UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
(Mark One)
For the quarterly period ended
OR
For the transition period from ___________to ___________
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| (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(s) | Name of each exchange on which registered | ||
| Units, each consisting of one share of Class A Common Stock, $0.0001 par value per share, and one-third of one redeemable warrant | MBAC.U | The New York Stock Exchange | ||
| Warrants included as part of the units, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 | MBAC.WS | The New York Stock Exchange |
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 such files).
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 the definitions 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 |
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
As of August 19, 2021,
Explanatory Note
M3-Brigade Acquisition Corp. II (the “Company,” “we”, “our” or “us”) is filing this Amendment No. 1 to the Current Report on Form 10-Q, originally filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 20, 2021 (the “Original Filing”).
Management has determined that the over-allotment option granted to the underwriters is considered to be a freestanding financial instrument and meets the definition of a liability under ASC 480, “Distinguishing Liabilities from Equity” (ASC 480) and ASC 815, “Derivatives and Hedging “ (ASC 815). The determination was based on the understanding that the over-allotment option may be exercised subsequent to the transfer of the securities from the underwriters to the investors and that the option should be detached from the initial securities before it is exercised. The over-allotment option liability is measured at fair value at inception and subsequently until it is exercised or expires, with changes in fair value presented in the statement of operations. On April 17, 2021, the underwriters forfeited the option to purchase up to an additional 6,000,000 units when it expired without being exercised. The over-allotment liability was extinguished upon the forfeiture of the unexercised option. In addition, Management has determined that approximately $1.5 million in professional fees relating to the now-terminated merger agreement with Syniverse Corporation was not properly reflected as accrued expenses in the Original Filing. The liability associated with such professional fees was extinguished without payment upon termination of such merger agreement on February 9, 2021.
Except as described above, this Amendment does not amend, update, or change any other items or disclosures in the Original Filing and does not purport to reflect any information or events subsequent to the filing thereof. As such, this Amendment speaks only as of the date the Original Filing was filed, and we have not undertaken herein to amend, supplement or update any information contained in the Original Filing to give effect to any subsequent events. Accordingly, this Amendment should be read in conjunction with the Original Filing and our filings made with the SEC subsequent to the filing of the Original Filing, including any amendment to those filings.
M3-Brigade Acquisition II Corp.
Quarterly Report on Form 10-Q/A
Table of Contents
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
M3-Brigade Acquisition II Corp.
CONDENSED BALANCE SHEETS
June 30, (Unaudited) (Restated) | December 31, 2020 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Cash and marketable securities held in Trust Account | ||||||||
| Deferred offering costs | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | |||||||
| Taxes payable | ||||||||
| Total current liabilities | ||||||||
| Warrant liability | ||||||||
| Deferred underwriters’ discount | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (See Note 7) | ||||||||
| Class A Common Stock subject to possible redemption, $ | ||||||||
| Stockholders’ Equity (Deficit): | ||||||||
| Preferred stock, $ | ||||||||
| Class B common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ( | ) | ||||||
| Total stockholders’ equity (deficit) | ( | ) | ||||||
| Total Liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
| (1) |
See accompanying notes to unaudited condensed financial statements.
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M3-Brigade Acquisition II Corp.
CONDENSED STATEMENTS OF OPERATIONS
Six months (Unaudited) (Restated) | Three months (Unaudited) (Restated) | |||||||
| Formation and operating costs | $ | |||||||
| Merger related costs | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income/(expense) | ||||||||
| Change in fair value of derivative liability | ||||||||
| Excess fair value of private placement warrants over consideration paid | ( | ) | ||||||
| Change in fair value of overallotment liability | ||||||||
| Transaction costs | ( | ) | ||||||
| Interest income | ||||||||
| Total other income/(expense) | ||||||||
| Net Income | $ | |||||||
| Earnings per share: | ||||||||
| Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption | ||||||||
| Basic and diluted net income per share, Class A common stock subject to possible redemption | $ | $ | ||||||
| Basic and diluted weighted average shares outstanding, non-redeemable common stock (1) | ||||||||
| Basic and diluted net income per share, non-redeemable common stock | $ | $ | ||||||
| (1) |
See accompanying notes to unaudited condensed financial statements.
