Item 1.Condensed Financial Statements (Unaudited)
The accompanying notes are an integral part of these unaudited condensed financial statements.
The accompanying notes are an integral part of these unaudited condensed financial statements.
The accompanying notes are an integral part of these unaudited condensed financial statements.
For the Period from January 22, 2021 (Inception) through September 30, 2021 (Unaudited)
The accompanying notes are an integral part of these unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 1—Description of Organization and Business Operations
Organization and General
First Reserve Sustainable Growth Corp. (the “Company”) was incorporated in Delaware on January 22, 2021. 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, 2021, the Company had not commenced any operations. All activity for the period from January 22, 2021 (inception) to September 30, 2021 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”) described below, as well as the identification and evaluation of prospective acquisition targets for an Initial Business Combination and ongoing administrative and compliance matters. The Company will not generate any operating revenues until after completion of its Initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest and other income on investments of the proceeds derived from the Initial Public Offering. The Company has selected December 31st as its fiscal year end.
Sponsor and Proposed Financing
The Company’s sponsor is First Reserve Sustainable Growth Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Initial Public Offering was declared effective on March 4, 2021. On March 9, 2021, the Company consummated its Initial Public Offering of 22,243,955 units (the “Units” and, with respect to the shares of Class A common stock included in the Units, the “Public Shares”), including the partial exercise of the underwriters’ option to purchase 2,243,955 additional Units (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of approximately $222.4 million, and incurring offering costs of approximately $12.8 million, of which approximately $7.8 million was for deferred underwriting commissions (Note 5).
Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 5,132,527 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant to the Sponsor, generating gross proceeds of approximately $7.7 million (Note 4).
Trust Account
Upon the closing of the Initial Public Offering and the Private Placement, approximately $222.4 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement were placed in a trust account (“Trust Account”), located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and will be invested only in U.S. government securities with a maturity of one hundred eighty five (185) 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, and that invest only in direct U.S. government treasury obligations, as determined by the Company. Funds will remain 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 may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.
The Company’s certificate of incorporation provides that, other than the withdrawal of interest to pay franchise and income taxes (less up to $100,000 to pay dissolution expenses), none of the funds held in the Trust Account will be released until the earliest of: (i) the completion of the Initial Business Combination; (ii) the redemption of any Public Shares that have been properly tendered in connection with a stockholder vote seeking to amend any provisions of the Company’s certificate of incorporation (A) to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if it has not consummated an Initial Business Combination within 24 months from the closing of the Initial Public Offering; or (iii) the redemption of 100% of the Public Shares if the Company is unable to complete an Initial Business Combination within 24 months from the closing of the Initial Public Offering. 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 holders (the “Public Stockholders”) of the Public Shares.
Initial Business Combination
The Company’s management has 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 are intended to be generally applied toward
6
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
consummating an Initial Business Combination. The Initial Business Combination must 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 interest earned on the Trust Account) at the time of the agreement to enter into the Initial Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect an Initial Business Combination.
The Company, after signing a definitive agreement for an Initial Business Combination, will either (i) seek stockholder approval of the Initial Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their Public Shares, regardless of whether they vote for or against the Initial Business Combination, for cash equal to their 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, or (ii) provide stockholders with the opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount in cash equal to their 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. The decision as to whether the Company will seek stockholder approval of the Initial Business Combination or will allow stockholders to sell their Public Shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval, unless a vote is required by law or under NASDAQ rules. If the Company seeks stockholder approval, it will complete its Initial Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Initial Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related Initial Business Combination, and instead may search for an alternate Initial Business Combination.
If the Company holds a stockholder vote or there is a tender offer for shares in connection with an Initial Business Combination, a stockholder will have the right to redeem his, her or its Public Shares for an amount in cash equal to his, her or its 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, such Public Shares are recorded at redemption amount and classified 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” (“ASC 480”).
Pursuant to the Company’s certificate of incorporation, if the Company is unable to complete the Initial Business Combination within 24 months from the closing of the Initial Public Offering, or March 9, 2023 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, 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 the Company’s franchise and income taxes (less up to $100,000 of such net interest to pay dissolution expenses and net of taxes payable), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further 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 and the Company’s officers and directors will not be entitled to liquidating distributions from the Trust Account with respect to any Founder Shares (as defined below) held by them if the Company fails to complete the Initial Business Combination within the Combination Period. However, if the Sponsor or any of the Company’s directors, officers or affiliates acquires shares of Class A common stock in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete the Initial Business Combination within the Combination Period.
In the event of a liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that the Company will provide its stockholders with the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, upon the completion of the Initial Business Combination, subject to the limitations described herein.
