UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(
For the fiscal year ended
For the transition period from to
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of |
| (Commission File Number) |
| (I.R.S. Employer |
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(Address of principal executive offices) |
| (Zip Code) |
Registrant’s telephone number, including area code: (
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class: |
| Trading Symbol: |
| Name of Each Exchange on Which Registered: |
SAILSM (Stakeholder Aligned Initial Listing) securities, each consisting of one share of | The | |||
The | ||||
Warrants included as part of the SAILSM securities, each whole warrant exercisable for one share of | The |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ |
| Accelerated filer | ☐ |
☒ |
| Smaller reporting company | ||
Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
As of June 30, 2020, the last business day of the registrant’s most recently completed second fiscal quarter, the registrant’s securities were not publicly traded. The registrant’s units began trading on the Nasdaq Stock Market LLC (“Nasdaq”) on November 13, 2020 and the registrant’s Class A common stock, par value $0.0001 (the “Class A common stock”) and warrants began separate trading on the Nasdaq on January 4, 2021. The aggregate market value of the common stock outstanding, other than shares held by persons who may be deemed affiliates of the registrant, computed by reference to the closing sales price for the common stock on December 31, 2020, as reported on the Nasdaq, was $
As of March 1, 2021,
Documents Incorporated by Reference: None.
EXPLANATORY NOTE
References throughout this Amendment No. 3 to the Annual Report on Form 10-K/A to “we,” “us,” the “Company” or “our company” are to Health Assurance Acquisition Corp., unless the context otherwise indicates.
The Company is filing this Amendment No. 3 (this “Amendment”) to amend the Amendment No. 2 (the “Amendment No. 2”) to the Annual Report on Form 10-K of Health Assurance Acquisition Corp. for the year ended December 31, 2020, filed with the U.S. Securities and Exchange Commission (the “SEC”) on January 6, 2022, solely to include the date of the audit opinion filed therewith, which was inadvertently omitted from the Amendment No. 2. This Amendment contains only the cover page to this Amendment, this Explanatory Note, Part II, Item 8. Financial Statements and Supplementary Data, Part IV, Item 15. Exhibits and Financial Statement Schedules, the Signature Page, and the audited financial statements of the Company, which have been unchanged except to provide the date of January 6, 2022, to the audit opinion.
This Amendment continues to describe the conditions as of the date of the Amendment No. 2, and except as expressly contained herein, the Company has not updated, modified or supplemented the disclosures contained in the Amendment No. 2. Accordingly, this Amendment should be read in conjunction with the Amendment No. 2 and with the Company’s other filings with the SEC.
As required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by our principal executive officer and principal financial officer are being filed as exhibits to this Amendment. Except as expressly set forth in this Amendment, the Form 10-K, as amended, has not been amended, updated or otherwise modified.
i
Item 8. Financial Statements and Supplementary Data.
Reference is made to Pages F-1 through F-22 comprising a portion of this Annual Report on Form 10-K/A.
1
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) | The following documents are filed as part of this Annual Report: | |
(1) | Financial Statements | |
(2) | Exhibits |
2
We hereby file as part of this Annual Report the exhibits listed in the attached Exhibit Index.
Exhibit No. |
| Description |
1.1 | Underwriting Agreement between the Company and Morgan Stanley Co. LLC(1) | |
3.1 | ||
3.2 | ||
4.1 | Warrant Agreement between Continental Stock Transfer & Trust Company and the Company(1) | |
10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
10.5 | Administrative Services Agreement between the Company and the Sponsor(1) | |
14.1 | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
* | Filed herewith |
** | Furnished herewith |
(1) | Incorporated by reference to the registrant’s Current Report on Form 8-K, filed with the SEC on November 17, 2020. |
(2) | Incorporated by reference to the registrant’s Annual Report on Form 10-K, filed with the SEC on March 4, 2021. |
3
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this Annual Report on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly authorized.