2
M3-Brigade Acquisition II Corp.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND TEMPORARY EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 (Unaudited) (Restated)
| Common Stock | Additional | Total | ||||||||||||||||||||||||||
| Class A | Class B | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares(1) | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance - December 31, 2020 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Sale of | ||||||||||||||||||||||||||||
| Offering costs | — | ( | ) | — | ||||||||||||||||||||||||
| Net loss – three months ended March 31, 2021 | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Fair value Public warrants at inception | ( | ) | ||||||||||||||||||||||||||
| Fair value of overallotment option at inception | ( | ) | ||||||||||||||||||||||||||
| Change in Class A common stock subject to possible redemption | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance as of March 31, 2021 (Unaudited) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Forfeiture of Class B Shares | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net income – three months ended June 30, 2021 | ||||||||||||||||||||||||||||
| Balance as of June 30, 2021 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| (1) |
See accompanying notes to unaudited condensed financial statements.
3
M3-Brigade Acquisition II Corp.
CONDENSED STATEMENT OF CASH FLOWS
For the six months ended June 30, 2021 (Unaudited) (Restated)
| Cash Flows from Operating Activities: | ||||
| Net income | $ | |||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||
| Interest earned on cash held in Trust Account | ( | ) | ||
| Excess fair value of private placement warrants over consideration paid | ||||
| Change in fair value of warrant liabilities | ( | ) | ||
| Change in fair value of overallotment option liability | ( | ) | ||
| Transaction costs allocable to warrant liabilities | ||||
| Changes in operating assets and liabilities | ||||
| Prepaid expenses and other assets | ( | ) | ||
| Accounts payable and accrued expenses | ||||
| Net cash used in operating activities | ( | ) | ||
| Cash flows from investing activities: | ||||
| Investments and marketable securities held in Trust | ( | ) | ||
| Net cash used in investing activities | ( | ) | ||
| Cash flows from financing activities: | ||||
| Proceeds from related party advances | ||||
| Repayment of related party advances | ( | ) | ||
| Proceeds from sale of Units, net of offering costs | ||||
| Proceeds from sale of Private Placement Warrants | ||||
| Payment of underwriters discount | ( | ) | ||
| Net cash provided by financing activities | ||||
| Net Change in Cash | ||||
| Cash, beginning of the period | ||||
| Cash, end of period | $ | |||
| Supplemental Disclosure of Non-cash Financing Activities: | ||||
| Deferred underwriters’ discount payable included in offering costs and accrued expenses | $ | |||
See accompanying notes to unaudited condensed financial statements.
4
M3-BRIGADE ACQUISITION II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 — Organization and Business Operations
M3-Brigade Acquisition II Corp. (the “Company”) is a newly organized blank check company incorporated as a Delaware corporation on December 16, 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 (“Business Combination”). On August 16, 2021, the Company entered into an Agreement and Plan of Merger with Syniverse Corporation.
The Company has selected December 31 as its fiscal year end.
As of June 30, 2021, the Company had not commenced any operations. All activity for the period from December 16, 2020 (inception) through June 30, 2021 relates to the Company’s formation and the initial public offering (“IPO”), which is described below. The Company believes it will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the IPO and unrealized gains and losses on the change in fair value of its warrants.
The Company’s sponsor is M3-Brigade Sponsor II LP, a Delaware limited liability company (the “Sponsor”).