Proposed Business Combination
On August 12, 2021, the Company, Juuce Limited, a private limited company incorporated under the laws of England and Wales (“Juuce”), EO Charging, an exempted company incorporated with limited liability in the Cayman Islands (“EO”), and Charge Merger
7
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Sub, Inc., a Delaware corporation and wholly owned subsidiary of EO (“Merger Sub”), entered into a Business Combination Agreement and Plan of Reorganization (the “Business Combination Agreement,” and the transactions contemplated thereby, the “Business Combination”), pursuant to which, among other things and subject to the terms and conditions contained therein, (i) the shareholders of Juuce will contribute all of the issued and outstanding ordinary shares of Juuce (“Juuce Shares”) to EO in exchange for ordinary shares of EO valued at $10.00 per share (“EO Ordinary Shares”) to be issued simultaneously with the issuance of EO Ordinary Shares in connection with the Merger (as defined below) and, if available cash exceeds a specified level, certain cash consideration (the “Share Contribution”) and (ii) Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of EO (the “Merger”). In connection with the Merger, (i) each holder of warrants to purchase shares of the Company’s Class A common stock will receive in exchange an equal number of warrants to purchase EO Ordinary Shares and (ii) each holder of the Company’s Class A common stock will receive in exchange an equal number of EO Ordinary Shares (iii) the obligations of Juuce, EO and Merger Sub to consummate the transactions contemplated by the Business Combination Agreement are subject to the condition that the Company has cash in the trust account of not less than $91,392,864.
Registration Rights Agreement
Concurrently with the closing of the Business Combination, the Company, the Sponsor, EO and other parties listed therein will enter into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which EO will agree that, within 30 calendar days after the closing of the Business Combination, EO will file with the SEC (at EO’s sole cost and expense) a registration statement registering the resale of certain securities held by or issuable to certain existing shareholders of the Company and Juuce (the “Resale Registration Statement”), and EO will use its commercially reasonable efforts to have the Resale Registration Statement declared effective as soon as reasonably practicable after the filing thereof. In certain circumstances, the parties can demand EO’s assistance with underwritten offerings and block trades. The parties will be entitled to customary piggyback registration rights.
Acquisition Agreement
Concurrently with the execution of the Business Combination Agreement, certain Juuce shareholders (the “Holders”) executed and delivered to the Company acquisition agreements (collectively, the “Acquisition Agreements”), pursuant to which, among other things, (i) EO agreed to purchase shares held by such Holders, (ii) the Holders agreed to contribute and assign their Juuce Shares and exercise their rights under Juuce’s articles of association and shareholder agreement to cause the other shareholders of Juuce to contribute and assign, their Juuce Shares to EO, in accordance with the terms of the Business Combination Agreement and (iii) Juuce, EO and each Holder agreed to use reasonable best efforts, including taking all necessary action, to cause one nominee designated by the Sponsor to be elected to serve as a director on the board of directors of EO during the Lock-up Period (as that term is defined in the Registration Rights Agreement) as it pertains to the Sponsor.
Sponsor Support Agreement
In connection with the execution of the Business Combination Agreement, on August 12, 2021, the Sponsor entered into a letter agreement with the Company and each member of the board of directors of the Company (the “Sponsor Support Agreement”), pursuant to which, among other things, the Sponsor agreed to (i) waive the anti-dilution rights set forth in the Company’s amended and restated certificate of incorporation with respect to the Founder Shares held by it, (ii) vote all the Class A common stock and Founder Shares held by it in favor of the adoption and approval of the Business Combination Agreement and the Business Combination, (iii) not transfer the Founder Shares (or EO Ordinary Shares issuable upon conversion thereof in the Merger) until the earlier of the closing of the Business Combination and any valid termination of the Business Combination Agreement; and (iv) subject 20% of the total EO Ordinary Shares issued to the Sponsor as part of the Business Combination to potential forfeiture if, within five years of the closing of the Business Combination, the volume weighted average price of the EO Ordinary Shares does not equal or exceed $12.50 per share for any 20 trading days within any 30 consecutive trading day period (or a change of control transaction does not occur during such period).
Refer to the Company’s Current Report on Form 8-K, filed with the SEC on August 12, 2021, for more information.
Going Concern and Management’s Plan
As of September 30, 2021, the Company had approximately $1.3 million in its operating bank account and working capital deficit of approximately $3.0 million.
The Company’s liquidity needs to date have been satisfied through a payment of $66,000 from the Sponsor to cover for certain offering costs in exchange for issuance of the Founder Shares (as defined in Note 4), the loan under the Note (as defined in Note 4) of approximately $300,000 and the net proceeds from the consummation of the Private Placement not held in the Trust Account. The
8
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Company fully repaid the Note on March 9, 2021. In addition, in order to finance transaction costs in connection with an Initial Business Combination, the Company’s officers, directors and initial stockholders may, but are not obligated to, provide the Company Working Capital Loans (see Note 4). As of September 30, 2021, there were no amounts outstanding under any Working Capital Loans.
Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination. The Company will need to raise additional capital through loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses.