January 12, 2022
HEALTH ASSURANCE ACQUISITION CORP. | ||
/s/ Hemant Taneja | ||
Name: | Hemant Taneja | |
Title: | Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K/A has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name |
| Position |
| Date |
/s/ Hemant Taneja | Chief Executive Officer | January 12, 2022 | ||
Hemant Taneja | (Principal Executive Officer) | |||
/s/ Michelle Brown | Chief Financial Officer | January 12, 2022 | ||
Michelle Brown | (Principal Financial and Accounting Officer) | |||
/s/ Quentin Clark | Director | January 12, 2022 | ||
Quentin Clark | ||||
/s/ Stephen K. Klasko, MD, MBA | Director | January 12, 2022 | ||
Stephen K. Klasko, MD, MBA | ||||
/s/ Anita V. Pramoda | Director | January 12, 2022 | ||
Anita V. Pramoda | ||||
/s/ Jennifer Schneider, MD | Director | January 12, 2022 | ||
Jennifer Schneider, MD | ||||
/s/ Glenn Tullman | Director | January 12, 2022 | ||
Glenn Tullman |
5
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of
Health Assurance Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Health Assurance Acquisition Corp. (the “Company”) as of December 31, 2020, the related statements of operations, changes in stockholders’ equity and cash flows for the period from September 8, 2020 (inception) through December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the period from September 8, 2020 (inception) through December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Restatement of Financial Statements
As discussed in Note 2 to the financial statements, the 2020 financial statements have been restated to correct certain misstatements.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, if the Company is unable complete a business combination by November 17, 2022 then the Company will cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ WithumSmith+Brown, PC
We have served as the Company's auditor since 2020.
New York, New York
May 26, 2021, except for the effects of the restatement disclosed in Note 2 and Note 8, as to which the date is January 6, 2022.
F-2
HEALTH ASSURANCE ACQUISITION CORP.
BALANCE SHEET
(As Restated - See Note 2)
December 31, 2020
Assets: |
|
| |
Current assets: |
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| |
Cash | $ | | |
Prepaid expenses | | ||
Total current assets |
| | |
Investments held in Trust Account |
| | |
Total Assets | $ | | |
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit: |
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| |
Current liabilities: |
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| |
Accounts payable | $ | | |
Accrued expenses |
| | |
Franchise tax payable |
| | |
Income tax payable | | ||
Total current liabilities |
| | |
Deferred underwriting commissions in connection with the initial public offering | | ||
Derivative warrant liabilities | | ||
Total liabilities |
| | |
Commitments and Contingencies |
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| |
Class A common stock, $ | | ||
Stockholders’ Deficit: |
|
| |
Preferred stock, $ |
| ||
Class A common stock, $ |
| — | |
Class B common stock, $ |
| | |
Additional paid-in capital |
| — | |
Accumulated deficit |
| ( | |
Total stockholders’ deficit |
| ( | |
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit | $ | |
The accompanying notes are an integral part of these financial statements.
F-3
HEALTH ASSURANCE ACQUISITION CORP.
STATEMENT OF OPERATIONS
As Restated - See Note 2
For The Period From September 8, 2020 (inception) through December 31, 2020
General and administrative expenses |
| $ | |
General and administrative expenses - related party | | ||
Franchise tax expense | | ||
Loss from operations | ( | ||
Loss on issuance of Private Placement Warrants | ( | ||
Change in fair value of derivative warrant liabilities | ( | ||
Financing cost - derivative warrant liabilities | ( | ||
Gain on investments held in Trust Account | | ||
Loss before income tax expense | ( | ||
Income tax expense | | ||
Net loss | $ | ( | |
Weighted average shares outstanding of Class A common stock |
| | |
Basic and diluted net loss per share, Class A common stock | $ | ( | |
Weighted average shares outstanding of Class B common stock | | ||
Basic and diluted net loss per share, Class B common stock | $ | ( |
The accompanying notes are an integral part of these financial statements.
F-4
HEALTH ASSURANCE ACQUISITION CORP.
STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
As Restated - See Note 2
For the Period From September 8, 2020 (inception) through December 31, 2020
Common Stock | Total | ||||||||||||||||||
Class A | Class B | Additional Paid-In | Accumulated | Stockholders’ | |||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | ||||||
Balance - September 8, 2020 (inception) |
| | $ | |
| | $ | | $ | | $ | | $ | | |||||
Issuance of Class B common stock to Initial Stockholders | — | — | | | | — | | ||||||||||||
Forfeiture of Class B common stock | — | — | ( | ( | | — | — | ||||||||||||
Accretion of Class A common stock to redemption value | — | — | — | — | ( | ( | ( | ||||||||||||
Net loss |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance - December 31, 2020 |
| — | $ | — |
| | $ | | $ | — | $ | ( | $ | ( |
The accompanying notes are an integral part of these financial statements.
F-3
HEALTH ASSURANCE ACQUISITION CORP.
STATEMENT OF CASH FLOWS
For the Period From September 8, 2020 (inception) through December 31, 2020
As Restated - See Note 2
Cash Flows from Operating Activities: |
|
| |
Net loss | $ | ( | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Loss on issuance of Private Placement Warrants | | ||
Financing cost - derivative warrant liabilities | | ||
Change in fair value of derivative warrant liabilities | | ||
Unrealized gain on investments held in Trust Account | ( | ||
Changes in operating assets and liabilities: |
| ||
Prepaid expenses | ( | ||
Franchise tax payable | | ||
Income tax payable | | ||
Accrued expenses |
| | |
Accounts payable |
| | |
Net cash used in operating activities |
| ( | |
Cash Flows from Investing Activities: | |||
Cash deposited in Trust Account | ( | ||
Net cash used in investing activities | ( | ||
Cash Flows from Financing Activities: |
|
| |
Proceeds from issuance of Class B common stock to Initial Stockholders | | ||
Proceeds received from initial public offering | | ||
Payment of offering costs | ( | ||
Proceeds received from private placement |
| | |
Net cash provided by financing activities |
| | |
Net change in cash |
| | |
Cash - beginning of the period |
| — | |
Cash - end of the period | $ | | |
Supplemental disclosure of noncash financing activities: |
|
| |
Forfeiture of Class B common stock | $ | | |
Offering costs included in accrued expenses | $ | | |
Offering costs charged to additional paid-in capital in connection with the initial public offering | $ | | |
Deferred underwriting commissions charged to additional paid-in capital in connection with the initial public offering | $ | |
The accompanying notes are an integral part of these financial statements.
F-4
Note 1—Description of Organization, Business Operations and Basis of Presentation
Health Assurance Acquisition Corp. (the “Company”) was incorporated as a Delaware corporation on September 8, 2020. On October 23, 2020, the Company effected a name change to Health Assurance Acquisition Corp. from Healthcare Assurance Acquisition Corp. The Company’s initial stockholders were: HAAC Sponsor, LLC (the “Sponsor”), a wholly-owned subsidiary of General Catalyst Group X—Early Venture, L.P., a Delaware limited partnership, Health Assurance Economy Foundation, a charitable foundation (“Foundation”), and any other holders of Alignment Shares (as described in Note 8) immediately prior to the offering; collectively, “Initial Stockholders.”
The Company was formed for the purpose of effectuating a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (herein referred to as “Initial Business Combination”). The Company has not selected any business combination target and it has not, nor has anyone on the Company’s behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. The Company will not be limited to a particular industry or geographic region in its identification and acquisition of a target company. The Company has neither engaged in any operations nor generated revenue to date. The Company has selected December 31 as its fiscal year end.
The Company’s management has broad discretion with respect to the specific application of the net proceeds from its initial public offering (the “Initial Public Offering”) of its securities called Stakeholder Aligned Initial Listing Securities, or SAILSM Securities (“SAILSM Securities”), although substantially all of the net proceeds of the Initial Public Offering are intended to be generally applied toward completing an Initial Business Combination. Furthermore, there is no assurance that the Company will be able to complete an Initial Business Combination.
