Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company.
See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
The aggregate market value of the common stock
held by non-affiliates of the registrant, computed as of June 30, 2020 (the last business day of the registrant’s most recently
completed second fiscal quarter) was approximately: N/A.
As of December 1, 2021, there were 25,875,000
shares of Class A common stock and 6,468,750 shares of Class B common stock of the registrant issued and outstanding.
This Amendment No. 2
to the Annual Report on Form 10-K/A (the “Report”) amends Amendment No. 1 to the Annual Report on Form 10-K/A
of Seven Oaks Acquisition Corp. as of and for the period ended December 31, 2020, as filed with the Securities and Exchange Commission
(“SEC”) on June 3, 2021 (the “First Amended Filing”).
The Company has re-evaluated
the Company’s application of ASC 480-10-S99-3A to its accounting classification of the redeemable Class A common stock, par
value $0.0001 per share (the “Public Shares”), issued as part of the units sold in the Company’s initial public offering
(the “IPO”) on December 22, 2020. Historically, a portion of the Public Shares was classified as permanent equity to
maintain stockholders’ equity greater than $5 million on the basis 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, as described in the Company’s amended and restated certificate
of incorporation (the “Charter”). Pursuant to such re-evaluation, the Company’s management has determined that the Public
Shares include certain provisions that require classification of all of the Public Shares as temporary equity regardless of the net tangible
assets redemption limitation contained in the Charter. In addition, in connection with the change in presentation for the Public Shares,
the Company determined it should restate 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 share pro rata in the income and losses of the Company.
Therefore, on
November 29, 2021, the Company’s management and the audit committee of the Company’s board of directors (the
“Audit Committee”) concluded that the Company’s previously issued (i) audited balance sheet as of
December 22, 2020 (the "Post IPO Balance Sheet"), as previously revised in the Company’s Annual Report on
Form 10-K, as amended, for the fiscal year ended December 31, 2020, filed with the SEC on June 3, 2021 (“2020
Form 10-K/A No. 1”), (ii) audited financial statements included in the 2020 Form 10-K/A No. 1;
(iii) unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2021, filed with the SEC on June 3, 2021; and (v) unaudited interim financial
statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021,
filed with the SEC on August 13, 2021 (collectively, the “Affected Periods”), should be restated to report all
Public Shares as temporary equity and should no longer be relied upon. As such, the Company will restate its financial statements
for the Affected Periods in this Form 10-K/A for the Post IPO Balance Sheet and the Company's audited financial statements
included in the 2020 Form 10-K/A No. 1. The unaudited condensed financial statements for the periods ended March 31,
2021 and June 30, 2021 will be restated in the Company’s Amendment No. 1 to the Company’s Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2021, to be filed with the SEC (the “Q3
Form 10-Q/A”).
The restatement does not have
an impact on its cash position and cash held in the trust account established in connection with the IPO (the “Trust Account”).
We are filing this Amendment
No. 2 to amend and restate the First Amended Filing with modification as necessary to reflect the restatements. The following items
have been amended to reflect the restatements:
NOTES TO FINANCIAL STATEMENTS
Note 1—Description of Organization and Business Operations
Organization and General
Seven Oaks Acquisition Corp. (the “Company”)
is a blank check company incorporated in Delaware on September 23, 2020. The Company was formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses
(the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the
risks associated with emerging growth companies.
As of December 31, 2020, the Company had
not commenced any operations. All activity for the period from September 23, 2020 (inception) through December 31, 2020 relates
to the Company’s formation and the initial public offering (the “Initial Public Offering”) described below, and the
search for a target for its initial Business Combination. The Company will not generate any operating revenues until after the completion
of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income on cash
and cash equivalents from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal
year end.
Sponsor and Financing
The Company’s sponsor is Seven Oaks Sponsor
LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public
Offering was declared effective on December 17, 2020. On December 22, 2020, the Company consummated its Initial Public Offering
of 25,875,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the
“Public Shares”), including 3,375,000 additional Units to cover over-allotments (the “Over-Allotment Units”),
at $10.00 per Unit, generating gross proceeds of approximately $258.8 million, and incurring offering costs of approximately $3.1 million.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the private placement (“Private Placement”) of 5,587,500 warrants (each, a “Private
Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant
to the Sponsor, generating proceeds of approximately $5.6 million (Note 5).
Trust Account
Upon the closing of the Initial Public Offering
and the Private Placement, $258.8 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds
of the Private Placement was held in a trust account (“Trust Account”) located in the United States with Continental Stock
Transfer & Trust Company acting as trustee, and invested only in U.S. government treasury obligations with a maturity of 185
days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act 1940, as amended
(the “Investment Company Act”), which will be invested only in direct U.S. government treasury obligations, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account
as described below.
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 and the sale of Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial
Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (excluding advisory
fees and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial Business Combination.
However, the Company only intends to complete a Business Combination if the post-transaction company owns or acquires 50% or more of the
issued and 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 the holders (the “Public
Stockholders”) of the Public Shares with the opportunity to redeem all or a portion of their Public Shares upon the completion of
a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii)
by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct
a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public
Shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.00 per Public Share). The
per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting
commissions the Company will pay to the underwriters (as discussed in Note 6). These Public Shares are recorded at a redemption value
and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards
Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from
Equity.” If the Company seeks stockholder approval, the Company will proceed with a Business Combination if a majority of the shares
voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares in connection with a Business Combination
in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by law and the
Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and
Restated Certificate of Incorporation (the “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 legal reasons, the Company will offer to redeem the Public Shares in conjunction with a
proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Stockholder
may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks
stockholder approval in connection with a Business Combination, the initial stockholders (as defined below) agreed to vote their Founder
Shares (as defined below in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business
Combination. In addition, the initial stockholders agreed to waive their redemption rights with respect to their Founder Shares and Public
Shares in connection with the completion of a Business Combination.