The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of the Business Combination or one year from the date the financials were issued. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 global pandemic on the industry 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—Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the period presented. Operating results for the three months ended September 30, 2021 and for the period from January 22, 2021 (Inception) through September 30, 2021 are not necessarily indicative of the results that may be expected through December 31, 2021.
The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the final prospectus filed by the Company with the SEC on March 5, 2021.
Restatement of Previously Issued Financial Statements
In preparation of the Company’s unaudited condensed financial statements as of and for quarterly period ended September 30, 2021, the Company concluded it should restate its previously issued financial statements to classify all Class A common stock subject to possible redemption in temporary equity. In accordance with the SEC and its staff’s guidance on redeemable equity instruments, ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of its Class A common stock in permanent equity. Although the Company did not specify a maximum redemption threshold, its amended and restated certificate of incorporation currently provides that, the Company will not redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001. Previously, the Company did not consider redeemable shares classified as temporary equity as part of net tangible assets. As a result, the Company restated its previously filed financial statements to present all redeemable Class A common stock as
9
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
temporary equity and to recognize accretion from the initial book value to redemption value at the time of its Initial Public Offering (including exercise of the over-allotment option). The Company’s previously filed financial statements that contained the error were reported in the Company’s Form 8-K filed with the SEC on March 16, 2021 and revised in the Company Form 10-Q for the quarterly period ended March 31, 2021 (the “Post-IPO Balance Sheet”) and the Company’s Form 10-Qs for the quarterly periods ended March 31, 2021, and June 30, 2021 (the “Affected Quarterly Periods”).
The impact of the restatement to the Post-IPO Balance Sheet is an increase to Class A common stock subject to possible redemption of approximately $26.0 million, a decrease to additional paid-in capital of $5.5 million, an increase to the accumulated deficit of $20.5 million, and the reclassification of par value of 2,596,547 Class A common stock from permanent equity to Class A common stock subject to possible redemption.
As of March 9, 2021
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Total assets
|
|
$
|
225,595,294
|
|
|
|
|
|
|
$
|
225,595,294
|
|
Total liabilities
|
|
$
|
24,121,210
|
|
|
|
|
|
|
$
|
24,121,210
|
|
Class A common stock subject to possible redemption
|
|
|
196,474,080
|
|
|
|
25,965,470
|
|
|
|
222,439,550
|
|
Preferred stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Class A common stock
|
|
|
260
|
|
|
|
(260
|
)
|
|
|
—
|
|
Class B common stock
|
|
|
575
|
|
|
|
—
|
|
|
|
575
|
|
Additional paid-in capital
|
|
|
5,523,006
|
|
|
|
(5,523,006
|
)
|
|
|
—
|
|
Accumulated deficit
|
|
|
(523,837
|
)
|
|
|
(20,442,204
|
)
|
|
|
(20,966,041
|
)
|
Total stockholders' equity (deficit)
|
|
$
|
5,000,004
|
|
|
$
|
(25,965,470
|
)
|
|
$
|
(20,965,466
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible
Redemption and Stockholders' Equity (Deficit)
|
|
$
|
225,595,294
|
|
|
$
|
—
|
|
|
$
|
225,595,294
|
|
The impact of the restatement on the financial statements for the Affected Quarterly Periods is presented below.
The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported balance sheet as of March 31, 2021:
As of March 31, 2021
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Total assets
|
|
$
|
225,505,074
|
|
|
|
|
|
|
$
|
225,505,074
|
|
Total liabilities
|
|
$
|
24,094,672
|
|
|
|
|
|
|
$
|
24,094,672
|
|
Class A common stock subject to possible redemption
|
|
|
196,410,400
|
|
|
|
26,029,150
|
|
|
|
222,439,550
|
|
Preferred stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Class A common stock
|
|
|
261
|
|
|
|
(261
|
)
|
|
|
—
|
|
Class B common stock
|
|
|
575
|
|
|
|
—
|
|
|
|
575
|
|
Additional paid-in capital
|
|
|
5,586,686
|
|
|
|
(5,586,686
|
)
|
|
|
—
|
|
Accumulated deficit
|
|
|
(587,520
|
)
|
|
|
(20,442,204
|
)
|
|
|
(21,029,724
|
)
|
Total stockholders' equity (deficit)
|
|
$
|
5,000,002
|
|
|
$
|
(26,029,151
|
)
|
|
$
|
(21,029,149
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible
Redemption and Stockholders' Equity (Deficit)
|
|
$
|
225,505,074
|
|
|
$
|
—
|
|
|
$
|
225,505,074
|
|
10
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported statement of cash flows for the period from January 22, 2021 (inception) through March 31, 2021:
Form 10-Q (March 31, 2021) - For the period from January 22, 2021 (inception) through March 31, 2021
|
|
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Cash Flow from Operating Activities
|
|
$
|
(1,203,431
|
)
|
|
$
|
—
|
|
|
$
|
(1,203,431
|
)
|
Cash Flows from Investing Activities
|
|
$
|
(222,439,550
|
)
|
|
$
|
—
|
|
|
$
|
(222,439,550
|
)
|
Cash Flows from Financing Activities
|
|
$
|
225,588,984
|
|
|
$
|
—
|
|
|
$
|
225,588,984
|
|
Supplemental Disclosure of Noncash Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering costs paid by Sponsor in exchange for issuance of Class B
common stock
|
|
$
|
21,000
|
|
|
$
|
—
|
|
|
$
|
21,000
|
|
Offering costs included in accrued expenses
|
|
$
|
435,000
|
|
|
$
|
—
|
|
|
$
|
435,000
|
|
Offering costs included in accounts payable
|
|
$
|
45,000
|
|
|
$
|
—
|
|
|
$
|
45,000
|
|
Offering costs paid by related party under note payable
|
|
$
|
65,094
|
|
|
$
|
—
|
|
|
$
|
65,094
|
|
Deferred underwriting commissions in connection with the initial public
offering
|
|
$
|
7,785,384
|
|
|
$
|
—
|
|
|
$
|
7,785,384
|
|
Initial value of Class A common stock subject to possible redemption
|
|
$
|
196,474,080
|
|
|
$
|
(196,474,080
|
)
|
|
$
|
—
|
|
Change in value of Class A common shares subject to possible
redemption
|
|
$
|
(63,679
|
)
|
|
$
|
63,679
|
|
|
$
|
—
|
|
The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported balance sheet as of June 30, 2021:
As of June 30, 2021
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Total assets
|
|
$
|
224,822,885
|
|
|
|
|
|
|
$
|
224,822,885
|
|
Total liabilities
|
|
$
|
21,546,194
|
|
|
|
|
|
|
$
|
21,546,194
|
|
Class A common stock subject to possible redemption
|
|
|
198,276,690
|
|
|
|
24,162,860
|
|
|
|
222,439,550
|
|
Preferred stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Class A common stock
|
|
|
242
|
|
|
|
(242
|
)
|
|
|
—
|
|
Class B common stock
|
|
|
556
|
|
|
|
—
|
|
|
|
556
|
|
Additional paid-in capital
|
|
|
3,720,434
|
|
|
|
(3,720,434
|
)
|
|
|
—
|
|
Retained earnings (accumulated deficit)
|
|
|
1,278,769
|
|
|
|
(20,442,185
|
)
|
|
|
(19,163,416
|
)
|
Total stockholders' equity (deficit)
|
|
$
|
5,000,001
|
|
|
$
|
(24,162,861
|
)
|
|
$
|
(19,162,860
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible
Redemption and Stockholders' Equity (Deficit)
|
|
$
|
224,822,885
|
|
|
$
|
—
|
|
|
$
|
224,822,885
|
|
The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported statement of cash flows for the period from January 22, 2021 (inception) through June 30, 2021:
Form 10-Q (June 30, 2021) - For the period from January 22, 2021 (inception) through June 30, 2021
|
|
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Cash Flow from Operating Activities
|
|
$
|
(1,682,771
|
)
|
|
$
|
—
|
|
|
$
|
(1,682,771
|
)
|
Cash Flows from Investing Activities
|
|
$
|
(222,439,550
|
)
|
|
$
|
—
|
|
|
$
|
(222,439,550
|
)
|
Cash Flows from Financing Activities
|
|
$
|
225,526,504
|
|
|
$
|
—
|
|
|
$
|
225,526,504
|
|
Supplemental Disclosure of Noncash Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering costs paid by Sponsor in exchange for issuance of Class B
common stock
|
|
$
|
21,000
|
|
|
$
|
—
|
|
|
$
|
21,000
|
|
Offering costs included in accrued expenses
|
|
$
|
417,500
|
|
|
$
|
—
|
|
|
$
|
417,500
|
|
Offering costs paid by related party under note payable
|
|
$
|
65,094
|
|
|
$
|
—
|
|
|
$
|
65,094
|
|
Deferred underwriting commissions in connection with the initial public
offering
|
|
$
|
7,785,384
|
|
|
$
|
—
|
|
|
$
|
7,785,384
|
|
Initial value of Class A common stock subject to possible redemption
|
|
$
|
196,474,080
|
|
|
$
|
(196,474,080
|
)
|
|
$
|
—
|
|
Change in value of Class A common stock subject to possible redemption
|
|
$
|
1,802,610
|
|
|
$
|
(1,802,610
|
)
|
|
$
|
—
|
|
11
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
The table below presents the effect of the financial statement adjustments related to the restatement discussed above to the Company’s previously reported statement of shareholders' equity for the period from January 22, 2021 (inception) through June 30, 2021:
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Balance - January 22, 2021 (inception)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Issuance of Class B common stock to Sponsor
|
|
|
25,000
|
|
|
|
-
|
|
|
|
25,000
|
|
Sale of shares in initial public offering, less allocation to derivative
warrant liabilities, gross
|
|
|
214,320,511
|
|
|
|
(214,320,511
|
)
|
|
|
-
|
|
Offering costs
|
|
|
(12,347,590
|
)
|
|
|
12,347,590
|
|
|
|
-
|
|
Class A common stock subject to possible redemption
|
|
|
(196,410,400
|
)
|
|
|
196,410,400
|
|
|
|
-
|
|
Accretion of Class A common stock subject to possible
redemption amount
|
|
|
-
|
|
|
|
(20,466,629
|
)
|
|
|
(20,466,629
|
)
|
Net loss
|
|
|
(587,520
|
)
|
|
|
-
|
|
|
|
(587,520
|
)
|
Balance - March 31, 2021 (Unaudited)
|
|
$
|
5,000,001
|
|
|
$
|
(26,029,150
|
)
|
|
$
|
(21,029,149
|
)
|
Shares subject to possible redemption