The registration statement for the Company’s Initial Public Offering was declared effective on November 12, 2020. On November 17, 2020, the Company consummated the Initial Public Offering of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of
Upon the closing of the Initial Public Offering and the Private Placement, $
Pursuant to stock exchange listing rules, the Company must complete an Initial Business Combination with one or more target businesses having an aggregate fair market value of at least
F-5
The Company’s certificate of incorporation provides that, other than the withdrawal of interest earned on the funds that may be released to the Company to pay taxes, none of the funds held in Trust Account will be released until the earlier of: (i) the completion of the an Initial Business Combination; (ii) the redemption of any of the common stock included in the SAILSM Securities being sold in the Initial Public Offering (the “Public Shares”) to its holders (the “Public Stockholders”) properly tendered in connection with a stockholder vote to amend certain provisions of the Company’s certificate of incorporation prior to an Initial Business Combination or (iii) the redemption of
The Company, after signing a definitive agreement for an Initial Business Combination, will either (i) seek stockholder approval of the Initial Business Combination at a meeting called for such purpose in connection with which Public Stockholders may seek to redeem their Public shares, regardless of whether they vote for or against the Initial Business Combination or do not vote at all, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the Initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes, or (ii) provide the Public Stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of the Company’s Initial Business Combination at $
Notwithstanding the foregoing, the Company’s Amended and Restated Certificate 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
The Company will only have
The Initial Stockholders, officers and directors have entered into a letter agreement with the Company, pursuant to which they have agreed to (i) waive their redemption rights with respect to any Alignment Shares (as defined in Note 5) and Public Shares they hold in connection with the completion of the Initial Business Combination, (ii) waive their redemption rights with respect to any Alignment Shares and Public Shares they hold in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation to modify the substance or timing of the Company’s obligation to redeem
F-6
from the Trust Account with respect to any Public Shares they hold if the Company fails to complete an Initial Business Combination within the Business Combination Period).
Basis of Presentation
The accompanying balance sheet is presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission.
As described in Note 2—Restatement of Previously Issued Financial Statements, the Company’s financial statements for the period from September 8, 2020 (inception) through December 31, 2020 (the “Affected Period”), is 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 and earnings per share 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company 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.
Liquidity and Going Concern
As of December 31, 2020, the Company had approximately $
Prior to December 31, 2020, the Company’s liquidity needs were satisfied through a payment of $
In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC 205-40, Presentation of Financial Statements - Going Concern,” management has determined that the mandatory liquidation and subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts
F-7
of assets or liabilities should the Company be required to liquidate after November 17, 2022. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
Note 2 —Restatement Of Previously Issued Financial Statements
The Company concluded it should restate its previously issued financial statements by amending Amendment No. 1 to its Annual Report on Form 10-K/A, filed with the SEC on May 26, 2021, to classify all Class A common stock subject to possible redemption in temporary equity and restate earnings per share. 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 $
The Company’s previously filed financial statements that contained the error were initially reported in the Company’s Form 8-K filed with the SEC on November 17, 2020 (the “Post-IPO Balance Sheet”), and the Company's Annual Report on 10-K for the annual period ended December 31, 2020, which were previously restated in the Company's Amendment No. 1 to its Form 10-K as filed with the SEC on May 26, 2021, as well as the Form 10-Qs for the quarterly periods ended March 31, 2021 and June 30, 2021 (the “Affected Periods”). 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 in the Company’s Form 10-Q/A for the quarterly period ended September 30, 2021.