The registration statement for the Company’s IPO
was declared effective on March 3, 2021 (the “Effective Date”). On March 8, 2021, the Company consummated the IPO of
The underwriters had a 45-day option from the effectiveness
date of the IPO (March 3, 2021) to purchase up to an additional
Simultaneously with the closing of the IPO, the Company
consummated the sale of
Transaction costs of the IPO amounted to $
Following the closing of the IPO on March 8, 2021, $
The Company’s management has broad discretion with
respect to the specific application of the net proceeds of the IPO, although substantially all of the net proceeds of the IPO are intended
to be generally applied toward consummating a Business Combination with (or acquisition of) a Target Business. As used herein, “Target
Business” must be with one or more target businesses that together have a fair market value equal to at least
5
The Company, after signing a definitive agreement for
a Business Combination, will either (i) seek stockholder approval of the Business Combination at a meeting called for such purpose
in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Business
Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business
days prior to the consummation of the initial Business Combination, including interest but less taxes payable, or (ii) provide
stockholders with the opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for a
stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account
as of two business days prior to commencement of the tender offer, including interest but less taxes payable. The decision as to
whether the Company will seek stockholder approval of the Business Combination or will allow stockholders to sell their shares in a
tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of
the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval unless a
vote is required by stock exchange rules. If the Company seeks stockholder approval, it will complete its Business Combination only
if a majority of the outstanding shares of common stock voted are voted in favor of the Business Combination. However, in no event
will the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $
If the Company holds a stockholder vote or there is a tender offer for shares in connection with a Business Combination, a public stockholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest but less taxes payable. As a result, such shares of common stock will be recorded at redemption amount and classified as temporary equity upon the completion of the IPO, in accordance with FASB ASC 480, “Distinguishing Liabilities from Equity.”
The Company will only have 24 months from the closing
date of the IPO (March 8, 2023) to complete its initial Business Combination. If the Company does not complete a Business Combination
within this period of time, it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible,
but not more than ten business days thereafter, redeem the public shares of common stock for a per share pro rata portion of the Trust
Account, including interest, but less taxes payable (less up to $
The initial stockholders have entered into letter agreements with the Company, pursuant to which they have waived their rights to participate in any redemption with respect to their initial shares; however, if the initial stockholders or any of the Company’s officers, directors or affiliates acquire shares of Class A common stock in or after the IPO, they will be entitled to a pro rata share of the Trust Account with respect to such acquired shares of Class A common stock upon the Company’s redemption or liquidation in the event the Company does not complete a Business Combination within the required time period.
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 less than the initial public offering price per Unit in the IPO.
The Company’s Sponsor has agreed that it will be
liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective
target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the trust account
to below (i) $
Risks 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 financial position 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 financial position 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. The financial statement does not include any adjustments that might result from the outcome of this uncertainty.
6
Liquidity and Capital Resources
As of June 30, 2021, the Company had approximately $
The Company’s liquidity needs prior to the IPO had been satisfied
through a payment from the Sponsor of $
In order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide Working Capital Loans to the Company (see Note 6). As of June 30, 2021, there were no amounts outstanding under any Working Capital Loans.
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 these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Note 2 — Restatement of Financial Statements
In reviewing its financial statements for prior reporting periods, management of the Company has determined that the following modifications are appropriate to reflect a non-cash liability which has since been eliminated:
| ● | In connection with the initial public offering (the “IPO”) of the Company, the underwriter was granted a customary overallotment option which permitted it to purchase up to an additional |
7
| ● | Adjustments to the classification of certain costs associated with the sale of Units |
| ● | Recognition of a Merger-related expense, which commenced in the second quarter of 2021. Note that the vendor forgave the balance due upon announcement of the termination of the merger in February 2022. |
On April 14, 2022, the audit committee of the board of directors of the Company (the “Audit Committee”) determined, after considering information provided by the Company’s management, that the value of the overallotment option described above should have been recorded as a liability at the time of the IPO and then reversed upon expiry of such option. Similarly, the Audit Committee determined that the Merger-related expense also should have been recorded as a liability. As a result of these omissions, the Audit Committee also determined that the Company’s unaudited financial statements as of June 30, 2021 as reported in the Company’s Form 10-Q filed on August 23, 2021 should be restated.
