The accompanying notes are an integral part
of the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Better World Acquisition Corp. (the “Company”)
was incorporated in Delaware on August 5, 2020. The Company is a blank check company formed for the purpose of entering into a merger,
share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or
more businesses or entities (the “Business Combination”).
Although the Company is not limited to a particular
industry or sector for purposes of consummating a Business Combination, the Company is focused on target businesses in the healthy living
industries that benefit from strong Environmental, Social and Governance (“ESG”) profiles. The Company is an early stage
and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth
companies.
As of June 30, 2021, the Company had not commenced
any operations. All activity for the period from August 5, 2020 (inception) through June 30, 2021 relates to the Company’s formation,
the initial public offering (“Initial Public Offering”), which is described below, and subsequent to the Initial Public Offering,
identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion
of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds
derived from the Initial Public Offering.
The registration statement for the Company’s
Initial Public Offering was declared effective on November 12, 2020. On November 17, 2020, the Company consummated the Initial Public
Offering of 11,000,000 units (the “Units” and, with respect to the shares of common stock included in the Units sold, the
“Public Shares”), at $10.00 per Unit, generating gross proceeds of $110,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 4,800,000 warrants (the “Private Warrants”) at a price of $1.00 per
Private Warrant in a private placement to BWA Holdings LLC (the “Sponsor”) and EarlyBirdCapital, Inc. (“EarlyBirdCapital”),
generating gross proceeds of $4,800,000, which is described in Note 4.
Following the closing of the Initial Public Offering
on November 17, 2020, an amount of $111,100,000 ($10.10 per Unit) from the net proceeds of the sale of the Units in the Initial Public
Offering and the sale of the Private Warrants was placed in a trust account (the “Trust Account”) located in the United States
and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as
amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that
holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as
determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds
in the Trust Account, as described below.
On November 17, 2020, the underwriters notified
the Company of their intention to partially exercise their over-allotment option on November 19, 2020. As such, on November 19, 2020,
the Company consummated the sale of an additional 1,618,600 Units, at $10.00 per Unit, generating gross proceeds of $16,186,000, and
the sale of an additional 485,580 Private Warrants, at $1.00 per Private Warrant, generating gross proceeds of $485,580. A total of $16,347,860
of the net proceeds was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $127,447,860.
Transaction costs amounted to $2,880,354 consisting
of $2,523,720 of underwriting fees and $356,634 of other offering costs.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private 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 a Business Combination having
an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding taxes payable on income earned on the
Trust Account) at the time of the agreement to enter into an initial Business Combination. The Company will only complete a Business
Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise
acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act.
The Company will provide its holders of the outstanding
Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the
completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or
(ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct
a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public
Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.10 per Public Share, plus any
pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
The Company will proceed with a Business
Combination if the Company has net tangible assets of at least $5,000,001 immediately prior to or upon such consummation of a Business
Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination.
If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons,
the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”),
conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file
tender offer documents with the SEC containing substantially the same information as would be included in a proxy statement prior to completing
a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder
approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the
proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination,
the Sponsor has agreed to vote its Founder Shares (as defined in Note 5), Representative Shares (as defined in Note 8) and any Public
Shares purchased during or after the Initial Public Offering (a) in favor of approving a Business Combination and (b) not to redeem any
shares in connection with a stockholder vote to approve a Business Combination or sell any shares to the Company in a tender offer in
connection with a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of
whether they vote for or against the proposed transaction.
The Sponsor has agreed (a) to waive
its redemption rights with respect to the Founder Shares and Public Shares held by it in connection with the completion of a Business
Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation that would affect a public stockholders’
ability to convert or sell their shares to the Company in connection with a Business Combination or affect the substance or timing of
the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the
Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
The Company will have until November
17, 2021 to complete a Business Combination. However, if the Company anticipates that it may not be able to consummate a Business Combination
by November 17, 2021, the Company may extend the period of time to consummate a Business Combination up to two times, each by an additional
three months (up to May 17, 2022) to complete a Business Combination (the “Combination Period”). In order to extend the time
available for the Company to consummate a Business Combination, the Sponsor or its affiliate or designees must deposit into the Trust
Account $1,000,000, or $1,150,000 if the underwriters’ over-allotment option is exercised in full ($0.10 per Public Share in either
case), on or prior to the date of the applicable deadline, for each three month extension.