The change in the carrying value of the redeemable shares of Class A common stock in the Post-IPO Balance Sheet resulted in a decrease of approximately $
As of November 17, 2020: |
| As Previously Reported |
| Adjustment |
| As Restated | |||
Total assets | $ | | $ | — | $ | | |||
Total liabilities |
| | $ | — | $ | | |||
Class A common stock subject to possible redemption | | | | ||||||
Preferred stock | — |
| — |
| — | ||||
Class A common stock | |
| ( | — | |||||
Class B common stock |
| |
| — |
| | |||
Additional paid-in-captial | | ( | — | ||||||
Accumulated deficit | ( | ( | ( | ||||||
Total stockholders’ equity (deficit) | $ | | $ | ( | $ | ( | |||
Total Liabilities, Class A Common Stock Subject to Redemption and Stockholders’ Equity (Deficit) | $ | | $ | — | $ | | |||
Shares of Class A common stock subject to redemption | | | | ||||||
Shares of Class A common stock | | ( | — |
F-8
The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported balance sheet as of December 31, 2020:
As of December 31, 2020 |
| As Previously Reported |
| Adjustment |
| As Restated | |||
Total assets | $ | | $ | — | $ | | |||
Total liabilities | $ | | $ | — | $ | | |||
Class A common stock subject to possible redemption |
| |
| |
| | |||
Preferred stock |
| — |
| — |
| — | |||
Class A common stock |
| |
| ( |
| — | |||
Class B common stock |
| |
| — |
| | |||
Additional paid-in-capital |
| |
| ( |
| — | |||
Accumulated deficit |
| ( |
| ( |
| ( | |||
Total stockholders’ equity (deficit) | $ | | $ | ( | $ | ( | |||
Total Liabilities, Class A Common Stock Subject to Redemption and Stockholders’ Equity (Deficit) | $ | | $ | — | $ | | |||
Shares of Class A common stock subject to redemption |
| |
| |
| | |||
Shares of Class A common stock |
| |
| ( |
| — |
The Company’s statement of stockholders’ equity has been restated to reflect the changes to the impacted stockholders’ equity accounts described above.
The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported statement of cash flows for the period from September 8, 2020 (inception) through December 31, 2020:
For the Period from September 8, 2020 (inception) through December 31, 2020 | |||||||||
| As Previously Reported |
| Adjustment |
| As Restated | ||||
Supplemental Disclosure of Noncash Financing Activities: | |||||||||
Initial value of Class A common stock subject to possible redemption | $ | | $ | ( | $ | — | |||
Change in value of Class A common stock subject to possible redemption | $ | ( | $ | | $ | — |
There restatement had no impact on the Company’s reported net loss. The table below presents the effect of the adjustments to the reported amounts of weighted average shares outstanding and basic and diluted earnings per share on the Company’s previously reported statement of operations for the period from September 8, 2020 (inception) through December 31, 2020:
Earnings Per Share | |||||||||
As Previously Reported | Adjustment | As Restated | |||||||
For the Period from September 8, 2020 (inception) through December 31, 2020 (restated) |
|
|
|
|
|
| |||
Net loss | $ | ( | $ | — | $ | ( | |||
Weighted average shares outstanding - Class A common stock |
| |
| ( |
| | |||
Basic and diluted earnings per share - Class A common stock | $ | — | $ | ( | $ | ( | |||
Weighted average shares outstanding- Class B common stock |
| |
| — |
| | |||
Basic and diluted earnings per share - Class B common stock | $ | ( | $ | | $ | ( |
F-9
Subsequent to our previously issued Annual Report on Form 10-K/A for the annual period ended December 31, 2020, as filed with the SEC on May 26, 2021, in connection with the Company’s assessment of going concern considerations in accordance with FASB ASC 205-40, Presentation of Financial Statements - Going Concern” management has determined that if the Company is unable to complete a Business Combination by November 17, 2022, then the Company will cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution as well as the Company’s working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern.
Note 3—Summary of Significant Accounting Policies
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue 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. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liability. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates. 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 does not have any cash equivalents as of December 31, 2020.
Investments Held in Trust Account
The Company’s portfolio of investments is comprised solely of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities, or a combination thereof. 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.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $
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.
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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.
