
institutions, that the credit risk with regard to these deposits is not significant. The Company’s investments held in the
Trust Account consist entirely of an investment in a money market fund that comprises only U.S. treasury securities.
Investments Held in Trust Account
Investments held in
the Trust Account at December 31, 2019 are classified as trading securities and are comprised solely of an investment in a money
market fund that invests only in U.S. treasury securities. Trading securities are presented on the unaudited condensed consolidated
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 is included in investment income from investments held in the Trust Account in the accompanying unaudited condensed
consolidated statement of operations. The fair value for trading securities is determined using quoted market prices in active
markets. At September 30, 2020, Investments held in Trust Account were held in cash.
HYLIION HOLDINGS CORP.
(f/k/a TORTOISE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Fair Value Measurements
Fair value is defined
as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between
market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used
in measuring fair value.
The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
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Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments
in active markets;
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Level 2, defined as inputs other than quoted prices in active markets that are either directly
or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar
instruments in markets that are not active; and
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Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring
an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant
inputs or significant value drivers are unobservable.
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In some circumstances,
the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances,
the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant
to the fair value measurement.
As of September 30,
2020, and December 31, 2019, the recorded values of cash, prepaid expenses, accounts payable, franchise taxes payable, and accrued
expenses approximate their fair values due to the short-term nature of the instruments.
Principles of Consolidation
The unaudited condensed
consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Merger Sub, at September 30, 2020. All
significant inter-company transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of
these financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited
condensed consolidated balance sheet and the reported amounts of revenues and expenses during the reporting period. 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 unaudited condensed consolidated balance sheet, which management considered in formulating its estimate, could change due
to one or more future confirming events. Actual results could differ from estimates.
Offering Costs
Offering costs consist
of expenses incurred in connection with preparation of the Initial Public Offering, of which approximately $13.36 million consisted
principally of underwriter discounts of $12.77 million (including $8.13 million of which payment is deferred) and approximately
$583,000 consisted of professional, printing, filing, regulatory and other costs. These expenses, together with the underwriting
discounts and commissions, were charged to equity upon completion of the Initial Public Offering.
HYLIION HOLDINGS CORP.
(f/k/a TORTOISE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Class A Common Stock Subject
to Possible Redemption
The Company accounted
for its Class A Common Stock subject to possible redemption in accordance with FASB ASC 480, “Distinguishing Liabilities
from Equity.” Shares of Class A Common Stock subject to mandatory redemption (if any) were classified as a liability
and measured at fair value. Shares of 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) were classified as temporary equity. At all other times, shares of Class
A Common Stock were classified as stockholders’ equity. The Company’s Class A Common Stock featured certain redemption
rights that were considered to be outside of the Company’s control and subject to the occurrence of uncertain future events.
The Company recognized changes in redemption value immediately as they occurred and adjusted the carrying value of the security
at the end of each reporting period. Increases or decreases in the carrying value of redeemable shares of Class A Common Stock
were affected by charges against additional paid-in capital. Accordingly, as of September 30, 2020 and December 31, 2019, 21,891,375
and 22,366,276 shares of Class A Common Stock subject to conditional redemption, respectively, were presented as temporary equity,
outside of the stockholders’ equity section of the Company’s consolidated balance sheets. Following
completion of the Business Combination and filing of the Second A&R Charter, each share of Class A Common Stock was automatically
reclassified, redesignated and changed into one validly issued, fully paid and non-assessable share of Common Stock, without any
further action by the Company or any stockholder thereof and there are no longer any shares of Class A Common Stock outstanding.
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 unaudited
condensed consolidated balance sheets carrying amounts of existing assets and liabilities and their respective tax bases. Deferred
income 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 during the period that included the enactment date. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount expected to be realized.
FASB ASC 740, “Income
Taxes,” 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 as of September
30, 2020 and December 31, 2019. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income
tax expense. No amounts were accrued for the payment of interest and penalties as of September 30, 2020 and December 31, 2019.
The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation
from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
As of September 30,
2020, and December 31, 2019, the Company had gross deferred tax assets related to federal and state net operating loss carryforwards
for income tax purposes of approximately $1,082,000 and $119,000, respectively. The Company has not performed a detailed analysis
to determine whether an ownership change under Section 382 of the Internal Revenue Code has occurred. Following the Merger, the
Company anticipates that its net operating loss carryforwards and certain other tax attributes (such as losses and deductions that
have accrued in the current year prior to the Merger) will be subject to limitation under Section 382 of the Internal Revenue Code
as a result of an “ownership change” by reason of the Merger. The effect of an ownership change would be the imposition
of an annual limitation on the use of net operating loss carryforwards attributable to periods before the change. Any limitation
may result in expiration of a portion of the net operating loss before utilization.