The Certificate of Incorporation provides that
a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert
or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares, without
the prior consent of the Company.
The holders of the Founder Shares (the “initial
stockholders”) agreed not to propose an amendment to the Certificate of Incorporation (A) to modify the substance or timing
of the Company’s obligation to allow redemption in connection with a Business Combination or to redeem 100% of the Public Shares
if the Company does not complete a Business Combination within the Combination Period (as defined below) or (B) 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.
If the Company is unable to complete a Business
Combination within 24 months from the closing of the Initial Public Offering, or December 22, 2022 (the “Combination Period”),
or any extended period of time that the Company may have to consummate an initial Business Combination as a result of an amendment to
the amended and restated certificate of incorporation, the Company will (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held
in the Trust Account and not previously released to the Company to pay its taxes (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 remaining stockholders and the board of directors, liquidate and dissolve, subject,
in each case, to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law.
The initial stockholders agreed to waive their
rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business
Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering,
they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete
a Business Combination within the Combination Period. The underwriters agreed to waive their rights to the deferred underwriting commission
(see Note 4) 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 residual assets remaining available
for distribution (including Trust Account assets) will be only $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 (except for the Company’s independent
registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which
the Company has discussed entering into a transaction agreement (a “Target”), reduce the amount of funds in the Trust Account
to below (i) $10.00 per Public Share or (ii) the lesser amount per Public Share held in the Trust Account as of the date of
the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of interest which may be withdrawn
to pay taxes, provided that such liability will not apply to any claims by a third party or Target that executed a waiver of any and all
rights to seek access to 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”). In the event that an executed waiver is deemed to be unenforceable against a third party, our 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 (other than 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.
Liquidity and Capital Resources
As of December 31, 2020, the Company had
approximately $1.8 million in its operating bank accounts and working capital of approximately $2.4 million, (not taking into account
tax obligations of approximately $55,000 that may be paid using investment income earned from Trust Account).
The Company’s liquidity needs prior to the
consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor and Jones & Associates, Inc.
(“Jones & Associates”) to purchase Founder Shares (as defined in Note 5), and loan proceeds from the Sponsor of $105,000
under the Note (as defined in Note 5). The Company repaid the Note in full on December 22, 2020. Subsequent from the consummation
of the Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds from the consummation of the
Initial Public Offering and the Private Placement held outside of the Trust Account.
Based on the foregoing, management believes that
the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a
Business Combination or one year from this filing. Over this time period, the Company will be using the funds held outside of the Trust
Account for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing
due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire,
and structuring, negotiating and consummating the Business Combination.
Risk and Uncertainties
On January 30, 2020, the World Health Organization
(“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”).
In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full
impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s results of operations,
financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories
and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly
uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s
results of operations, financial position and cash flows may be materially adversely affected. Additionally, the Company’s ability
to complete an Initial Business Combination may be materially adversely affected due to significant governmental measures being implemented
to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among
others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target
company’s personnel, vendors and service providers to negotiate and consummate an Initial Business Combination in a timely manner.
The Company’s ability to consummate an Initial Business Combination may also be dependent on the ability to raise additional equity
and debt financing, which may be impacted by the COVID-19 outbreak and the resulting market downturn.
Note 2—Restatement of Previously Issued Financial Statements
In November 2021, the Company
concluded it should restate its previously issued financial statements by amending to classify all Class A common stock subject
to possible redemption in temporary equity. In accordance with ASC 480, paragraph 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, or total stockholders’ equity. Although the Company
did not specify a maximum redemption threshold, its charter 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 stock
classified as temporary equity as part of net tangible assets. Effective with these financial statements, the Company revised this interpretation
to include temporary equity in net tangible assets. Also, in connection with the change in presentation for the Class A common stock
subject to possible redemption, the Company also 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 share pro rata in the income and losses of the Company. As a result, the Company restated its previously filed
financial statements to present all redeemable Class A common stock as temporary equity and to recognize accretion from the initial
book value to redemption value at the time of its Initial Public Offering and in accordance with ASC 480.
In May 2021, the Audit Committee
of the Company, in consultation with management, concluded that, because of a misapplication of the accounting guidance related to its
public and private placement warrants to purchase common stock that the Company issued in December 2020 (the “Warrants”),
the Company’s previously issued financial statements for the period from September 23, 2020 (inception) through December 31, 2020,
should no longer be relied upon. As such, the Company is restating its financial statements for this period included in this Annual
Report.
On April 12, 2021, the staff
of the Securities and Exchange Commission (the “SEC Staff”) issued a public statement entitled “Staff Statement on
Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)” (the
“SEC Staff Statement”). In the SEC Staff Statement, the SEC Staff expressed its view that certain terms and conditions common
to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to equity. Since
issuance on December 22, 2020, the Company’s warrants were accounted for as equity within the Company’s previously reported
balance sheets. After discussion and evaluation, including with the Company’s independent registered public accounting firm and
the Company’s audit committee, management concluded that the warrants should be presented as liabilities at fair value with subsequent
fair value remeasurement.
Historically, the Warrants
were reflected as a component of equity as opposed to liabilities on the balance sheets and the statements of operations did not include
the subsequent non-cash changes in estimated fair value of the Warrants, based on our application of FASB ASC Topic 815-40, Derivatives
and Hedging, Contracts in Entity’s Own Equity (“ASC 815-40). The views expressed in the SEC Staff Statement were not consistent
with the Company’s historical interpretation of the specific provisions within its warrant agreement and the Company’s application
of ASC 815-40 to the warrant agreement. The Company reassessed its accounting for Warrants issued on December 22, 2020, in light of the
SEC Staff’s published views. Based on this reassessment, management determined that the Warrants should be classified as liabilities
measured at fair value upon issuance, with subsequent changes in fair value reported in the Company Statement of Operations each reporting
period.
