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
MARCH 31, 2021
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Recharge Acquisition Corp.
(the “Company”) is a blank check company incorporated in Delaware on July 7, 2020. The Company was formed for the purpose
of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with
one or more businesses (a “Business Combination”). The Company is not limited to a particular industry or geographic region
for purposes of consummating a Business Combination.
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 March 31, 2021,
the Company had not commenced any operations. All activity through March 31, 2021 relates to the Company’s formation and 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
on Form S-1, as amended, for the Company’s Initial Public Offering was declared effective on September 30, 2020. On October 5,
2020, the Company consummated the Initial Public Offering of 20,000,000 units (the “Units” and, with respect to the shares
of Class A common stock included in the Units sold, the “Public Shares”) at $10.00 per Unit, generating gross proceeds
of $200,000,000, which is described in Note 3.
Simultaneously with the closing
of the Initial Public Offering, the Company consummated the sale of 7,750,000 warrants (the “Private Placement Warrants”)
at a price of $1.00 per Private Placement Warrant in a private placement to SKG Sponsor LLC (the “Sponsor”), generating gross
proceeds of $7,750,000, which is described in Note 4.
On October 23, 2020,
the underwriters partially exercised their over-allotment option, resulting in the purchase of an additional 40,000 Units generating total
gross proceeds of $400,000. In connection with the underwriters’ partial exercise of their over-allotment option, the Company also
consummated the sale of an additional 12,000 Private Placement Warrants at $1.00 per Private Placement Warrant, generating total proceeds
of $12,000. A total of $404,000 was deposited into the Trust Account.
Following the closing of
the Initial Public Offering on October 5, 2020, and the partial exercise of the over-allotment option on October 23, 2020, an
amount of $202,404,000 ($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 Placement Warrants was placed in a trust account (the “Trust Account”), located in the United States and invested
only 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 held
in the Trust Account, as described below.
Transaction costs amounted
to $11,434,768, consisting of $4,008,000 of underwriting fees, $7,014,000 of deferred underwriting fees and $412,768 of other offering
costs. $11,088,812 of the transaction costs were charged to equity. $345,956 were expensed through the statement of operations in relation
to the warrants.
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
Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business
Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete
a Business Combination with one or more target businesses that together have an aggregate fair market value of at least 80% of the value
of the Trust Account (excluding the deferred underwriting commissions and 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 $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.
RECHARGE ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The Company will proceed
with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon such
consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding 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 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 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 other 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) and any Public Shares purchased during or after the Initial Public Offering
in favor of approving 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 or don’t vote at all.
Notwithstanding the above,
if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules,
the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect
to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The Sponsor has agreed (a) to
waive its redemption rights with respect to its Founder Shares (as defined in Note 5) 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
(i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s
initial Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with
respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless the Company
provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment. 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.
The Company will have until
October 5, 2022 to complete a Business Combination (the “Combination Period”). 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 10 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 its tax obligations (less up to $100,000 of interest to pay dissolution
expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of the 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. There will be no redemption rights or liquidating distributions with respect
to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination
Period.
The Sponsor has agreed to
waive its liquidation rights with respect to the Founder Shares (as defined in Note 5) 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. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in
the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event,
such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public
Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution
will be less than the Initial Public Offering price per Unit ($10.00).
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 third party 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 the lesser of (1) $10.10 per Public Share and (2) the actual
amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.10 per share
due to reductions in the value of the trust assets, less taxes payable; provided that such liability will not apply to any claims by a
third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account nor will
it apply to any claims under the Company’s indemnity of the underwriters of the 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 Sponsor 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 Sponsor 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.
RECHARGE ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
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 10
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/A as filed with
the SEC on June 30, 2021. The interim results for the three months ended March 31, 2021 are not necessarily indicative of the
results to be expected for period ended December 31, 2021 or for any future periods.
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, not being required to comply with
any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or to provide
a supplement to the auditor’s report providing additional information about the audit and the financial 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 statement 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 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 March 31, 2021 and December 31, 2020.
RECHARGE ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Marketable Securities Held in Trust Account
At March 31, 2021 and
December 31, 2020, substantially all of the assets held in the Trust Account were held in money market funds, which are primarily
invested in U.S. Treasury Bills.
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 Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.” Class A 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 Class A 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, 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 consolidated
balance sheets.
Warrant Liability
The Company accounts for
warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms
and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).
The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability
pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether
the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment,
which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period
end date while the warrants are outstanding.
For issued or modified warrants
that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in
capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants
are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the
estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the
warrants was estimated using a binomial lattice simulation model approach (see Note 9).