|
|
|
(1,866,290
|
)
|
|
|
1,866,290
|
|
|
|
-
|
|
Net income
|
|
$
|
1,866,289
|
|
|
$
|
-
|
|
|
$
|
1,866,289
|
|
Balance - June 30, 2021 (Unaudited)
|
|
$
|
5,000,001
|
|
|
$
|
(25,162,861
|
)
|
|
$
|
(19,162,860
|
)
|
In connection with the change in presentation for the Class A common stock subject to possible redemption, the Company has restated its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of shares participate pro rata in the income and losses of the Company. The impact to the reported amounts of weighted average shares outstanding and basic and diluted earnings per common share is presented below for the Affected Quarterly Periods:
|
|
Earnings Per Share for Class A common stock
|
|
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Adjusted
|
|
Form 10-Q (March 31, 2021) - For the period from January 22, 2021
(inception) through March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
19,647,131
|
|
|
|
(12,232,479
|
)
|
|
|
7,414,652
|
|
Basic and diluted earnings per share
|
|
$
|
0.00
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.05
|
)
|
Form 10-Q (June 30, 2021) - Three months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
19,643,091
|
|
|
|
2,600,864
|
|
|
|
22,243,955
|
|
Basic and diluted earnings per share
|
|
$
|
0.00
|
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
Form 10-Q (June 30, 2021) - For the period from January 22, 2021
(inception) through June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
19,643,906
|
|
|
|
(3,795,088
|
)
|
|
|
15,848,818
|
|
Basic and diluted earnings per share
|
|
$
|
0.00
|
|
|
$
|
0.06
|
|
|
$
|
0.06
|
|
|
|
Earnings Per Share for Class B common stock
|
|
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Adjusted
|
|
Form 10-Q (March 31, 2021) - For the period from January 22, 2021
(inception) through March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
6,052,604
|
|
|
|
(865,608
|
)
|
|
|
5,186,996
|
|
Basic and diluted earnings per share
|
|
$
|
(0.10
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.05
|
)
|
Form 10-Q (June 30, 2021) - Three months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
8,161,853
|
|
|
|
(2,600,864
|
)
|
|
|
5,560,989
|
|
Basic and diluted earnings per share
|
|
$
|
0.23
|
|
|
$
|
(0.16
|
)
|
|
$
|
0.07
|
|
Form 10-Q (June 30, 2021) - For the period from January 22, 2021
(inception) through June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
7,252,239
|
|
|
|
(1,852,534
|
)
|
|
|
5,399,705
|
|
Basic and diluted earnings per share
|
|
$
|
0.18
|
|
|
$
|
(0.12
|
)
|
|
$
|
0.06
|
|
12
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Emerging Growth Company
The Company is an "emerging growth company," as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company's financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Actual results could differ from those estimates.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. At September 30, 2021, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of September 30, 2021.
Investments Held in the Trust Account
The Company’s portfolio of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, or a combination thereof. The Company’s investments held in the Trust Account are classified as marketable securities. Marketable securities are presented on the balance sheet at fair value at the end of each reporting period. Trading securities and investments in money market funds are presented on the 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 income on investments held in the Trust Account in the accompanying unaudited condensed statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
13
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, excluding the derivative warrant liabilities, which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements” equal or approximate the carrying amounts represented in the balance sheet.
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 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.
Offering Costs Associated with the Initial Public Offering
Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with derivative warrant liabilities were expensed as incurred and presented as non-operating expenses in the condensed statements of operations. Offering costs associated with the Class A common stock issued were charged against the carrying value of the shares of Class A common stock upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The 5,560,989 warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the 5,132,527 Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised. The fair value of the Public Warrants as of September 30, 2021 is based on observable listed prices for such warrants. The fair value of the Private Placement Warrants is estimated using a Monte Carlo simulation. The determination of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
14
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, 22,243,955 shares of Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.
Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount. The change in the carrying value of redeemable shares of Class A common stock resulted in charges against additional paid-in capital and accumulated deficit.
Net Loss Per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net Loss per common share is calculated by dividing the net Loss by the weighted average shares of common stock outstanding for the respective period.
The calculation of diluted net Loss does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering (including the consummation of the Over-allotment) and the private placement warrants to purchase an aggregate of 10,693,516 shares of Class A common stock in the calculation of diluted Loss per share, because their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net Loss per share is the same as basic net Loss per share for the three and nine months ended September 30, 2021. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
The table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net loss per share for each class of common stock:
|
|
For the Three Months Ended
September 30, 2021
|
|
|
For the Period From January 22, 2021
(inception) through September 30, 2021
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
Basic and diluted net loss per common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net loss
|
|
$
|
(1,127,158
|
)
|
|
$
|
(281,789
|
)
|
|
$
|
(100,122
|
)
|
|
$
|
(30,056
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common stock
outstanding
|
|
|
22,243,955
|
|
|
|
5,560,989
|
|
|
|
18,183,551
|
|
|
|
5,458,586
|
|
Basic and diluted net loss per common stock
|
|
$
|
(0.05
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under FASB ASC Topic 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred 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 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. There were no unrecognized tax benefits as of September 30, 2021. The
15
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
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, 2021. 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.
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standards Update (“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. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU 2020-06 at the Company’s inception using the modified retroactive method for transition. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
Note 3—Initial Public Offering
On March 9, 2021, the Company consummated its Initial Public Offering of 22,243,955 Units, including the partial exercise of the underwriters’ option to purchase 2,243,955 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of approximately $222.4 million, and incurring offering costs of approximately $12.8 million, of which approximately $7.8 million was for deferred underwriting commissions.
Each Unit consists of one share of the Company’s Class A common stock, $0.0001 par value, and one-fourth of one warrant (each, a “Public Warrant” and, collectively, the “Public Warrants”).
Note 4—Related Party Transactions
Due From Sponsor
At the closing of the Initial Public Offering on March 9, 2021, proceeds from the sale of the Founder Shares (as defined below) in the amount of $25,000 were due to the Company. Such amount was paid by the Sponsor to the Company on March 11, 2021.
Founder Shares
On January 22, 2021, 5,750,000 shares of the Company’s Class B common stock (the “Founder Shares”) were issued to the Sponsor in exchange for the payment of $25,000 of expenses on behalf of the Company, or approximately $0.004 per share. Up to 750,000 Founder Shares were subject to forfeiture to the extent that the over-allotment option for the Initial Public Offering was not exercised by the underwriters. The underwriters’ over-allotment option expired 45 days from the effective date of the registration statement for the Initial Public Offering. The forfeiture will be adjusted to the extent that the over-allotment option is not exercised in full by the underwriters so that the Founder Shares will represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. The underwriters partially exercised their over-allotment option on March 9, 2021 to purchase an additional 2,243,955 Units, with the remaining portion of the over-allotment option expiring at the conclusion of the 45-day option period. On April 18, 2021 the remaining portion of the over-allotment option expired and, as a result, the Sponsor forfeited 189,011 Founder Shares.
The holders of the Founders Shares agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of the Initial Business Combination or (B) subsequent to the Initial Business Combination, (x) if the last sale price of the Company’s Class A 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 Initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization 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.
16
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 5,132,527 Private Placement Warrants at a price of $1.50 per Private Placement Warrant to the Sponsor, generating gross proceeds of approximately $7.7 million. No underwriting discounts or commissions were paid with respect to such sale.
Each whole Private Placement Warrant is exercisable for one whole share of the Company’s Class A common stock at a 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. If the Initial Business Combination is not completed within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund redemptions of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
The Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the Initial Business Combination.
Related Party Loans
On January 22, 2021, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to an unsecured promissory note (the “Note”). The Note was non-interest bearing and payable upon the closing date of the Initial Public Offering. The Company borrowed a total of approximately $66,000 under the Note and fully repaid the balance on March 9, 2021.
In addition, in order to finance transaction costs in connection with an Initial Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes an Initial Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that an Initial Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of an Initial Business Combination or, at the lenders’ discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Initial Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. As of September 30, 2021, the Company had no borrowings under the Working Capital Loans.
Note 5—Commitments & Contingencies
Registration Rights
The holders of the Founder Shares, Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans, if any, (and any Class A common shares issuable upon the exercise of the Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans) were entitled to registration rights pursuant to a registration rights agreement signed upon the effective date of the Initial Public Offering. The holders of at least $25 million in value of these securities were entitled to demand that the Company file a registration statement covering such securities and to require the Company to effect up to an aggregate of three underwritten offerings of 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. 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 underwriting agreement for the Initial Public Offering to purchase up to 3,000,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. The underwriters partially exercised their over-allotment option on March 9, 2021 to purchase an additional 2,243,955 Over-Allotment Units. On April 18, 2021, the remaining over-allotment option expired unexercised.