The Company’s previously
filed financial statements that contained these errors were the Company’s Form 8-K filed with the SEC on December 30,
2020 (the “Post-IPO Balance Sheet”), and the Company's Annual Report on 10-K for the annual period ended December 31,
2020 (the “Affected Annual Period”), which were previously restated in the Company's Amendment No. 1 to its Form 10-K
as filed with the SEC on June 3, 2021, as well as the Form 10-Qs for the quarterly periods ended. March 31, 2021, and
June 30, 2021 (collectively, the “Affected Periods”).
In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff
Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements,” the Company evaluated the corrections noted above and has determined that the related impact was
material to the Affected Periods that contained the errors. Therefore, the Company, in consultation with its Audit Committee,
concluded that the Affected Periods should be restated to present (i) all Class A ordinary shares subject to possible redemption as
temporary equity, (ii) to recognize accretion from the initial book value to redemption value at the time of its Initial Public
Offering, (iii) to correct its earnings per share calculation, and (iv) properly reflect the classification of warrants. These
financial statements restate the Company’s previously issued audited financial statements covering the periods through
December 31, 2020. The quarterly periods ended March 31, 2021, and June 30, 2021, will be restated with an amendment
the Company’s Form 10-Q for the quarterly period ended September 30, 2021.
Impact of the Restatements
The impact of the restatements noted above, is as follows:
As of December 22,
2020
|
|
As Reported
on Original
Form 10-K
|
|
|
Restatement
No. 1 –
Warrants
Adjustment
|
|
|
Restatement
No. 2 –
Temporary
Equity
Adjustment
|
|
|
As Restated
|
|
Total assets
|
|
$
|
262,064,501
|
|
|
$
|
--
|
|
|
$
|
-
|
|
|
$
|
262,064,501
|
|
Total liabilities
|
|
$
|
903,035
|
|
|
$
|
18,525,000
|
|
|
$
|
-
|
|
|
$
|
19,428,035
|
|
Class A common stock subject to possible redemption
|
|
|
256,161,460
|
|
|
|
(18,525,000
|
)
|
|
|
21,113,540
|
|
|
|
258,750,000
|
|
Preferred stock
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Class A common stock
|
|
|
26
|
|
|
|
185
|
|
|
|
(211
|
)
|
|
|
-
|
|
Class B common stock
|
|
|
647
|
|
|
|
-
|
|
|
|
-
|
|
|
|
647
|
|
Additional paid-in capital
|
|
|
5,060,642
|
|
|
|
167,901
|
|
|
|
(5,228,543
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(61,309
|
)
|
|
|
(168,086
|
)
|
|
|
(15,884,786
|
)
|
|
|
(16,114,181
|
)
|
Total stockholders' equity (deficit)
|
|
$
|
5,000,006
|
|
|
$
|
-
|
|
|
$
|
(21,113,540
|
)
|
|
$
|
(16,113,534
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders' Deficit
|
|
$
|
262,064,501
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
262,064,501
|
|
Shares of Class A common stock subject to possible redemption
|
|
|
25,616,146
|
|
|
|
(1,852,500
|
)
|
|
|
2,111,354
|
|
|
|
25,875,000
|
|
Shares of Class A common stock
|
|
|
258,254
|
|
|
|
1,852,000
|
|
|
|
(2,111,354
|
)
|
|
|
--
|
|
The impact of the restatement
on the balance sheets, statement of stockholders’ equity (deficit), statements of operations earnings per share data, and statements
of cash flows for the Affected Annual Period is presented below. The restatement had no impact on total assets, total liabilities, net
income (loss) and net cash flows from operating, investing or financing activities.
As of December 31, 2020
|
|
As Reported
on Original
Form 10-K
|
|
|
Restatement
No. 1 –
Warrants
Adjustment
|
|
|
Restatement
No. 2 –
Temporary
Equity
Adjustment
|
|
|
As Restated
|
|
Total assets
|
|
$
|
261,273,723
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
261,273,723
|
|
Total liabilities
|
|
$
|
210,349
|
|
|
|
22,415,255
|
|
|
$
|
-
|
|
|
$
|
22,625,604
|
|
Class A common stock subject to possible redemption
|
|
|
256,063,370
|
|
|
|
(22,415,260
|
)
|
|
|
25,101,890
|
|
|
|
258,750,000
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Class A common stock
|
|
|
27
|
|
|
|
224
|
|
|
|
(251
|
)
|
|
|
-
|
|
Class B common stock
|
|
|
647
|
|
|
|
-
|
|
|
|
-
|
|
|
|
647
|
|
Additional paid-in capital
|
|
|
5,158,732
|
|
|
|
4,058,122
|
|
|
|
(9,216,854
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(159,402
|
)
|
|
|
(4,058,341
|
)
|
|
|
(15,884,785
|
)
|
|
|
(20,102,528
|
)
|
Total stockholders' equity (deficit)
|
|
$
|
5,000,004
|
|
|
$
|
5
|
|
|
$
|
(25,101,890
|
)
|
|
$
|
(20,101,881
|
)
|
Total
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders' Deficit
|
|
$
|
261,273,723
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
261,273,723
|
|
Shares of Class A common stock subject to possible redemption
|
|
|
25,606,337
|
|
|
|
(2,241,526
|
)
|
|
|
2,510,189
|
|
|
|
25,875,000
|
|
Shares of Class A common stock
|
|
|
268,663
|
|
|
|
2,241,526
|
|
|
|
(2,510,189
|
)
|
|
|
--
|
|
For The Period From September 23, 2020 (inception) through December 31, 2020
|
|
|
Total Stockholders'
Equity (Deficit), As
Reported
on original 10-K
|
|
|
Restatement
No. 1 –
Warrants
Adjustment
|
|
|
Restatement
No. 2 –
Temporary
Equity
Adjustment
|
|
|
Total Stockholders'
Equity (Deficit), As
Restated
|
|
Balance - September 23, 2020 (inception)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Issuance of Class B common stock to the initial stockholders
|
|
|
25,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,000
|
|
Sale of units in initial public offering, less fair value of public warrants, gross
|
|
|
258,750,000
|
|
|
|
(12,937,499
|
)
|
|
|
(245,812,501