As of December 31, 2020, the carrying values of cash, prepaid expenses, accounts payable, accrued expenses, franchise tax payable and income taxes 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.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of the IPO,
Under ASC 480-10-S99, the Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Immediately upon the closing of the IPO, the Company recognized the accretion from initial book value to redemption amount. The change in the carrying value of Class A common stock subject to possible redemption resulted in charges against additional paid-in capital and accumulated deficit.
Offering Costs Associated with the Initial Public Offering
The Company complies with the requirements of the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees and other costs. 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 Class A common stock were charged against the carrying value of the shares of Class A common stock upon the completion of the Initial Public Offering. Of the total offering costs of the Initial Public Offering, approximately $
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Income Taxes
The Company complies with the accounting and reporting requirements of FASB ASC 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
There were
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 common share is calculated by dividing the net income (loss) by the weighted average shares of common stock outstanding for the respective period.
The calculation of diluted net income (loss) per common stock does not consider the effect of the warrants issued in connection with the IPO and the Private Placement to purchase an aggregate of
The following table reflects presents a reconciliation of the numerator and denominator used to compute basic and diluted net loss per share for each class of common stock:
For the Period From September 8,2020 | ||||||
(inception) Through December 31,2020 | ||||||
Class A | Class B | |||||
Basic and diluted net income per common stock: |
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Numerator: |
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Allocation of net loss | $ | ( | $ | ( | ||
Denominator: |
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Basic and diluted weighted average common stock outstanding |
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Basic and diluted net loss per common stock | $ | ( | $ | ( |
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge its exposures to cash flow, market or foreign currency risks. Management evaluates all of the Company’s financial instruments, including issued warrants to purchase its Class A common stock, 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.
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The Company issued
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s balance sheet.
Note 4—Initial Public Offering
Public SAILSM Securities
On November 17, 2020, the Company consummated its Initial Public Offering of
Each SAILSM Security consists of
Note 5—Related Party Transactions
Alignment Shares
On September 24, 2020, an affiliate of the Sponsor paid $
The Initial Stockholders, directors and executive officers have agreed not to transfer, assign or sell any of their Alignment Shares and any of their shares of Class A common stock deliverable upon conversion of the Alignment Shares for
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transfer, assign or sell any of their Private Placement Warrants and any shares of Class A common stock issued upon conversion or exercise thereof until
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, the Private Placement Warrants Purchasers purchased an aggregate of
Each whole Private Placement Warrant is exercisable for
The Initial Stockholders, officers and directors have also agreed not to transfer, assign or sell any of their Private Placement Warrants and any shares of Class A common stock issued upon conversion or exercise thereof until
Related Party Loans
On September 24, 2020, the Sponsor agreed to loan the Company up to an aggregate of $
Working Capital Loans
In order to finance transaction costs in connection with an intended Initial Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”). Up to $
Administrative Services and Director Compensation
Commencing on the date that the Company’s securities were first listed on Nasdaq through the earlier of consummation of the Initial Business Combination and the Company’s liquidation, the Company has agreed to pay the Sponsor for office space, secretarial and administrative support provided to members of the Company’s management team of $
In addition, each independent director will receive quarterly cash compensation of $
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are included in general and administrative expenses – related party on the accompanying statement of operations and accrued expenses on the accompanying balance sheet as of December 31, 2020.
In addition, the Sponsor, executive officers and directors, or any of their respective affiliates are 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 Company’s audit committee will review on a quarterly basis all payments that were made to the Sponsor, executive officers or directors, or their affiliates.