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. At March 31,
2021 and December 31, 2020, the Company had deferred tax assets of $35,117 and $42,717.
FASB 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 March 31, 2021 and December 31,
2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation
from its position. The Company is subject to income tax examinations by major taxing authorities since inception. The effective tax rate
differs from the statutory tax rate of 21% for the three months ended March 31, 2021 and 2020, due to the valuation allowance recorded
on the Company’s net operating losses and permanent differences.
Net Income Per Common Share
Net income per share is computed
by dividing net income by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered
the effect of the warrants sold in the Public Offering and Private Placement to purchase an aggregate of 17,782,000 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 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, net of applicable
franchise and income taxes, by the weighted average number 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 income, adjusted for income or loss on marketable securities
attributable to Class A common stock subject to possible redemption, by the weighted average number of non-redeemable common stock
outstanding for the period.
RECHARGE ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Non-redeemable common stock
includes Founder Shares and non-redeemable Class A shares as these shares do not have any redemption features. Non-redeemable common
stock participates in the income or loss on marketable securities based on Class A non-redeemable share’s proportionate interest.
The
following table reflects the calculation of basic and diluted net income per common share (in dollars, except per share amounts):
|
|
Three Months
Ended
March 31,
2021
|
|
Class A Common stock subject to possible redemption
|
|
|
|
|
Numerator: Earnings allocable to Class A Common stock subject to possible redemption
|
|
|
|
|
Interest earned on marketable securities held in Trust Account
|
|
$
|
35,139
|
|
Unrealized gain on marketable securities held in Trust Account
|
|
|
4,996
|
|
Less: Company’s portion available to pay taxes
|
|
|
(40,135
|
)
|
Net Income allocable to shares subject to redemption
|
|
$
|
—
|
|
Denominator: Weighted Average Class A common stock subject to possible redemption
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Class A Common stock subject to possible redemption
|
|
|
16,109,853
|
|
Basic and diluted net income per share, Class A Common stock subject to possible redemption
|
|
$
|
—
|
|
|
|
|
|
|
Non-Redeemable Common Stock
|
|
|
|
|
Numerator: Net Income minus Net Earnings
|
|
|
|
|
Net Income
|
|
$
|
14,897,414
|
|
Less: Net income allocable to Class A common stock subject to possible redemption
|
|
|
—
|
|
Non-Redeemable Net Income
|
|
$
|
14,897,147
|
|
Denominator: Weighted Average Non-Redeemable Common Stock
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Non-redeemable common stock
|
|
|
8,940,147
|
|
Basic and diluted net loss per share, Non-redeemable common stock
|
|
$
|
1.67
|
|
Concentration of Credit Risk
Financial instruments that
potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times,
may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account.
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 condensed balance sheet, primarily due to their short-term nature. 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.
Derivative Financial Instruments
The Company evaluates its
financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance
with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities,
the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with
changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such
instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are
classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument
could be required within 12 months of the balance sheet date.
Recent Accounting Standards
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.
In August 2020, the
Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models
that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative
scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces
additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity.
ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible
instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early
adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have
on its financial position, results of operations or cash flows.
NOTE 3. PUBLIC OFFERING
Pursuant to the Initial Public
Offering, the Company sold 20,040,000 Units, which includes the partial exercise by the underwriters of their over-allotment option on
October 23, 2020 in the amount of 40,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A
common stock and one-half of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase
one share of Class A common stock at an exercise price of $11.50 per share (see Note 8).
RECHARGE ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing
of the Initial Public Offering, the Sponsor purchased an aggregate of 7,750,000 Private Placement Warrants at a price of $1.00 per Private
Placement Warrant, for an aggregate purchase price of $7,750,000. On October 23, 2020, in connection with the underwriters’
election to partially exercise their over-allotment option, the Company sold an additional 12,000 Private Placement Warrants to the Sponsor,
at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $12,000. Each Private Placement Warrant is exercisable
to purchase one share of Class A common stock at a price of $11.50 per share. The proceeds from the Private Placement 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 of the sale of the Private Placement Warrants will be used to fund the redemption of the Public
Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On July 22, 2020, the
Sponsor purchased 5,750,000 shares of Class B common stock (the “Founder Shares”) for an aggregate consideration of $25,000.
The Founder Shares included an aggregate of up to 750,000 shares of Class B common stock subject to forfeiture by the Sponsor to
the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the Sponsor would own, on an as-converted
basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering. As a result of the underwriters’
election to partially exercise their over-allotment option on October 23, 2020, a total of 10,000 Founder Shares are no longer subject
to forfeiture and 740,000 Founder Shares were forfeited, resulting in an aggregate of 5,010,000 Founder Shares issued and outstanding.