|
)
|
|
|
-
|
|
Offering costs
|
|
|
(3,139,725
|
)
|
|
|
168,086
|
|
|
|
2,971,639
|
|
|
|
-
|
|
Common stock subject to possible redemption
|
|
|
(256,063,370
|
)
|
|
|
22,415,260
|
|
|
$
|
233,648,110
|
|
|
|
-
|
|
Accretion on Class A common stock subject to possible redemption amount
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,909,138
|
)
|
|
|
(15,909,138
|
)
|
Sale of private placement warrants to Sponsor in private placement
|
|
|
5,587,501
|
|
|
|
(5,587,501
|
)
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
|
(159,402
|
)
|
|
|
(4,058,341
|
)
|
|
|
-
|
|
|
|
(4,217,743
|
)
|
Balance - December 31, 2020
|
|
$
|
5,000,004
|
|
|
$
|
5
|
|
|
$
|
(25,101,890
|
)
|
|
$
|
(20,101,881
|
)
|
|
|
Earnings Per Share
|
|
|
|
As Reported
on Original
Form 10-K
|
|
|
Restatement
No. 1 –
Warrants
Adjustment
|
|
|
Restatement
No. 2 –
Temporary
Equity
Adjustment
|
|
|
As Restated
|
|
For the period From June 4, 2020 (Inception) Through December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(159,402
|
)
|
|
|
(4,058,341
|
)
|
|
$
|
-
|
|
|
$
|
(4,217,743
|
)
|
Weighted average shares outstanding - Class A common stock
|
|
|
25,615,056
|
|
|
|
4,863
|
|
|
|
(22,337,456
|
)
|
|
|
3,234,375
|
|
Basic and diluted loss per share - Class A common stock
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
(0.47
|
)
|
|
$
|
(0.47
|
)
|
Weighted average shares outstanding - Class B common stock
|
|
|
5,762,948
|
|
|
|
4,863
|
|
|
|
(37,342
|
)
|
|
|
5,730,469
|
|
Basic and diluted loss per share - Class B common stock
|
|
$
|
(0.03
|
)
|
|
|
(0.70
|
)
|
|
$
|
0.26
|
|
|
$
|
(0.47
|
)
|
Statement of Cash Flows for the period From September 23, 2020 (Inception) Through December 31, 2020
|
|
|
As Reported
on Original
Form 10-K
|
|
|
Restatement
No. 1 –
Warrants
Adjustment
|
|
|
Restatement
No. 2 –
Temporary
Equity
Adjustment
|
|
|
As Restated
|
|
Initial Value of Class A common stock subject to possible redemption
|
|
$
|
256,161,460
|
|
|
|
(18,525,000
|
)
|
|
$
|
(237,636,460
|
)
|
|
$
|
-
|
|
Change in Value of Class A common stock subject to possible redemption
|
|
$
|
(98,090
|
)
|
|
|
(3,890,260
|
)
|
|
$
|
3,988,350
|
|
|
$
|
-
|
|
Accretion to Class A common stock subject to possible redemption to redemption amount
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
15,909,138
|
|
|
$
|
15,909,138
|
|
Note 3—Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements are presented
in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant
to the rules and regulations of the Securities and Exchange Commission (“SEC”).
As described in Note 2—Restatement of Previously
Issued Financial Statements, the Company’s financial statements for the period as of December 31, 2020, and the Affected Periods,
are restated in this Annual Report on Form 10-K/A (Amendment No. 2) (this “Annual Report”) to correct the misapplication
of accounting guidance related to the Company’s Public Shares in the Company’s previously issued audited and unaudited condensed
financial statements for such periods. The restated financial statements are indicated as “Restated” in the audited and
unaudited condensed financial statements and accompanying notes, as applicable. See Note 2—Restatement of Previously Issued Financial
Statements for further discussion.
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 shareholder 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 those of 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.
The Company will remain an emerging growth company
until the earliest of (i) the last day of the first fiscal year (a) following the fifth anniversary of the completion of the
Public Offering, (b) in which the Company’s total annual gross revenue is at least $1.07 billion or (c) when the Company
is deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0
million as of the prior June 30th and (ii) the date on which the Company has issued more than $1.0 billion in non-convertible
debt securities during the prior three-year period.
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.
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 at December 31,
2020.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times, may exceed the Federal
depository insurance coverage of $250,000, and investments held in Trust Account. The Company has not experienced losses on these accounts
and management believes the Company is not exposed to significant risks on such accounts. The Company’s investments held in the
Trust Account as of December 31, 2020 are comprised of investments in U.S. Treasury securities with an original maturity of 185 days
or less or investments in a money market funds that comprise only U.S. treasury securities money market funds.
Investments Held in the Trust Account
Upon the closing of the Initial Public Offering
and the Private Placement, approximately $258.8 million, was placed in the Trust Account and invested in money market funds that invest
in U.S. government securities. All of the Company’s investments held in the Trust Account are classified as trading securities.
Trading securities are presented on the balance sheet 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 gain on investments held in Trust Account in the accompanying statement of
operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
Fair Value of Financial Instruments
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. U.S. 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.
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates
the carrying amounts represented in the balance sheet.