If the Company is unable to complete
a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up,
(ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the
Trust Account and not previously released to the Company to pay taxes, divided by the number of then outstanding Public Shares, which
redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to
the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject
in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law.
The Sponsor has agreed to waive its
liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period.
However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating
distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. In the event
of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the
amount of funds deposited into the Trust Account ($10.10).
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products
sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce
the amount of funds in the Trust Account to below $10.10 per Public Share, except as to any claims by a third party who executed a valid
and enforceable agreement with the Company waiving any right, title, interest or claim of any kind they may have in or to any monies held
in the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of Initial Public Offering against
certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover,
in the event that an executed waiver is deemed to be unenforceable against a third party, the Insiders will not be responsible to the
extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Insiders will have to indemnify
the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent
registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements
with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s
financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of
the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of
this uncertainty.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain
information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or
omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information
and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management,
the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are
necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the period ended December 31, 2020, as
filed with the SEC on June 11, 2021. The interim results for the three and six months ended June 30, 2021 are not necessarily indicative
of the results to be expected for the year ending December 31, 2021 or for any future periods.
Going Concern
In connection with the Company’s assessment
of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”)
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined
that the mandatory liquidation and subsequent dissolution, should the Company be unable to complete a business combination, raises substantial
doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets
or liabilities should the Company be required to liquidate after November 17, 2021.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting
firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation
in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use of Estimates
The preparation of the condensed financial statements
in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near
term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of June 30, 2021 and December 31, 2020, respectively.
Marketable Securities Held in Trust Account
At June 30, 2021 and December 31, 2020, respectively,
substantially all of the assets held in the Trust Account were held in U.S. Treasury securities.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject
to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control
of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified
as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features
certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future
events. Accordingly, as of June 30, 2021 and December 31, 2020, respectively, common stock subject to possible redemption is presented
at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets.
Warrant Liability
The Company accounts for the Private Warrants
in accordance with the guidance contained in ASC 815-40-15-7D and 7F under which the Private Warrants do not meet the criteria for equity
treatment and must be recorded as liabilities. Accordingly, the Company classifies the Private Warrants as liabilities at their fair value
and adjusts the Private Warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet
date until exercised, and any change in fair value is recognized in our statement of operations. The Private Warrants for periods where
no observable traded price was available are valued using a binomial lattice simulation model.
Income Taxes
The Company follows the asset and liability
method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for
the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and
a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax
return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of June 30, 2021 and December 31, 2020, respectively. The Company
is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is subject to income tax examinations by major taxing authorities since inception. The effective tax rate differs from the
statutory tax rate of 21% for the three and six months ended June 30, 2021, respectively, due to the valuation allowance recorded on the
Company’s net operating losses and the permanent difference arising from the income recorded due to the change in fair value of
the Company’s warrant liability.
On March 27, 2020, the CARES Act was enacted in
response to COVID-19 pandemic. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period which the new
legislation is enacted. The CARES Act made various tax law changes including among other things (i) increasing the limitation under Section
163(j) of the Internal Revenue Code of 1986, as amended (the “IRC”) for 2019 and 2020 to permit additional expensing of interest
(ii) enacting a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k), (iii)
making modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019,
and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and (iv)
enhancing the recoverability of alternative minimum tax credits. Given the Company’s full valuation allowance position and
capitalization of all costs, the CARES Act did not have an impact on the financial statements.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
Net Income (Loss) Per Common Share
Net income (loss) per share is computed by dividing
net income (loss) by the weighted-average number of shares of common stock outstanding during the period, excluding shares of common stock
subject to forfeiture. The Company has not considered the effect of the warrants sold in the Initial Public Offering and the private placement
to purchase an aggregate of 17,904,180 shares in the calculation of diluted loss per share, since the exercise of the warrants are contingent
upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.
The Company’s statement of operations includes
a presentation of income per share for common shares subject to possible redemption in a manner similar to the two-class method of income
(loss) per share. Net income per common share, basic and diluted, for common stock subject to possible redemption is calculated by dividing
the proportionate share of income or loss on marketable securities held by the Trust Account by the weighted average number of shares
of common stock subject to possible redemption outstanding since original issuance.
Net (loss per share, basic and diluted, for non-redeemable
common stock is calculated by dividing the net loss, adjusted for income or loss on marketable securities attributable to common stock
subject to possible redemption, by the weighted average number of non-redeemable common stock outstanding for the period.