17
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
The underwriters were entitled to an underwriting discount of $0.20 per unit, or approximately $4.4 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or approximately $7.8 million in the aggregate 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 for the Initial Public Offering.
Note 6 — Class A Common Stock Subject to Possible Redemption
The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events. The Company is authorized to issue 250,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holder of the Company’s Class A common stock are entitled to one vote for each share. As of September 30, 2021, there were 22,243,955 shares of Class A common stock outstanding, all of which were subject to possible redemption.
The Class A common stock subject to possible redemption reflected on the balance sheet is reconciled on the following table:
Gross proceeds
|
|
$
|
222,439,550
|
|
Less:
|
|
|
|
|
Fair value of Public Warrants at issuance
|
|
|
(8,119,040
|
)
|
Offering costs allocated to Class A common stock subject to possible redemption
|
|
|
(12,347,589
|
)
|
Plus:
|
|
|
|
|
Accretion on Class A common stock subject to possible redemption amount
|
|
|
20,466,629
|
|
Class A common stock subject to possible redemption
|
|
$
|
222,439,550
|
|
Note 7—Stockholders’ Equity
Preferred Stock - The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2021, there were no shares of preferred stock issued or outstanding.
Class A Common Stock - The Company is authorized to issue 250,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of September 30, 2021, there were 22,243,955 shares of Class A common stock outstanding. All shares of Class A common stock subject to possible redemption have been classified as temporary equity (see Note 6).
Class B Common Stock - The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. On January 22, 2021, the Company issued 5,750,000 shares of Class B common stock, including an aggregate of up to 750,000 shares of Class B common stock that were subject to forfeiture to the Company by the Sponsor for no consideration to the extent that the underwriters’ over-allotment option was not exercised in full or in part so that the Founder Shares would collectively represent 20% of the Company’s issued and outstanding common stock after the Initial Public Offering. The underwriters partially exercised their over-allotment option on March 9, 2021 to purchase an additional 2,243,955 Over-Allotment Units. On April 18, 2021, the remaining over-allotment option expired unexercised and, as a result, 189,011 Founder Shares were forfeited by the Sponsor.
Holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of the stockholders, except as required by law. Each share of common stock will have one vote on all such matters. Prior to the closing of the Initial Business Combination, holders of Class B common stock have the exclusive right to elect directors.
The Class B common stock will automatically convert into Class A common stock at the time of the Initial Business Combination, or at any time prior thereto at the option of the holder, on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts sold in the Initial Public Offering and related to the closing of the Initial Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering plus
18
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the Initial Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the Initial Business Combination).
Note 8—Warrants
As of September 30, 2021, the Company had 5,560,989 Public Warrants and the 5,132,527 Private Placement Warrants outstanding.
Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of an Initial Business Combination or earlier upon redemption or liquidation. The warrants will become exercisable on the later of (a) 30 days after the completion of an Initial Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company agreed that as soon as practicable, but in no event later than 15 business days after the closing of the Initial Business Combination, the Company will use its best efforts to file with the SEC a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants. The Company has also agreed to use its commercially reasonable efforts to cause the registration statement to become effective and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed.
In addition, if (a) the Company issues additional Class A common stock or equity-linked securities in connection with the closing of the Initial Business Combination at an issue price or effective issue price of less than $9.20 per share (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), and (b) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Initial Business Combination (net of redemptions), the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Newly Issued Price, the $18.00 per share redemption trigger price described under “Redemption of warrants for cash when the price per share of Class A common stock equals or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 180% of the Newly Issued Price and the $10.00 per share redemption trigger price described below under “Redemption of warrants for cash when the price per share of Class A common stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the Newly Issued Price.
Notwithstanding the above, if the Company’s shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement, but the Company will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
The Private Placement Warrants (including the shares of Class A common stock issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of an Initial Business Combination, subject to certain limited exceptions, and they will not be redeemable by the Company, subject to certain limited exceptions, so long as they are held by the Sponsor or its permitted transferees. The Sponsor, or its permitted transferees, has the option to exercise the Private Placement Warrants for cash or on a cashless basis. Except as described above, the Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants, including as to exercise price, exercisability and exercise period. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company in all redemption scenarios and exercisable by the holders on the same basis as the Public Warrants.