The fair value of the Public Warrants (if not
market observed) and Private Warrants is estimated using a Binomial Lattice in a risk-neutral framework. The future stock price of the
Company is modeled assuming a Geometric Brownian Motion in a risk-neutral framework. For each modeled future price, the warrant payoff
is calculated based on the contractual terms (incorporating any optimal early exercise / redemption), and then discounted at the term-matched
risk-free rate. The value of the Warrants is calculated as the probability-weighted present value over all future modeled payoffs.
As of December 31, 2020, the carrying values
of cash, prepaid expenses, accounts payable, accrued expenses, income tax payable and franchise tax payable approximate their fair values
due to the short-term nature of the instruments. The Company’s portfolio of investments held in the Trust Account is comprised of
investments in U.S. Treasury securities with an original maturity of 185 days or less or investments in money market funds that invest
in U.S. government securities, or a combination thereof. The fair value for trading securities is determined using quoted market prices
in active markets (Level 1).
Offering Costs Associated with the Initial Public Offering
The Company complies with the requirements of
the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A – “Expenses of Offering.” Offering costs consist of
legal, accounting, underwriting fees and other costs directly related to the Initial Public Offering. Offering costs are allocated to
the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds
received. Offering costs associated with warrant liabilities are expensed as incurred, presented as non-operating expenses in the
statement of operations. Offering costs associated with the Public Warrants were charged to stockholders’ equity and offering
costs associated with the Public Shares 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.
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.”
Common stock subject to mandatory redemption (if any) is classified as a liability instrument and measured at fair value. Conditionally
redeemable common stock (including 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) is classified as temporary equity.
At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption
rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly,
at December 31, 2020, 25,875,000 shares of common stock subject to possible redemption is presented as temporary equity, outside
of the stockholders’ equity section of the Company’s balance sheet.
Effective with the closing of the Initial
Public Offering, the Company recognized the accretion from initial book value to redemption amount, which approximates fair value.
The change in the carrying value of Class A common stock subject to possible redemption resulted in charges against additional
paid-in capital (to the extent available), accumulated deficit and Class A common stock.
Derivative Warrant liabilities
The Company does not use
derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial
instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The Company issued 12,937,500
warrants in connection with the Initial Public Offering (the “Public Warrants”) 5,587,500 warrants in a Private Placement
(the “Private Placement Warrants”). These warrants are recognized as derivative liabilities in accordance with ASC 815-40.
Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjust the instruments to fair value at each
reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value
is recognized in the Company’s statement of operations. The fair value of the Public Warrants (if not market observed) and Private
Warrants is estimated using a Binomial Lattice in a risk-neutral framework. The future stock price of the Company is modeled assuming
a Geometric Brownian Motion in a risk-neutral framework. For each modeled future price, the Warrant payoff is calculated based on the
contractual terms (incorporating any optimal early exercise / redemption), and then discounted at the term-matched risk-free rate. The
value of the Warrants is calculated as the probability-weighted present value over all future modeled payoffs.
Net Income (Loss) Per Share of Common Stock
The Company complies with accounting and disclosure requirements of
FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A common
stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per share
of common stock is calculated by dividing the net income (loss) by the weighted average number of common stock outstanding for the respective
period.
The Company has not considered the effect of
the warrants sold in the Initial Public Offering and Private Placement, as well as the warrants issued upon conversion of the Note
(as defined in Note 5), to purchase an aggregate of 18,525,000 shares of common stock in the calculation of diluted loss per common
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 under the treasury stock method. As a result, diluted net loss per common share is the same as basic net loss
per common stock for the period presented. 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 of common stock for each class of common stock:
|
|
For The Period From September 23, 2020
(inception) through December 31, 2020
|
|
|
|
Class A
|
|
|
Class B
|
|
Basic and diluted net loss per common share:
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Allocation of net loss
|
|
$
|
(1,521,695
|
)
|
|
$
|
(2,696,047
|
)
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding
|
|
|
3,234,375
|
|
|
|
5,730,469
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.47
|
)
|
|
$
|
(0.47
|
)
|
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under FASB ASC Topic 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.
FASB ASC Topic 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. The Company’s
general and administrative costs are generally considered start-up costs and are not currently deductible.
No amounts were accrued for the payment of interest
and penalties as of December 31, 2020 and 2019. The Company is currently not aware of any issues under review that could result in
significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing
authorities since inception.
On March 27, 2020, President Trump signed
the Coronavirus Aid, Relief, and Economic Security “CARES” Act into law. The CARES Act includes several significant business
tax provisions that, among other things, would eliminate the taxable income limit for certain net operating losses(“NOL) and allow
businesses to carry back NOLs arising in 2018, 2019 and 2020 to the five prior years, suspend the excess business loss rules, accelerate
refunds of previously generated corporate alternative minimum tax credits, generally loosen the business interest limitation under IRC
section 163(j) from 30 percent to 50 percent among other technical corrections included in the Tax Cuts and Jobs Act tax provisions.
Recent Accounting Pronouncements
Management does not believe that any recently
issued, but not yet effective, accounting pronouncements, if currently adopted, would have an effect on the Company’s financial
statements.
Note 4—Initial Public Offering
On December 22, 2020, the Company consummated
its Initial Public Offering of 25,875,000 Units, including 3,375,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds
of approximately $258.8 million, and incurring offering costs of approximately $3.1 million.
Each Unit consists of one share of Class A
common stock, and one-half of one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to
purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7).