Note 6—Commitments and Contingencies
Registration Rights
The holders of the Alignment Shares, Private Placement Warrants, and Private Placement Warrants that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock into which such securities may convert and that may be issued upon conversion of Working Capital Loans and upon conversion of the Alignment Shares) are entitled to registration rights pursuant to a registration rights agreement. The initial stockholders and holders of the Private Placement Warrants will be entitled to make up to
Underwriting Agreement
The Company granted the underwriters a
The underwriters were entitled to an underwriting discount of $
In connection with the consummation of the sale of SAILSM Securities pursuant to the over-allotment option exercised on November 17, 2020, the underwriters were entitled to an aggregate of approximately $
Risks and uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have an 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 7—Derivative Warrant Liabilities
As of December 31, 2020, the Company
No fractional Public Warrants will be issued upon separation of the SAILSM Securities and only whole Public Warrants will trade. Each whole Public Warrant entitles the registered holder to purchase
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a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis under the circumstances specified in the warrant agreement) and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. The Company has agreed that as soon as practicable, but in no event later than twenty (
The Public Warrants will expire
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
The Company may also redeem the Public Warrants, in whole and not in part, at a price of $
● | if, and only if, the last sales price of shares of the Class A common stock equals or exceeds $ |
● | if, and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying such warrants commencing five business days prior to the |
In addition, when the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants (except with respect to the Private Placement Warrants) in whole and not in part, for the number of shares of Class A common stock determined by reference to the table set forth in the Company’s prospectus relating to the Proposed Offering based on the redemption date and the “fair
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market value” of the shares of Class A common stock, upon a minimum of
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.
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 Business 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.
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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
The Class A common stock subject to possible redemption reflected on the balance sheet is reconciled on the following table:
Gross Proceeds |
| $ | |
Less: |
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Proceeds allocated to Public Warrants |
| ( | |
Class A common stock issuance costs |
| ( | |
Plus: |
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Accretion of carrying value to redemption value |
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Class A common stock subject to possible redemption | $ | |
Note 9—Stockholders’ Deficit
Class A Common Stock — The Company is authorized to issue
Class B Common Stock — The Company is authorized to issue
On the last day of each measurement period (as defined below), which will occur annually over ten fiscal years following consummation of an Initial Business Combination (and, with respect to any measurement period in which there is a change of control or in which the Company liquidates, dissolves or winds up, on the business day immediately prior to such event instead of on the last day of such measurement period),
● | if the sum (such sum, the “Total Return”) of (i) the volume weighted average price of the shares of Class A common stock of the last fiscal quarter of the applicable measurement period, as further described in the Company’s registration statement for its Initial Public Offering (the “VWAP”), of shares of the Company’s Class A common stock for such final fiscal quarter in such measurement period and (ii) the amount per share of any dividends or distributions paid or payable to holders of the Company’s Class A common stock on the record date for which is on or prior to the last day of the measurement period does not exceed the Price Threshold (as defined below), the number of conversion shares for such measurement period will be |
● | if the Total Return exceeds the Price Threshold but does not exceed an amount equal to |
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Common Stock or securities (other than the Public Warrants and the Private Placement Warrants) issued by the Company and/or any entities that (after giving effect to completion of the Initial Business Combination) are subsidiaries of the Company that are directly or indirectly convertible into or exercisable for shares of Class A common stock, or for a cash settlement value in lieu thereof (“PIPE Securities”), the number of shares of Class A common stock so issued, and the maximum number of shares of Class A common stock issuable (whether settled in shares or in cash) upon conversion or exercise of any such PIPE Securities, divided by (B) the Total Return; and |
● | if the Total Return exceeds an amount equal to |
● | The term “measurement period” means (i) the period of four fiscal quarters ending with, and including, the last fiscal quarter of the fiscal year in which the Company consummates its Initial Business Combination and (ii) each of the nine successive four-fiscal-quarter periods. |
● | The “Price Threshold” will initially equal $ |
● | The foregoing calculations will be based on the Company’s fiscal year and fiscal quarters, which may change as a result of an Initial Business Combination. Each conversion of Alignment Shares will apply to the holders of Alignment Shares on a pro rata basis. If, upon conversion of any Alignment Shares, a holder would be entitled to receive a fractional interest in a share, the Company will round down to the nearest whole number of the number of shares of Class A common stock to be issued to such holder. |
The conversion shares will be deliverable no later than the tenth day following the last day of each applicable measurement period. The conversion shares will be delivered no later than 10:00 a.m., New York City time, on the date of issuance. The Company is required to publicly announce the number of conversion shares to be issued no less than two business days prior to issuance.