Non-redeemable common stock includes Founder Shares
and non-redeemable shares of common stock as these shares do not have any redemption features. Non-redeemable common stock participates
in the income or loss on marketable securities based on non-redeemable shares’ proportionate interest.
The following table reflects the calculation of
basic and diluted net income (loss) per common share (in dollars, except per share amounts):
|
|
Three Months
Ended
June 30,
2021
|
|
|
Six Months
Ended
June 30,
2021
|
|
Common stock subject to possible redemption
|
|
|
|
|
|
|
Numerator: Earnings allocable to Common stock subject to possible redemption
|
|
|
|
|
|
|
Interest earned on marketable securities held in Trust Account
|
|
$
|
(2,527
|
)
|
|
$
|
34,663
|
|
Less: interest available to be withdrawn for payment of taxes
|
|
|
--
|
|
|
|
(34,663
|
)
|
Net income attributable
|
|
$
|
(2,527
|
)
|
|
$
|
--
|
|
Denominator: Weighted Average Common stock subject to possible redemption
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption
|
|
|
11,662,491
|
|
|
|
11,686,062
|
|
Basic and diluted net income per share, Common stock subject to possible redemption
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
Non-Redeemable Common Stock
|
|
|
|
|
|
|
|
|
Numerator: Net Loss minus Net Earnings
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(101,117
|
)
|
|
$
|
731,529
|
|
Net income allocable to Common stock subject to possible redemption
|
|
|
--
|
|
|
|
--
|
|
Non-Redeemable Net (Loss) Income
|
|
$
|
(101,117
|
)
|
|
$
|
731,529
|
|
Denominator: Weighted Average Non-redeemable Common stock
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Non-redeemable common stock
|
|
|
4,443,179
|
|
|
|
4,484,172
|
|
Basic and diluted net loss per share, Non-redeemable common stock
|
|
$
|
(0.02
|
)
|
|
$
|
0.16
|
|
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
Depository Insurance Corporation maximum coverage of $250,000. The Company has not experienced losses on these accounts.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying
amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
Fair Value Measurements
Fair value is defined as the price that would
be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement
date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
●
|
Level 1,
|
defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
●
|
Level 2,
|
defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
●
|
Level 3,
|
defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In some circumstances, the inputs used to measure
fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is
categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which
simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes
certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies
the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021,
including interim periods within those fiscal years, with early adoption permitted.
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed
financial statements.
NOTE 3. PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold 11,000,000 Units at a price of $10.00 per Unit. Each Unit consists of one share of common stock and one redeemable warrant (“Public
Warrant”). In connection with the underwriters’ partial exercise of the over-allotment option on November 19, 2020, the Company
sold an additional 1,618,600 Units, at a purchase price of $10.00 per Unit. Each Public Warrant entitles the holder to purchase one share
of common stock at an exercise price of $11.50 per share (see Note 8).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the
Initial Public Offering, the Sponsor and EarlyBirdCapital purchased an aggregate of 4,800,000 Private Warrants at a price of $1.00 per
Private Warrant for an aggregate purchase price of $4,800,000. The Sponsor purchased 3,975,000 Private Warrants and EarlyBirdCapital purchased
825,000 Private Warrants. In connection with the underwriters’ partial exercise of the over-allotment option on November 19, 2020,
the Sponsor and EarlyBirdCapital purchased an additional 485,580 Private Warrants, at a purchase price of $1.00 per Private Warrant, for
an aggregate purchase price of $485,580. Each Private Warrant entitles the holder to purchase one share of common stock at a price of
$11.50 per full share, subject to adjustment (see Note 8). The proceeds from the Private Warrants were added to the proceeds from the
Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period,
the proceeds from the sale of the Private Warrants will be used to fund the redemption of the Public Shares (subject to the requirements
of applicable law).
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On August 5, 2020, the Sponsor paid
$25,000 to cover certain offering costs of the Company in consideration for 3,593,750 shares of common stock (the “Founder Shares”).