In assessing the realization
of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets
will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during
the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, any limitation on the use of net operating losses under Section 382 of the Internal
Revenue Code, and taxing strategies in making this assessment. In case the deferred tax assets will not be realized in future periods,
the Company has provided a valuation allowance for the full amount of the deferred tax assets as of September 30, 2020 and December
31, 2019.
HYLIION HOLDINGS CORP.
(f/k/a TORTOISE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Recent Accounting Pronouncements
In December 2019, the
FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU
2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain
exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.
This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020,
with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statements and
related disclosures.
Management does not
believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
impact on the Company’s unaudited condensed consolidated financial statements.
3. Initial Public Offering
On March 4, 2019, the Company sold 23,300,917
Units in the Initial Public Offering, including 800,917 Units that were issued pursuant to the underwriters’ partial exercise
of their over-allotment option, at a price of $10.00 per Unit, generating gross proceeds of approximately $233.0 million,
and incurring offering costs of approximately $13.36 million, inclusive of approximately $8.13 million in deferred underwriting
commissions.
Each Unit consists
of one share of the Company’s Class A Common Stock, par value $0.0001 per share, and one-half of one redeemable warrant (each,
a “Warrant” and, collectively, the “Warrants”). Each whole Warrant entitles the holder to purchase one
share of Class A Common Stock at an exercise price of $11.50 per share. No fractional shares will be issued upon separation of
the Units and only whole Warrants will trade. Each Warrant became exercisable 30 days after the completion of the Business Combination
and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation. Once the
Warrants became exercisable, the Company may redeem the outstanding Warrants in whole, but not in part, at a price of $0.01 per
Warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last reported sale price of the
Company’s common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending
on the third business day prior to the date on which the Company sent the notice of redemption to the warrantholders.
Of the Units sold in
the Initial Public Offering, an aggregate of 77,750 Units (the “Affiliated Units”) were purchased by certain employees
of affiliates of the Company.
The underwriters of
the Initial Public Offering were entitled to underwriting discounts and commissions of 5.5%, of which 2.0% (approximately $4.64
million) was paid at the closing of the Initial Public Offering and 3.5% (approximately $8.13 million) was deferred.
On March 4, 2019, the
underwriters partially exercised their over-allotment option and on March 7, 2019, the underwriters waived the remainder of their
over-allotment option. In connection therewith, the Sponsor forfeited 643,520 shares of the Company’s Class B Common Stock
(the “Founder Shares”) for cancellation by the Company.
4. Related Party Transactions
Founder Shares
In November 2018, the
Sponsor paid $25,000 in offering expenses on behalf of the Company in exchange for the issuance of 5,750,000 Founder Shares, or
approximately $0.004 per share. In February 2019, the Company effected a stock dividend of 718,750 shares of Class B Common Stock,
resulting in the Sponsor holding an aggregate of 6,468,750 Founder Shares (up to 843,750 shares of which were subject to forfeiture
to the extent the underwriters did not exercise their over-allotment option). On March 4, 2019, the underwriters partially exercised
their over-allotment option and on March 7, 2019, the underwriters waived the remainder of their over-allotment option. In connection
therewith, the Sponsor forfeited 643,520 Founder Shares for cancellation by the Company. As used herein, unless the context otherwise
requires, “Founder Shares” shall be deemed to include the shares of Class A Common Stock issued upon conversion thereof.
The Founder Shares were identical to the shares of Class A Common Stock included in the Units sold in the Initial Public Offering
except that the Founder Shares are shares of Class B Common Stock which automatically converted into shares of Class A Common Stock
at the time of the Initial Business Combination and are subject to certain transfer restrictions, as described in more detail below.
HYLIION HOLDINGS CORP.
(f/k/a TORTOISE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The holders of the
Founder Shares have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the
earlier to occur of: (i) one year after the completion of the Initial Business Combination and (ii) subsequent to the Initial Business
Combination, (a) if the last reported sale price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted
for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day
period commencing at least 150 days after the consummation of the Initial Business Combination, or (b) the date on which the Company
completes a liquidation, merger, stock exchange or other similar transaction that results in all of the Company’s stockholders
having the right to exchange their shares of common stock for cash, securities or other property.