Note 5—Related Party Transactions
Founder Shares
On October 13, 2020, the Sponsor and Jones &
Associates, an affiliate of one of the underwriters of the Initial Public Offering, purchased 4,715,000 and 1,035,000 shares of the Company’s
Class B common stock, par value $0.0001 per share, respectively, for an aggregate of 5,750,000 shares (the “Founder Shares”)
for a total purchase price of $25,000. On December 17, 2020, the Company effected a 1.125-for-1 stock split of its Class B common
stock, resulting in an aggregate of 6,468,750 shares of Class B common stock outstanding. All shares and associated amounts have
been retroactively restated to reflect the stock split. Of the 6,468,750 Founder Shares outstanding, up to 843,750 shares are subject
to forfeiture to the extent that the over-allotment option was not exercised in full by the underwriters, so that the Founder Shares would
represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. The underwriters exercised their
over-allotment option in full on December 22, 2020; thus, these 843,750 Founder Shares were no longer subject to forfeiture.
The initial stockholders agreed, subject to limited
exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (i) one year after the completion
of the initial Business Combination and (ii) the date on which the Company completes a liquidation, merger, capital stock exchange
or other similar transaction after the initial Business Combination that results in all of the stockholders having the right to exchange
their Class A common stock for cash, securities or other property; except to certain permitted transferees and under certain circumstances.
Any permitted transferees will be subject to the same restrictions and other agreements of the initial stockholders with respect to any
Founder Shares. Notwithstanding the foregoing, if (1) the closing price of the Class A common stock equals or exceeds $12.00
per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days
within any 30-trading day period commencing at least 150 days after the initial Business Combination or (2) if the Company consummates
a transaction after the initial Business Combination which results in the stockholders having the right to exchange their shares for cash,
securities or other property, the Founder Shares will be released from the lock-up.
Private Placement Warrants
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the Private Placement of 5,587,500 Private Placement Warrants at a price of $1.00 per Private
Placement Warrant to the Sponsor, generating proceeds of approximately $5.6 million.
Each Private Placement Warrant is exercisable
for one whole share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private
Placement Warrants to the Sponsor was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company
does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless.
The purchasers of the Private Placement Warrants
agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants (except to permitted transferees)
until 30 days after the completion of the initial Business Combination.
Related Party Loans
On October 13, 2020, 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 a promissory note
(the “Note”). This loan was non-interest bearing and payable upon the completion of the Initial Public Offering. The Company
borrowed $105,000 under the Note and repaid the Note in full on December 22, 2020.
In addition, in order to finance transaction costs
in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and
directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company
completes a Business Combination, the Company 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. The Working Capital Loans would either
be repaid upon consummation of a Business Combination or, at the lenders’ discretion, up to $1.5 million of such Working Capital
Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be
identical to the Private Placement Warrants. 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. As of December 31, 2020, the Company had no borrowings under
the Working Capital Loans.
Service and Administrative Fees
Commencing on the date that the Company’s
securities were first listed on the Nasdaq through the earlier of consummation of the initial Business Combination and the Company’s
liquidation, the Company agreed to pay an affiliate of the Sponsor a total of $20,000 per month for office space, secretarial and administrative
services provided to members of the management team. For the period from September 23, 2020 through December 31, 2020, the Company
incurred $20,000 of such expenses.
In addition, the Sponsor, executive officers and
directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities
on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations.
The audit committee will review on a quarterly basis all payments that were made to the Sponsor, executive officers or directors, or their
affiliates. Any such payments prior to an initial Business Combination will be made from funds held outside the Trust Account.
Note 6—Commitments and Contingencies
Registration Rights
The holders of Founder Shares, Private Placement
Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any shares of common stock issuable upon
the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of
the Founder Shares), were entitled to registration rights pursuant to a registration rights agreement signed upon the consummation of
the Initial Public Offering. These holders will be entitled to certain demand and “piggyback” registration rights. However,
the registration rights agreement provides that we will not be required to effect or permit any registration or cause any registration
statement to become effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection
with the filing of any such registration statements.
Underwriting Agreement
The underwriters were entitled to an underwriting
discount of $0.10 per Unit, or approximately $2.6 million, paid upon the closing of the Initial Public Offering.
Business Combination Marketing Agreement
The Company engaged certain underwriters in connection
with the Business Combination to assist the Company in holding meetings with the stockholders to discuss the potential Business Combination
and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s
securities in connection with the initial Business Combination, assist the Company in obtaining stockholder approval for the Business
Combination and assist the Company with its press releases and public filings in connection with the Business Combination. The scope of
engagement excludes identifying and/or evaluating possible acquisition candidates. Pursuant to the agreement with underwriters, the marketing
fee payable to the underwriters will be 3.5% of the gross proceeds of the Initial Public Offering. The marketing 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 such agreement.
Note 7— Derivative Warrant Liabilities
The Company has 12,937,500 public warrants and
5,587,500 private warrants outstanding as of December 31, 2020.
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 Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12
months from the closing of the Initial Public Offering; 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 has agreed that as soon as practicable, but in no
event later than 15 business days after the closing of its initial Business Combination, the Company will use its commercially reasonable
efforts to file with the SEC and have an effective registration statement covering the shares of Class A common stock issuable upon
exercise of the warrants and will use its commercially reasonable efforts to cause the same to become effective within 60 business days
after the closing of the Company’s initial Business Combination and to maintain a current prospectus relating to those shares of
Class A common stock until the warrants expire or are redeemed. If the shares issuable upon exercise of the warrants are not registered
under the Securities Act in accordance with the above requirements, the Company will be required to permit holders to exercise their warrants
on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to
issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or
qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. 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, and in the event the Company does not so elect, it will use its commercially
reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
The warrants have an exercise price of $11.50
per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption
or liquidation. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities
for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price
of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith
by the board of directors and, in the case of any such issuance to the initial stockholders or their affiliates, without taking into account
any Founder Shares held by the initial stockholders or such affiliates, as applicable, prior to such issuance) (the “Newly Issued
Price”) (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest
thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination
(net of redemptions), and (z) the volume weighted average trading price of the Class A common stock during the 20 trading day
period starting on the trading day after the day on which the Company consummates the initial Business Combination (such price, the “Market
Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115%
of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described under “Redemption
of warrants when the price per share of Class A common stock equals or exceeds $18.00” will be adjusted (to the nearest cent)
to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described
under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00” will be adjusted
(to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants are identical to
the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of
the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination,
subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable (except as described below
in “Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00”) so long as they
are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or
its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same
basis as the Public Warrants.