On November 9, 2020, the Sponsor returned to the Company for cancellation, at no cost, an aggregate of 718,750 Founder Shares, resulting
in an aggregate of 2,875,000 Founder Shares outstanding and held by the Sponsor. On November 12, 2020, the Company effected a stock dividend
of 0.1 shares for each share of common stock outstanding, resulting in an aggregate of 3,162,500 Founder Shares outstanding and held by
the Sponsor. The Founder Shares included, after giving retroactive effect to the share surrender and stock dividend, an aggregate of up
to 412,500 shares subject to forfeiture to the extent that the underwriters’ over-allotment was not exercised in full or in part,
so that the Sponsor would collectively own 20% of the Company’s issued and outstanding shares after the Initial Public Offering
(assuming the Sponsor did not purchase any Public Shares in the Initial Public Offering). In connection with the underwriters’ partial
exercise of the over-allotment option and the forfeiture of the remaining over-allotment option, 7,850 Founder Shares were forfeited and
404,650 Founder Shares are no longer subject to forfeiture resulting in an aggregate of 3,154,650 Founder Shares outstanding at June 30,
2021.
The Sponsor has agreed, subject to certain limited
exceptions, not to transfer, assign or sell any of the Founder Shares until (1) with respect to 50% of the Founder Shares, the earlier
of one year after the completion of a Business Combination and the date on which the closing price of the common stock equals or exceeds
$12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days
within any 30-trading day period commencing after a Business Combination and (2) with respect to the remaining 50% of the Founder Shares,
one year after the completion of a Business Combination, or earlier, in either case, if, subsequent to a Business Combination, the Company
completes a liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders
having the right to exchange their shares of common stock for cash, securities or other property.
Due from Sponsor
At the closing of the Initial Public Offering
on November 17, 2020, an aggregate amount of $25,038 was due to the Company. Such amount remains outstanding as of June 30, 2021 and is
recorded in prepaid expenses and other current assets in the accompanying balance sheets.
Administrative Support Agreement
The Company has agreed, commencing on November
12, 2020 through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay an affiliate of
the Company’s management a total of $10,000 per month for office space, utilities and secretarial support. For the three and six
months ended June 30, 2021, respectively, the Company incurred $30,000 and $60,000 in fees for these services, respectively. At June 30,
2021 and December 31, 2020, fees of $20,000 are included in accounts payable and accrued expenses in the accompanying balance sheets,
respectively.
Promissory Note — Related Party
On August 5, 2020, the Company issued an unsecured
promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate principal
amount of $300,000. The Promissory Note was non-interest bearing and payable on the earlier of (i) March 31, 2021, (ii) the consummation
of the Initial Public Offering or (iii) the date on which the Company determined not to proceed with the Initial Public Offering. The
outstanding balance under the Promissory Note was repaid subsequent to the Initial Public Offering. As of June 30, 2021 and December 31,
2020, respectively, no balance is outstanding under the Promissory Note.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
Related Party Loans
In addition, in order to finance transaction
costs in connection with a Business Combination, the Sponsor or certain of the Company’s officers and directors or their affiliates
may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Each loan would be evidenced
by promissory note. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion,
up to $1,500,000 of notes may be converted upon completion of a Business Combination into warrants at a price of $1.00 per warrant. Such
warrants would be identical to the Private Warrants. 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.
Related Party Extension Loans
As discussed in Note 1, the Company
may extend the period of time to consummate a Business Combination up to two times, each by an additional three months (up to May 17,
2022 to complete a Business Combination). In order to extend the time available for the Company to consummate a Business Combination,
the Sponsor or its affiliates or designees must deposit into the Trust Account $1,000,000, or $1,150,000 if the underwriters’ over-allotment
option is exercised in full ($0.10 per Public Share in either case), on or prior to the date of the applicable deadline, for each three
month extension. Any such payments would be made in the form of a non-interest bearing, unsecured promissory note. Such notes would either
be paid upon consummation of a Business Combination, or, at the relevant insider’s discretion, converted upon consummation of a
Business Combination into additional Private Warrants at a price of $1.00 per Private Warrant. The Sponsor and its affiliates or designees
are not obligated to fund the Trust Account to extend the time for the Company to complete a Business Combination.
NOTE 6. COMMITMENTS
Registration Rights
Pursuant to a registration rights agreement
entered into on November 12, 2020, the holders of the Founder Shares and Representative Shares (as defined in Notes 5 and 8, respectively),
as well as the holders of the Private Warrants (and underlying securities) and any warrants issued in payment of Working Capital Loans
made to Company (and underlying securities) will be entitled to registration rights. The holders of a majority of these securities are
entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founder Shares can elect
to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are
to be released from escrow. The holders of a majority of the Representative Shares, Private Warrants and warrants issued in payment of
working capital loans made to the Company (or underlying securities) can elect to exercise these registration rights at any time after
the Company consummates a Business Combination. Notwithstanding anything to the contrary, EarlyBirdCapital may only make a demand on one
occasion and only during the five-year period beginning on the effective date of the registration statement of which this prospectus forms
a part. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed
subsequent to consummation of a Business Combination; provided, however, that EarlyBirdCapital may participate in a “piggy-back”
registration only during the seven-year period beginning on the effective date of the registration statement of which this prospectus
forms a part. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from
delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any
such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day
option from the date of the Initial Public Offering to purchase up to 1,650,000 additional Units to cover over-allotments, if any, at
the Initial Public Offering price less the underwriting discounts and commissions. On November 19, 2020, the underwriters partially
exercised their over-allotment option to purchase an additional 1,618,600 Units at $10.00 per Unit and forfeited the remaining over-allotment
option.