Private Placement Warrants
Concurrently with the
closing of the Initial Public Offering, Tortoise Borrower purchased an aggregate of 6,660,183 Private Placement Warrants at a price
of $1.00 per warrant, generating gross proceeds of approximately $6.66 million, in the Private Placement. Each Private Placement
Warrant is exercisable for one share of the Company’s common stock at an exercise price of $11.50 per share. A portion of
the purchase price of the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust
Account. The Private Placement Warrants are non-redeemable for cash and exercisable on a cashless basis so long as they are
held by Tortoise Borrower or its permitted transferees.
Tortoise Borrower agreed,
subject to limited exceptions, not to transfer, assign or sell any of its Private Placement Warrants until 30 days after the completion
of the Initial Business Combination.
Related Party Loans
Prior to the consummation
of the Initial Public Offering, the Sponsor agreed to loan the Company funds to cover expenses related to the Initial Public Offering
and certain operating expenses. This loan was non-interest bearing and payable upon the closing of the Initial Public Offering.
The Company borrowed approximately $580,000 from the Sponsor, and repaid the loan in full on March 29, 2019.
In August 2020, the
Sponsor agreed to loan the Company up to $500,000 pursuant to a non-interest bearing promissory note that is due and payable upon
the earlier of the date on which the Company consummates its initial Business Combination and the effective date of the winding
up of the Company. At September 30, 2020, $120,000 was outstanding and is included as Note payable to Sponsor on the unaudited
condensed balance sheets. On October 1, 2020, in connection with the Closing, the promissory note was paid in full.
Administrative Services Agreement
Pursuant to an Administrative
Services Agreement between the Company and the Sponsor, dated February 27, 2019 (the “Administrative Services Agreement”),
the Company agreed to pay the Sponsor a total of $10,000 per month for office space, utilities and administrative support. Upon
completion of the Initial Business Combination, the agreement terminated. The Company incurred $30,000 for expenses in connection
with the Administrative Services Agreement for the three months ended September 30, 2020 and 2019, which are recorded in the accompanying
unaudited condensed consolidated statements of operations. The Company incurred $60,000 and $40,000 for expenses in connection
with the Administrative Services Agreement for the nine months ended September 30, 2020 and 2019, respectively, which are recorded
in the accompanying unaudited condensed consolidated statements of operations. On March 29, 2019, the Sponsor assigned all of
its rights, interests and obligations under the Administrative Services Agreement to Tortoise Capital Advisors, L.L.C.
5. Commitments & Contingencies
Forward Purchase Agreement
The Company entered
into an amended and restated forward purchase agreement (the “Forward Purchase Agreement”) with Atlas Point Fund, pursuant
to which Atlas Point Fund, which is a fund managed by CIBC National Trust but is not affiliated with the Company or the Sponsor,
purchased up to an aggregate maximum amount of $150,000,000 of a number of Forward Purchase Units, consisting of one Forward Purchase
Shareand one Forward Purchase Warrants, for $10.00 per Unit in a private placement that closed simultaneously with the closing
of the Business Combination. The Forward Purchase Warrants have the same terms as the Warrants and the Forward Purchase Shares
are identical to the shares of Class A Common Stock included in the Units sold in the Initial Public Offering, except the Forward
Purchase Shares and the Forward Purchase Warrants are subject to transfer restrictions and certain registration rights. The proceeds
from the sale of the Forward Purchase Securities may be used as part of the consideration to the sellers in the Initial Business
Combination, and any excess funds may be used for the working capital needs of the post-transaction company. This agreement is
independent of the percentage of stockholders electing to redeem their Public Shares and provided the Company with an increased
minimum funding level for the Initial Business Combination.
HYLIION HOLDINGS CORP.
(f/k/a TORTOISE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Registration Rights
The holders of the
Founder Shares, the 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) are entitled to registration rights pursuant to a registration rights agreement entered
into on February 27, 2019 (the “Registration Rights Agreement”). The holders of these securities are entitled to make
up to three demands, excluding short-form demands, that the Company register such securities. In addition, the holders have certain
“piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of an
Initial Business Combination. However, the Registration Rights Agreement provides that the Company will not permit any registration
statement filed under the Securities Act to become effective until termination of the applicable lock-up period. The Company
will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted
the underwriters a 45-day option to purchase up to 3,375,000 additional Units to cover any over-allotments at the Initial
Public Offering price of $10.00 per Unit, less the underwriting discounts and commissions. On March 4, 2019, the underwriters partially
exercised their over-allotment option to purchase 800,917 additional Units, and on March 7, 2019, the underwriters notified the
Company of their intent to waive the remainder of their over-allotment option.