For so long as any Alignment Shares remain outstanding, the Company may not, without the prior or written consent of the holders of a majority of the Alignment Shares then outstanding, take certain actions such as to (i) amend, alter or repeal any provision of the Company’s amended and restated certificate of incorporation, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Company’s shares of Class B common stock, (ii) change the Company’s fiscal year, (iii) increase the number of directors on the Board, (iv) pay any dividends or effect any split on any of the Company’s capital stock or make any distributions of cash, securities or any other property, (v) adopt any stockholder rights plan, (vi) acquire any entity or business with assets at a purchase price greater than
Preferred Stock — The Company is authorized to issue
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Note 10—Fair Value Measurements
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2020 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
| Quoted Prices |
| Significant Other |
| Significant Other | ||||
in Active Markets | Observable Inputs | Unobservable Inputs | |||||||
Description | (Level 1) | (Level 2) | (Level 3) | ||||||
Assets: |
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U.S. Treasury Securities maturing May 20, 2021 | $ | | $ | — | $ | — | |||
Liabilities: | |||||||||
Derivative warrant liabilities - public | $ | — | $ | — | $ | | |||
Derivative warrant liabilities - private | $ | — | $ | — | $ | | |||
$ | | $ | — | $ | |
Level 1 instruments include investments in mutual funds invested in government securities.
Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. There were
The fair value of Public Warrants was calculated using an option pricing model. The inputs utilized to calculate the value of an option pricing model are (i) the value of the underlying asset, (ii) the exercise price, (iii) the risk-free rate, (iv) the volatility of the underlying asset, (v) the dividend yield of the underlying asset, and (vi) the assumed time to a liquidity event. The fair value of Private Warrants was calculated using the Black-Scholes Option Pricing Model. For the period from September 8, 2020 (inception) until December 31, 2020, the Company recognized a charge to the statement of operations resulting from an increase in the fair value of liabilities of approximately $
The estimated fair values of the Private Placement Warrants, and the Public Warrants are determined using Level 3 inputs. Inherent in the Black-Scholes Option Pricing Model and the Option Pricing Method are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its Class A common stock warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer company’s Class A common stock that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement:
| As of November 17, 2020 |
| As of December 31, 2020 |
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Volatility |
| | % | | % | ||
Stock price | $ | | $ | | |||
Expected life of the options to convert |
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Risk-free rate |
| | % |
| | % | |
Dividend yield |
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The change in the fair value of the derivative warrant liabilities measured with Level 3 inputs for the period from September 8, 2020 (inception) through December 31, 2020 is summarized as follows:
Derivative warrant liabilities at September 18, 2020 (inception) |
| $ | — |
Issuance of Public and Private Warrants |
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Change in fair value of derivative warrant liabilities |
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Derivative warrant liabilities at December 31, 2020 | $ | |
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:
| December 31, 2020 | ||
Current |
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Federal | $ | | |
State |
| — | |
Deferred |
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Federal |
| ( | |
State |
| — | |
Valuation allowance |
| ( | |
Income tax provision | $ | |
The Company’s net deferred tax assets are as follows:
| December 31, 2020 | ||
Deferred tax assets: |
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Start-up/Organization costs | $ | | |
Total deferred tax assets |
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Valuation allowance |
| ( | |
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. For the period from September 8, 2020 (date of inception) to December 31, 2020, the valuation allowance was approximately
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 |
| | % |
Change in fair value of derivative warrant liabilities |
| ( | % |
Financing costs - derivative warrant liabilities | ( | % | |
Loss on issuance of Private Placement Warrants | ( | % | |
Change in valuation allowance |
| ( | % |
Effective Tax Rate |
| | % |
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Note 12—Subsequent Events
Management has evaluated subsequent events to determine if events or transactions occurring through May 26, 2021, the date the financial statements were issued, require 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.
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