Redemption of warrants for cash when the price per share of Class A common stock equals or exceeds $18.00
19
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Once the warrants become exercisable, the Company may redeem the outstanding 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, or the 30-day redemption period, to each warrant holder; and
|
|
•
|
if, and only if, the reported last sale price of the Class A 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.
|
The Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period. If and when the warrants become redeemable by the Company, it may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
The Company has established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and the Company issues a notice of redemption of the warrants, each warrant holder will be entitled to exercise its warrant prior to the scheduled redemption date. However, the price of the Class A common stock may fall below the $18.00 redemption trigger price (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) as well as the $11.50 (for whole shares) warrant exercise price after the redemption notice is issued.
Redemption of warrants for cash when the price per share of Class A common stock equals or exceeds $10.00
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
|
•
|
in whole and not in part;
|
|
•
|
at a price of $0.10 per warrant, provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares of Class A common stock determined by reference to the table set forth in the warrant agreement;
|
|
•
|
upon a minimum of 30 days’ prior written notice to each warrant holder; and
|
|
•
|
if, and only if, the reported last sale price of the Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends notice of redemption to the warrant holders;
|
The “fair market value” of the Class A common stock shall mean the average reported last sale price of the Class A common stock for the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants. The Company will provide the warrant holders with the final fair market value no later than one business day after the ten-trading day period described above ends. In no event will the warrants be exercisable on a cashless basis in connection with this redemption feature for more than 0.361 shares of Class A common stock per whole warrant (subject to adjustment). This redemption feature differs from the typical warrant redemption features used in some other blank check offerings.
No fractional shares of Class A common stock will be issued upon the exercise of warrants on a cashless basis. If, upon the exercise of warrants on a cashless basis, a holder would be entitled to receive a fractional interest in a share, the Company will round down to the nearest whole number of the number of shares of Class A common stock to be issued to the holder.
If the Company is unable to complete an 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 respect to such warrants. Accordingly, the warrants may expire worthless.
Note 9—Fair Value Measurements
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2021 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
20
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Description
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant Other
Unobservable Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account - money market fund
|
|
$
|
222,446,907
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative warrant liabilities - Public warrants
|
|
$
|
4,615,620
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Derivative warrant liabilities - Private placement warrants
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,132,530
|
|
Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. The estimated fair value of the Public Warrants was transferred from a Level 3 measurement to a Level 1 measurement in April 2021, when the Public Warrants were separately listed and traded in an active market. There were no other transfers to/from Levels 1, 2, and 3 during the three and nine months ended September 30, 2021.
For periods where no observable traded price is available, the Company utilized a Monte Carlo simulation to estimate the initial fair value of the Public and Private Placement Warrants. For periods subsequent to the detachment of the Public Warrants from the Units in April 2021, the fair value of the Public Warrants is based on the observable listed price for such warrants. For the three month periods ended September 30, 2021, and for the period from January 22, 2021 (inception) through September 30, 2021, the Company recognized a gain resulting from changes in the fair value of derivative warrant liabilities of approximately $3.5 million and $6.1 million, respectively, which is presented in the accompanying condensed statements of operations.
The estimated fair value of the Public Warrants and of the Private Placement Warrants, prior to the Public Warrants being traded in an active market, was determined using Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer company’s common stock that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement dates:
|
|
March 9, 2021
|
|
|
September 30,
2021
|
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Stock price
|
|
$9.63 - $9.54
|
|
|
$
|
9.84
|
|
Volatility
|
|
20.4%
|
|
|
15.0%
|
|
Dividend yield
|
|
0.0%
|
|
|
0.0%
|
|
Term (in years)
|
|
|
5.0
|
|
|
|
5.0
|
|
Estimated time to M&A (in years)
|
|
|
1.00
|
|
|
|
1.00
|
|
Risk-free rate
|
|
1.03%
|
|
|
1.15%
|
|
The change in the fair value of the derivative warrant liabilities, measured using Level 3 inputs, for the three months ended September 30, 2021 and for the period from January 22, 2021 (inception) through September 30, 2021 is summarized as follows:
Derivative warrant liabilities at January 22, 2021 (inception)
|
|
$
|
-
|
|
Issuance of Public and Private Warrants
|
|
|
15,817,830
|
|
Change in fair value of derivative warrant liabilities
|
|
|
(47,040
|
)
|
Derivative warrant liabilities at March 31, 2021
|
|
$
|
15,770,790
|
|
Transfer of Public Warrants to Level 1
|
|
|
(8,174,650
|
)
|
Change in fair value of derivative warrant liabilities
|
|
|
(769,880
|
)
|
Derivative warrant liabilities at June 30, 2021
|
|
$
|
6,826,260
|
|
Change in fair value of derivative warrant liabilities
|
|
|
(1,693,730
|
)
|
Derivative warrant liabilities at September 30, 2021
|
|
$
|
5,132,530
|
|
21
FIRST RESERVE SUSTAINABLE GROWTH CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 10—Subsequent Events
Management has evaluated subsequent events and transactions that occurred after the balance sheet date through the date the 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 financial statements.
22