The underwriters were
entitled to an underwriting discount for each Unit sold in the Initial Public Offering, except for the Affiliated Units. An aggregate
of approximately $4.64 million (or $0.20 per Unit), was paid to the underwriters upon the closing of the Initial Public Offering.
An additional fee of approximately $8.13 million (or $0.35 per Unit), will be payable to the underwriters for deferred underwriting
commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the
event that the Company completes an Initial Business Combination, subject to the terms of the underwriting agreement.
Deferred Legal Fees Associated with
the Initial Public Offering
The Company entered
into an engagement letter to obtain legal advisory services, pursuant to which the Company’s legal counsel agreed to defer
half of their fees until the closing of the Initial Business Combination. As of September 30, 2020, the Company recorded an aggregate
of $150,000 in connection with such arrangement as deferred legal fees in the accompanying unaudited condensed consolidated balance
sheets.
6. Stockholders’ Equity
Class A Common Stock
Pursuant to the amended
and restated certificate of incorporation in effect as of September 30, 2020, the Company was authorized to issue 200,000,000 shares
of Class A Common Stock with a par value of $0.0001 per share. As of September 30, 2020, and December 31, 2019, there were 23,300,917
shares of Class A Common Stock issued and outstanding, of which 21,891,375 and 22,366,276 shares of Class A Common Stock were classified
outside of permanent equity, respectively.
Class B Common Stock
Pursuant to the amended
and restated certificate of incorporation in effect as of September 30, 2020, the Company was authorized to issue 20,000,000 shares
of Class B Common Stock with a par value of $0.0001 per share. Holders of Class B Common Stock were entitled to one vote per share
of Class B Common Stock. In November 2018, the Company issued 5,750,000 shares of Class B Common Stock. In February 2019, the Company
effected a stock dividend of 718,750 shares of Class B Common Stock. As of March 4, 2019, there were 6,468,750 shares of Class
B Common Stock outstanding (up to 843,750 shares of which were subject to forfeiture to the extent the underwriters did not exercise
their over-allotment option). On March 4, 2019, the underwriters partially exercised their over-allotment option to purchase 800,917
additional Units. On March 7, 2019, the underwriters waived the remainder of their over-allotment option and in connection therewith,
the Sponsor forfeited 643,520 shares of Class B Common Stock for cancellation by the Company. As of September 30, 2020, and December
31, 2019, there were 5,825,230 shares of Class B Common Stock outstanding.
Holders of Class A
Common Stock and holders of Class B Common Stock voted together as a single class on all matters submitted to a vote of the Company’s
stockholders, except as required by law or stock exchange rule; provided that only holders of Class B Common Stock had the right
to vote on the election of the Company’s directors prior to the Initial Business Combination.
HYLIION HOLDINGS CORP.
(f/k/a TORTOISE ACQUISITION CORP.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The shares of Class
B Common Stock automatically converted into shares of Class A Common Stock at the time of the Business Combination on a one-for-one basis,
subject to adjustment. Following the effectiveness of the Second A&R Charter, each share of Class A Common Stock was automatically
reclassified, redesignated and changed into one validly issued, fully paid and non-assessable share of Common Stock, without any
further action by the Company or its stockholders.
Preferred Stock
Pursuant to the amended
and restated certificate of incorporation in effect as of September 30, 2020, the Company was authorized to issue 1,000,000 shares
of preferred stock 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 September 30, 2020, and December 31, 2019, there were no shares of preferred stock issued
or outstanding.
Warrants
The Warrants became
exercisable 30 days after the completion of the Business Combination o; provided in each case that the Company has an effective
registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the Warrants and
a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under
the securities, or blue sky, laws of the state of residence of the holder (or the Company permits holders to exercise their Warrants
on a cashless basis under the circumstances specified in the warrant agreement). The Company filed with the SEC a registration
statement for the registration, under the Securities Act, of the shares of common stock issuable upon exercise of the Warrants.
The Company will use its best efforts to cause the same to become effective, but in no event later than 60 business days after
the closing of the Business Combination, and to maintain the effectiveness of such registration statement, and a current prospectus
relating thereto, until the expiration of the Warrants in accordance with the provisions of the warrant agreement. Notwithstanding
the above, if the Company’s common stock is at the time of any exercise of a Warrant not listed on a national securities
exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act,
the Company may, at its option, require holders of Warrants who exercise their Warrants to do so on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act or another exemption. The Warrants will expire five years after the completion
of the Business Combination or earlier upon redemption or liquidation.