The Sponsor has agreed that,
subject to certain limited exceptions, the Founder Shares will not be transferred, assigned, sold or released from escrow until the earlier
of (A) one year after the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the
last reported sale price of the 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 a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other
similar transaction that results in all of the stockholders having the right to exchange their common stock for cash, securities or other
property.
Promissory Note — Related Party
On July 7, 2020, the
Company issued the Promissory Note to the Sponsor, pursuant to which the Company could borrow up to an aggregate principal amount of $300,000.
The Promissory Note is non-interest bearing and is payable on the earlier of (i) March 31, 2021 or (ii) the consummation
of the Initial Public Offering. This Promissory Note was subsequently amended on October 2, 2020 such that the entire unpaid principal
balance is payable on the earlier of: (i) the consummation of an initial business combination or (ii) the Company’s liquidation,
if the Company fails to consummate an initial business combination within the time period required by its amended and restated certificate
of incorporation. The principal balance may be prepaid at any time. If the Company fails to consummate a business combination, the Promissory
Note will be repaid with funds held outside the Trust account. As of March 31, 2021 and December 31, 2020, there was $185,047
outstanding under the Promissory Note.
Administrative Services Agreement
The Company entered into
an agreement, commencing on September 30, 2020 through the earlier of the Company's consummation of a Business Combination and its
liquidation, to pay the Sponsor a total of up to $10,000 per month for office space, utilities and secretarial and administrative support. For
the months ended March 31, 2021, the Company incurred $30,000 in fees for these services. At March 31, 2021 and December 31,
2020, $60,000 and $30,000, respectively, are included in accounts payable and accrued expenses in the accompanying condensed balance sheets.
Related Party Loans
In order to finance transaction
costs in connection with a Business Combination, the initial stockholders or an affiliate of the initial stockholders or certain of the
Company’s directors and officers may, but are not obligated to, loan the Company funds as may be required (“Working Capital
Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds
of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the
Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust
Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
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 a Business Combination, without interest,
or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post-Business
Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. At March 31,
2021 and December 31, 2020, no amounts were outstanding under the working capital loans.
RECHARGE ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 6. COMMITMENTS
Registration Rights Agreement
Pursuant to a registration
rights agreement entered into on March 31, 2021, the holders of the Founder Shares, Private Placement Warrants and warrants that
may be issued upon conversion of Working Capital Loans (and any Class A common stock issuable upon the exercise of the Private Placement
Warrants and warrants issued upon conversion of the Working Capital Loans) will be entitled to registration rights requiring the Company
to register a sale of any of its securities held by them. The holders of these securities will be entitled to make up to three demands,
excluding short form demands, that the Company register such securities under the Securities Act. In addition, the holders will have certain
“piggy-back” registration rights to include their securities in other registration statements filed by the Company, subject
to certain limitations. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters are entitled
to a deferred fee of $0.35 per Unit, or $7,014,000 in the aggregate. 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 a Business Combination, subject to the terms of the underwriting
agreement.
NOTE 7. STOCKHOLDER’S 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 March 31, 2021 and December 31, 2020, there were no shares of preferred stock issued or outstanding.
Class A
Common Stock — The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value
of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At March 31, 2021 and December 31,
2020, there were 2,466,566 and 3,930,147 shares of Class A common stock issued and outstanding, excluding 17,573,434 and 16,109,853
shares of Class A common stock subject to possible redemption, respectively.
Class B
Common Stock — The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value
of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. At March 31, 2021 and December 31,
2020, there were 5,010,000 shares of Class B common stock issued and outstanding.
Holders of Class A common
stock and Class B common stock will vote together as a single class on all matters submitted to a vote of stockholders except as
required by law.
The shares of Class B
common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a one-for-one
basis, subject to adjustment pursuant. In the case that additional shares of Class A common stock or equity-linked securities
are issued or deemed issued in connection with a Business Combination, the number of shares of Class A common stock issuable upon
conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all
shares of common stock outstanding upon the completion of the Initial Public Offering, plus the total number of shares of Class A
common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or
deemed issued, by the Company in connection with or in relation to the consummation of a Business Combination, excluding any shares of
Class A common stock or equity-linked securities exercisable for or convertible into shares of Class A common stock issued,
or to be issued, to any seller in a Business Combination and any private placement-equivalent warrants issued to the Sponsor, officers
or directors upon conversion of Working Capital Loans; provided that such conversion of founder shares will never occur on a less than
one for one basis.