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
Business Combination Marketing Agreement
The Company has engaged EarlyBirdCapital
as an advisor in connection with a Business Combination to assist the Company in holding meetings with its stockholders to discuss the
potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested
in purchasing the Company’s securities in connection with a Business Combination, assist the Company in obtaining stockholder approval
for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination.
The Company will pay EarlyBirdCapital a cash fee for such services upon the consummation of a Business Combination in an amount equal
to 3.5% of the gross proceeds of the Initial Public Offering, or $4,416,510, (exclusive of any applicable finders’ fees which might
become payable); provided that up to 30% of the fee may be allocated at the Company’s sole discretion to other FINRA members that
assist the Company in identifying and consummating a Business Combination.
Additionally, the Company will pay EarlyBirdCapital
a cash fee equal to 1.0% of the total consideration payable in a Business Combination if EarlyBirdCapital introduces the Company to the
target business with which the Company completes a Business Combination.
NOTE 7. STOCKHOLDERS’ EQUITY
Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At June 30, 2021 and December 31, 2020, respectively, there were no shares of preferred stock issued or outstanding.
Common Stock — The Company
is authorized to issue 50,000,000 shares of common stock with a par value of $0.0001 per share. At June 30, 2021 and December 31, 2020,
respectively, there were 4,453,191 and 4,525,620 shares of common stock issued and outstanding, excluding 11,652,479 and 11,580,050 shares
of common stock subject to possible redemption, so that the Sponsor would collectively own 20% of the Company’s issued and outstanding
common stock after the Initial Public Offering (assuming Sponsor did not purchase any Public Shares in the Initial Public Offering).
NOTE 8. WARRANTS
Warrants — The
Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from
the closing of the Initial Public Offering. No warrants will be exercisable for cash unless the Company has an effective and current
registration statement covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to
such shares of common stock. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable
upon exercise of the Public Warrants is not effective within a specified period following the consummation of a Business Combination,
warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have
failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section
3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available,
holders will not be able to exercise their warrants on a cashless basis. The Public Warrants will expire five years after the completion
of a Business Combination or earlier upon redemption or liquidation.
The Company may redeem the Public Warrants
(excluding the Private Warrants and any warrants underlying units issued upon conversion of the Working Capital Loans):
|
●
|
in whole and not in part;
|
|
|
|
|
●
|
at a price of $0.01 per warrant;
|
|
|
|
|
●
|
upon not less than 30 days’ prior written notice of redemption to each warrant holder; and
|
|
|
|
|
●
|
if, and only if, the last reported sale price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like), for any 20 trading days within a 30 trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders
|
BETTER WORLD ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
If the Company calls the Public Warrants
for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless
basis,” as described in the warrant agreement. 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 stock dividend, or recapitalization, reorganization,
merger or consolidation. However, except as described below, the warrants will not be adjusted for issuance of common stock at a price
below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable
to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders
of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s
assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
In addition, if (x) the Company issues
additional common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination
at an issue price or effective issue price of less than $9.20 per common stock (with such issue price or effective issue price to be determined
in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without
taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance), (y) the aggregate
gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding
of a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted
average trading price of its common stock during the 20 trading day period starting on the trading day prior to the day on which the Company
consummates its Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the
warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of (i) Market Value or (ii) the price at which the
Company issue the additional shares of common stock or equity-linked securities.