The Private Placement
Warrants are identical to the Warrants, except that the Private Placement Warrants and the shares of common stock issuable upon
exercise of the Private Placement Warrants were not transferable, assignable or salable until 30 days after the completion of the
Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants are non-redeemable for
cash and exercisable on a cashless basis so long as they are held by Tortoise Borrower or Tortoise Borrower’s permitted transferees.
If the Private Placement Warrants are held by someone other than Tortoise Borrower 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 Warrants.
The exercise price
and number of shares of common stock issuable upon exercise of the Warrants may be adjusted in certain circumstances including
in the event of a share capitalization, or recapitalization, reorganization, merger or consolidation.
The Company may call
the Warrants for redemption for cash (except 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 of the
Company’s common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third business day prior
to the date on which the Company sends the notice of redemption to the warrantholders.
|
Commencing 90 days
after the Warrants become exercisable, the Company may redeem the outstanding Warrants (including both the Warrants and the Private
Placement Warrants) in whole and not in part, at a price equal to a number of shares of common stock to be determined by reference
to the table set forth in the Company’s prospectus relating to the Initial Public Offering based on the redemption date and
the “fair market value” of the Company’s common stock, upon a minimum of 30 days’ prior written notice
of redemption and if, and only if, the last reported sale price of the Company’s common stock equals or exceeds $10.00 per
share (as adjusted per share splits, share dividends, reorganizations, recapitalizations and the like) on the trading day prior
to the date on which the Company sends the notice of redemption to the warrantholders. The “fair market value” of the
Company’s common stock is the average last reported sale price of the Company’s common stock for the 10 trading days
ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Warrants.
HYLIION HOLDINGS CORP.
(f/k/a TORTOISE ACQUISITION CORP.)
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
If the Company calls
the Warrants for redemption for cash, management will have the option to require all holders that wish to exercise the Warrants
to do so on a “cashless basis,” as described in the warrant agreement. Additionally, in no event will the Company be
required to net cash settle any Warrants. If the Company is unable to complete the Initial 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.
7. Fair Value Measurements
The following tables
present information about the Company’s financial assets that are measured at fair value on a recurring basis as of December
31, 2019 by level within the fair value hierarchy.
September 30, 2020
Description
|
|
Quoted Prices in Active Markets (Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant Other Unobservable Inputs
(Level 3)
|
|
Investments held in Trust Account
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
236,643,898
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total
|
|
$
|
236,643,898
|
|
|
$
|
-
|
|
|
$
|
-
|
|
December 31, 2019
Description
|
|
Quoted Prices in Active Markets (Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant Other Unobservable Inputs
(Level 3)
|
|
Investments held in Trust Account
|
|
|
|
|
|
|
|
|
|
Money Market Fund
|
|
$
|
236,054,346
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total
|
|
$
|
236,054,346
|
|
|
$
|
-
|
|
|
$
|
-
|
|
As of September 30,
2020, there was soley cash held in the Trust Account. As of December 31, 2019, the investments held in the Trust Account were comprised
solely of an investment in a money market fund that invests only in U.S. treasury securities.
Transfers to/from Levels
1, 2 and 3 are recognized at the end of the reporting period. There were no transfers between levels for the three and nine months
ended September 30, 2020 and 2019.
At December 31, 2019, Level 1 instruments include investments
in money market funds and U.S. Treasury securities. The Company uses inputs such as the actual trade data, benchmark yields, quoted
market prices from dealers or broker, and other similar sources to determine the fair value of its investments.
8. Subsequent Events
As described in Note
1 and 4, the Company completed its Initial Business Combination on October 1, 2020 and closed on the PIPE Financing and the Forward
Unit Purchase. In connection with the closing of the Business Combination, the Company paid the underwriters’ deferred discount
of $8.13 million to the underwriters of the Initial Public Offering, the deferred legal fees of $150,000, the promissory note of
$120,000 and paid approximately $33,573 to redeem 3,308 shares of Class A Common Stock.
Management has evaluated all other subsequent
events to determine if events or transactions occurring through the date the unaudited condensed consolidated financial statements
were available for issuance require potential adjustment to or disclosure in the unaudited condensed consolidated financial statements
and has concluded that all such events that would require recognition or disclosure have been recognized or disclosed.