Redemption of warrants when the price per share of Class A
common stock equals or exceeds $18.00:
Once the warrants become exercisable, the Company may redeem the outstanding
warrants for cash:
• 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 to each warrant holder; and
•
if, and only if, the last reported sale price (the “closing price”) of the Class A common stock equals or exceeds $18.00
per share (as adjusted) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which
the Company sends the notice of redemption to the warrant holders.
The 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 then 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, the Company 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.
Redemption of warrants for when the price per share of Class A
common stock equals or exceeds $10.00:
Once the warrants become exercisable, the Company may redeem the outstanding
warrants:
•
in whole and not in part;
•
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to
exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed
table based on the redemption date and the “fair market value” of Class A common stock;
• if, and only if, the closing price of the Class A common stock equals or exceeds $10.00 per Public Share (as adjusted) for any 20
trading days within the 30-trading day period ending three trading days before the Company sends notice of redemption to the warrant holders;
and
• if the closing price of the shares of Class A common stock for any 20 trading days within a 30- trading day period ending on the
third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $18.00 per
share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding
Public Warrants, as described above.
The “fair market value” of Class A
common stock shall mean the volume-weighted average price of the Class A common stock during the ten trading days ending on the third
trading day immediately following the date on which the notice of redemption is sent to the holders of warrants. In no event will the
warrants be exercisable in connection with this redemption feature for more than 0.361 shares of Class A common stock per warrant
(subject to adjustment).
In no event will the Company be required to net
cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates
the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they
receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly,
the warrants may expire worthless.
Note 8- 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 380,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s
Class A common stock are entitled to one vote for each share. As of December 31, 2021, there were 25,875,000 shares of Class A
common stock outstanding, which were all subject to possible redemption and classified outside of permanent equity in the balance sheets.
The Class A common stock subject to possible redemption reflected
on the balance sheet is reconciled on the following table:
Gross proceeds
|
|
$
|
258,750,000
|
|
Less:
|
|
|
|
|
Fair value of Public Warrants at issuance
|
|
|
(12,937,500
|
)
|
Offering costs allocated to Class A common stock subject to possible redemption
|
|
|
(2,971,639
|
)
|
Plus:
|
|
|
|
|
Accretion of carrying value to redemption value
|
|
|
15,909,139
|
|
Class A common stock subject to possible redemption
|
|
$
|
258,750,000
|
|
Note 9—Stockholders’ Deficit
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with
such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.
As of December 31, 2020, there were no shares of preferred stock issued or outstanding.
Class A
Common Stock — The Company is authorized to issue 380,000,000 shares of Class A common stock with a par
value of $0.0001 per share. As of December 31, 2020, there were 25,875,000 shares of Class A common stock issued or
outstanding shares all of which are subject to possible redemption and are classified as temporary equity (see Note 8).
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 October 13, 2020, the Company issued 5,750,000 shares of Class B common stock to the Sponsor and Jones &
Associates for an aggregate price of $25,000. On December 17, 2020, the Company effected a 1.125-for-1 stock split of its Class B
common stock, resulting in an aggregate of 6,468,750 shares of Class B common stock outstanding. All shares and associated amounts
have been retroactively restated to reflect the stock split. Of the 6,468,750 shares of Class B common stock outstanding, up to 843,750
shares were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part,
so that the initial stockholders would collectively own 20% of the Company’s issued and outstanding common stock after the Initial
Public Offering. The underwriter exercised its over-allotment option in full on December 22, 2020; thus, these 843,750 Founder Shares
were no longer subject to forfeiture.
Holders of record of the Class A common stock
and holders of record of the Class B common stock will vote together as a single class on all matters submitted to a vote of the
stockholders, with each share of common stock entitling the holder to one vote except as required by law.
The Class B common stock will automatically
convert into Class A common stock concurrently with or immediately following the consummation of the initial Business Combination
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 connection with the initial Business Combination, the number of shares of Class A common stock issuable
upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A
common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by Public
Stockholders), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion
or exercise of any equity- linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the
consummation of the initial Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights
exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial Business
Combination and any private placement warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans,
provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.
Note 10—Fair Value Measurements
The following table presents
information about the Company’s assets that are measured at fair value on a recurring basis as of December 31, 2020 and indicates
the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
December 31, 2020
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
275,000,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative warrant liabilities - Public warrants
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
15,654,375
|
|
Derivative warrant liabilities - Private warrants
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,760,880
|
|
Transfers
to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There was no transfer in or out of Level 3 measurements
in the period from September 23 (inception) through December 31, 2020.
Level
1 instruments include investments in mutual funds invested in government securities. The Company uses inputs such as actual trade data,
benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.
Level 3 instruments are comprised of derivative warrant liabilities measured at fair value using a Binomial Lattice model and Black-Scholes.
The
fair value of the Public Warrants issued in connection with the Public Offering have been measured at fair value using a Binomial Lattice
model. The fair value of the warrants issued in the Private Placement were estimated using Black-Scholes.