The Private Warrants are identical to
the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants and the shares of common
stock issuable upon the exercise of the Private Warrants will not be transferable, assignable or saleable until after the completion of
a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable for cash or on a
cashless basis, at the holder’s option, and be non-redeemable so long as they are held by the initial purchasers or their permitted
transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private
Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
BETTER
WORLD ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2021
(Unaudited)
Representative
Shares
On
August 5, 2020, the Company issued to EarlyBirdCapital 377,750 shares of common stock (the “Representative Shares”). On November
9, 2020, EarlyBirdCapital returned to the Company for cancellation, at no cost, an aggregate of 75,550 Representative Shares, resulting
in an aggregate of 302,200 Representative Shares outstanding and held by EarlyBirdCapital. On November 12, 2020, the Company effected
a stock dividend of 0.1 shares for each share of common stock outstanding, resulting in EarlyBirdCapital holding an aggregate of 332,420
Representative Shares. The Company accounted for the Representative Shares as an offering cost of the Initial Public Offering, with a
corresponding credit to stockholders’ equity. The Company estimated the fair value of Representative Shares to be $2,666 based
upon the price of the Founder Shares issued to the Sponsor. The holders of the Representative Shares have agreed not to transfer, assign
or sell any such shares until the completion of a Business Combination. In addition, the holders have agreed (i) to waive their redemption
rights with respect to such shares in connection with the completion of a Business Combination and (ii) to waive their rights to liquidating
distributions from the Trust Account with respect to such shares if the Company fails to complete a Business Combination within the Combination
Period.
The
Representative Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately
following the effective date of the registration statement related to the Initial Public Offering pursuant to Rule 5110(g)(1) of FINRA’s
NASD Conduct Rules. Pursuant to FINRA Rule 5110(g)(1), these securities will not be sold during the Initial Public Offering, or sold,
transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that
would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective
date of the Initial Public Offering, except to any underwriter and selected dealer participating in the Initial Public Offering and their
bona fide officers or partners, provided that all securities so transferred remain subject to the lockup restriction above for the remainder
of the time period.
NOTE
9. FAIR VALUE MEASUREMENTS
The
Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each
reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company
seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is
used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and
liabilities:
|
Level 1:
|
Quoted prices
in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions
for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
|
|
Level 2:
|
Observable inputs other
than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted
prices for identical assets or liabilities in markets that are not active.
|
|
|
|
|
Level 3:
|
Unobservable inputs based
on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The following table presents information about
the Company’s assets that are measured at fair value on a recurring basis at June 30, 2021 and December 31, 2020, respectively,
and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Marketable securities
held in Trust Account
|
|
|
1
|
|
|
$
|
127,496,350
|
|
|
$
|
127,461,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability –
Private Warrants
|
|
|
3
|
|
|
|
5,444,147
|
|
|
|
6,554,119
|
|
The
Private Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the
balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value
presented within change in fair value of warrant liabilities in the consolidated statement of operations.
BETTER
WORLD ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2021
(Unaudited)
Initial
Measurement
The
Company established the initial fair value for the Warrants on November 17, 2020, the date of the Company’s Initial Public Offering,
using a binomial lattice model for the Private Warrants. The Company allocated the proceeds received from (i) the sale of Units (which
is inclusive of one share of common stock and one Public Warrant) and (ii) the sale of Private Warrants, first to the Warrants based
on their fair values as determined at initial measurement, with the remaining proceeds allocated to common stock subject to possible
redemption. The Warrants were classified as Level 3 at the initial measurement date due to the use of unobservable inputs.
The following are the inputs used by the Company in
establishing the fair value of its Private Warrants at June 30, 2021 and December 31, 2020.
Input
|
|
December 31,
2020
|
|
|
June
30,
2021
|
|
Risk-free
interest rate
|
|
|
0.40
|
|
|
|
0.84
|
%
|
Trading
days per year
|
|
|
252
|
|
|
|
252
|
|
Expected
volatility
|
|
|
19.9
|
%
|
|
|
16.5
|
%
|
Exercise
price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Stock
Price
|
|
$
|
10.15
|
|
|
$
|
9.98
|
|
On
December 31, 2020 and June 30, 2021, the Private Warrants were determined to be $1.24 per warrant and $1.03 per warrant, respectively,
for an aggregate value of $6.55 million and $5.44 million, respectively.
The
following table presents the changes in the fair value of the warrant liabilities:
|
|
Private
Placement
|
|
Fair value as of December 31, 2020
|
|
$
|
6,554,119
|
|
Change
in valuation inputs or other assumptions
|
|
|
(1,109,972
|
)
|
Fair value as of June 31, 2021
|
|
$
|
5,444,147
|
|
NOTE
10. SUBSEQUENT EVENTS
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial
statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment
or disclosure in the condensed financial statements.