NOTE 8. WARRANT LIABILITY
At March 31, 2021 and
December 31, 2020, there were 10,020,000 Public Warrants and 7,762,000 Private Placement Warrants outstanding.
Public Warrants may only
be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants
will become exercisable on the later of (a) the completion of a Business Combination or (b) 12 months from the closing of the
Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption
or liquidation.
The Company will not be obligated
to deliver any Class A common stock pursuant to the exercise of a Public Warrant and will have no obligation to settle such warrant
exercise unless a registration statement under the Securities Act with respect to the Class A common stock underlying the warrants
is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration.
No warrant will be exercisable and the Company will not be obligated to issue a share of Class A common stock upon exercise of a
warrant unless the share of Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to
be exempt under the securities laws of the state of residence of the registered holder of the warrants.
RECHARGE ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The Company has agreed that
as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will
use its best efforts to file with the SEC and registration statement registering the issuance of the shares of Class A common stock
issuable upon exercise of the warrants, to cause such 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, as specified in the warrant agreement.
If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by
the 60th business day after the closing of a Business Combination or 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.
Once the warrants become
exercisable, the Company may redeem the Public Warrants:
|
•
|
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 reported closing 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 three business days before the Company sends the notice of redemption to the warrant holders.
|
If and when the warrants
become redeemable by the Company, the Company may not exercise its redemption right if the issuance of shares of common stock upon exercise
of the warrants is not exempt from registration or qualification under applicable state blue sky laws or if the Company is unable to effect
such registration or qualification.
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 Class A 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, the warrants will not be adjusted for issuance of Class A 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 shares of Class A 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 Class A common (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) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances
represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of 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 the
Company’s Class A common stock during the 20 trading day period starting on the trading day prior to the day on which the Company
consummates a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants
will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00
per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the
Newly Issued Price.
The Private Placement Warrants
are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants
and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or
salable until after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement
Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted
transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the
Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
RECHARGE ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 9. FAIR VALUE MEASUREMENTS
The Company follows the guidance
in ASC Topic 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 and liabilities that are measured at fair value on a recurring basis at March 31, 2021
and December 31, 2020, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair
value:
Description
|
|
Level
|
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and marketable securities held in Trust Account
|
|
|
1
|
|
|
$
|
202,485,412
|
|
|
$
|
202,439,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability – Public Warrants
|
|
|
1
|
|
|
$
|
7,715,400
|
|
|
$
|
16,032,000
|
|
Warrant Liability – Private Placement Warrants
|
|
|
3
|
|
|
$
|
6,054,360
|
|
|
$
|
12,807,300
|
|
The Warrants were accounted
for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on our balance sheet. 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.
The Public Warrants and Private Warrants were initially valued using
a binomial lattice simulation model, which is considered to be a Level 3 fair value measurement. The binomial lattice model’s primary
unobservable input utilized in determining the fair value of the Private Warrants is the expected volatility of the common stock. The
expected volatility as of the initial public offering (“IPO”) date was derived from observable public warrant pricing on comparable
‘blank-check’ companies without an identified target. The expected volatility as of subsequent valuation dates was implied
from the Company’s own public warrant pricing. For periods subsequent to the detachment of the warrants from the Units, the close
price of the public warrant price was used as the fair value as of each relevant date.
The key inputs into the binomial
lattice simulation model for the Private Placement Warrants were as follows at December 31, 2020 and at March 31, 2021:
Input
|
|
March 31, 2021
|
|
|
December 31, 2020
|
|
Risk-free interest rate
|
|
|
.89
|
%
|
|
|
.38
|
%
|
Trading days per year
|
|
|
252
|
|
|
|
252
|
|
Expected volatility
|
|
|
14.2
|
%
|
|
|
22.4
|
%
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Stock Price
|
|
$
|
9.79
|
|
|
$
|
10.00
|
|
The following table presents
the changes in the fair value of warrant liabilities:
|
|
Private Placement
|
|
|
Public
|
|
|
Warrant Liabilities
|
|
Fair value as of January 1, 2021
|
|
$
|
12,807,300
|
|
|
$
|
16,032,000
|
|
|
$
|
28,839,300
|
|
Change in valuation inputs or other assumptions
|
|
|
(6,752,940
|
)
|
|
|
(8,316,600
|
)
|
|
|
(15,069,540
|
)
|
Fair value as of March 31, 2021
|
|
$
|
6,054,360
|
|
|
$
|
7,715,400
|
|
|
$
|
13,769,760
|
|
There were no transfers in
or out of Level 3 from other levels in the fair value hierarchy.
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.
The Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.