The
estimated fair value of the Private Placement Warrants and the Public Warrants is determined using Level 3 inputs. Inherent in a Binomial
Lattice model and Black-Scholes 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 as their measurement dates:
|
|
As of December 22, 2020
|
|
|
As of December 31, 2020
|
|
Volatility
|
|
|
19.5
|
%
|
|
|
21.0
|
%
|
Stock price
|
|
$
|
9.50
|
|
|
$
|
9.75
|
|
Expected life of the options to convert
|
|
|
5.33
|
|
|
|
5.33
|
|
Risk-free rate
|
|
|
0.55
|
%
|
|
|
0.53
|
%
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
The
change in the fair value of the derivative warrant liabilities for the period from September 23, 2020 (inception) through December 31,
2020 is summarized as follows:
Derivative warrant liabilities at September 23, 2020 (inception)
|
|
$
|
-
|
|
Issuance of Public and Private Warrants
|
|
|
18,525,000
|
|
Change in fair value of derivative warrant liabilities
|
|
|
3,890,255
|
|
Derivative warrant liabilities at December 31, 2020
|
|
$
|
22,415,255
|
|
Note 11—Income Taxes
The Company’s general and administrative costs are generally
considered start-up costs and are not currently deductible.
The income tax provision (benefit) consists of the following:
|
|
Period from
September 23, 2020
|
|
|
|
(inception) through
December 31, 2020
|
|
Current
|
|
|
|
|
Federal
|
|
$
|
-
|
|
State
|
|
|
-
|
|
Deferred
|
|
|
|
|
Federal
|
|
|
(33,474
|
)
|
State
|
|
|
-
|
|
Valuation allowance
|
|
|
33,474
|
|
Income tax (benefit) provision
|
|
$
|
-
|
|
The Company’s net deferred tax assets are as follows:
|
|
December 31, 2020
|
|
Deferred tax assets:
|
|
|
|
|
Net-operating loss carryforward
|
|
$
|
15,716
|
|
Start-up/Organization costs
|
|
|
17,758
|
|
Total deferred tax assets
|
|
|
33,474
|
|
Valuation allowance
|
|
|
(33,474
|
)
|
Deferred tax asset, net of allowance
|
|
$
|
-
|
|
In assessing the realization of deferred tax assets,
management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary
differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax
assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information
available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has
therefore established a full valuation allowance.
There were no unrecognized tax benefits as of
December 31, 2020. No amounts were accrued for the payment of interest and penalties at 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.
A reconciliation of the statutory federal income tax rate (benefit)
to the Company’s effective tax rate (benefit) is as follows:
|
|
December 31, 2020
|
|
Statutory federal income tax rate
|
|
|
21.0
|
%
|
Change in fair value of derivative warrant liabilities
|
|
|
(19.4
|
)%
|
Financing costs – derivative warrant liabilities
|
|
|
(0.8
|
)%
|
Change in valuation allowance
|
|
|
(0.8
|
)%
|
Income tax provision expense
|
|
|
0.0
|
%
|
Note 12—Subsequent Events
Management has evaluated subsequent events to
determine if events or transactions occurring through June 3, 2021, the date the financial statements were issued required potential
adjustment to or disclosure in the financial statements and has concluded that all such events that would require recognition or disclosure
have been recognized or disclosed.
Exhibit
|
|
Description
|
3.1
|
|
Amended
and Restated Certificate of Incorporation (Incorporated by reference to the corresponding exhibit to the Company’s Current
Report on Form 8-K (File No. 001-39817), filed with the SEC on December 23, 2020).
|
|
|
|
3.2
|
|
Bylaws
(Incorporated by reference to Exhibit 3.3 to Amendment No. 1 to the Company’s Registration Statement on Form S-l
(File No. 333-251062), filed with the SEC on December 11, 2020).
|
|
|
|
4.1
|
|
Specimen
Unit Certificate (Incorporated by reference to the corresponding exhibit to Amendment No. 1 to the Company’s Registration
Statement on Form S-l (File No. 333-251062), filed with the SEC on December 11, 2020).
|
|
|
|
4.2
|
|
Specimen
Class A common stock Certificate (Incorporated by reference to the corresponding exhibit to Amendment No. 1 to the Company’s
Registration Statement on Form S-l (File No. 333-251062), filed with the SEC on December 11, 2020).
|
|
|
|
4.3
|
|
Specimen
Warrant Certificate (Incorporated by reference to the corresponding exhibit to Amendment No. 1 to the Company’s Registration
Statement on Form S-l (File No. 333-251062), filed with the SEC on December 11, 2020).
|
|
|
|
4.4
|
|
Warrant
Agreement between the Company and Continental Stock Transfer & Trust Company, dated as of December 17, 2020 (Incorporated
by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-39817), filed
with the SEC on December 23, 2020).
|
|
|
|
4.5(1)
|
|
Description
of Securities
|
|
|
|
10.1
|
|
Letter
Agreement, dated December 17, 2020, by and among the Company, Seven Oaks Sponsor LLC, Jones & Associates, Inc.
and each of the initial stockholders of the Company (Incorporated by reference to the corresponding exhibit to the Company’s
Current Report on Form 8-K (File No. 001-39817), filed with the SEC on December 23, 2020).
|
|
|
|
10.2
|
|
Investment
Management Trust Agreement, dated December 17, 2020, by and between the Company and Continental Stock Transfer & Trust
Company, as trustee. (Incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K
(File No. 001-39817), filed with the SEC on December 23, 2020).
|
|
|
|
10.3
|
|
Registration
Rights Agreement, dated December 17, 2020, by and among the Company, Seven Oaks Sponsor LLC and the other holders party thereto
(Incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-39817),
filed with the SEC on December 23, 2020).
|
|
|
|
10.4
|
|
Private
Placement Warrants Purchase Agreement, dated December 17, 2020, by and among the Company and Seven Oaks Sponsor LLC (Incorporated
by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-39817), filed
with the SEC on December 23, 2020).
|
|
|
|
31.1
|
|
Certification
of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification
of Principal Financial and Accounting Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification
of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
|
|
|
|
32.2
|
|
Certification
of Principal Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
(1) Incorporated by reference to the Initial 10-K filed on March 31,
2021.