The following tables summarize the effect if the financial statements had been restated on each financial statement line item as of the date indicated:
| As Previously Reported | Adjustment | As Restated | ||||||||||
| Balance Sheet at June 30, 2021 (unaudited) | ||||||||||||
| Accrued expenses | $ | $ | $ | |||||||||
| Total current liabilities | ||||||||||||
| Total liabilities | ||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ( | ) | ||||||
| Statement of operations for the three months ended June 30, 2021 (unaudited) | ||||||||||||
| Merger related expenses | - | |||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Change in fair value in overallotment option liability | - | |||||||||||
| Total other income | ||||||||||||
| Net income | ( | ) | ||||||||||
| Loss per share – three months ended June 30, 2021 (unaudited) | ||||||||||||
| Basic and diluted loss per share – Class A common stock | $ | - | $ | |||||||||
| Basic and diluted loss per share – Class B common stock | $ | - | $ | |||||||||
| Statement of operations for the six months ended June 30, 2021 (unaudited) | ||||||||||||
| Merger related expenses | - | |||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Change in fair value in overallotment option liability | - | |||||||||||
| Transaction costs | ||||||||||||
| Total other income | ||||||||||||
| Net income | ( | ) | ||||||||||
| Statement of Cash Flows – six months ended June 30, 2021 (unaudited) | ||||||||||||
| Net income | ( | ) | ||||||||||
| Transaction costs | ||||||||||||
| Change in fair value of overallotment option liability | - | ( | ) | ( | ) | |||||||
| Change in accounts payable and accrued expenses | ||||||||||||
| Net cash flows used in operating activities | ( | ) | ( | ) | ||||||||
| Proceeds from sale of Units, net | ( | ) | ||||||||||
| Net cash provided by financing activities | ( | ) | ||||||||||
8
Note 3 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Prospectus for its IPO as filed with the SEC on March 5, 2021. The interim results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), 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, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company may elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
9
Use of Estimates
The preparation of unaudited condensed financial statements in conformity with US 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 unaudited condensed financial statements.
Making estimates requires management to exercise significant judgement. 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 unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with
an original maturity of three months or less when purchased to be cash equivalents. The Company had approximately $
Marketable Securities Held in Trust Account
At June 30, 2021, the assets held in the Trust Account were substantially held in mutual funds that invest primarily in U.S. government securities.
Concentration of Credit Risk
Financial instruments that potentially subject the Company
to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository
Insurance Corporation limit of $
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that feature 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, Class A common stock is classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.
Net Income Per Common Stock
Net income (loss) per common stock is computed by dividing
net income (loss) by the weighted average number of shares of common stock outstanding for each of the periods. The calculation of diluted
income (loss) per common stock does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering
or (ii) Private Placement Warrants because the exercise of the warrants is contingent upon the occurrence of future events and the inclusion
of such warrants would be anti-dilutive. The warrants are exercisable to purchase
The Company’s statements of operations include a presentation of income (loss) per share for Class A Common Stock subject to possible redemption in a manner similar to the two-class method of income (loss) per common stock. Net income per common stock, basic and diluted, for redeemable Class A Common Stock is calculated by dividing the interest income earned on the Trust Account, by the weighted average number of shares of redeemable Class A Common Stock outstanding since original issuance. Net loss per common stock, basic and diluted, for non-redeemable Class A and Class B Common Stock is calculated by dividing the net income (loss), adjusted for income attributable to Class A common stock subject to possible redemption, by the weighted average number of shares of non-redeemable Class A and Class B Common Stock outstanding for the period. Non-redeemable Class B Common Stock include the Founder Shares as these common stock shares do not have any redemption features and do not participate in the income earned on the Trust Account.
10
The underwriters had a 45-day option from the effectiveness date of
the IPO (March 3, 2021) to purchase up to an additional
Below is a reconciliation of the net loss per common stock (restated):
| For the three months ended June 30, 2021 | ||||
| Numerator: total net income | $ | |||
| Redeemable Class A common stock: | ||||
| Net loss allocated to Class A common stock | $ | |||
| Weighted Average Redeemable Class A common stock – basic and diluted | ||||
| Basic and diluted net loss per share – Class A common stock | $ | |||
| Class B common stock: | ||||
| Net loss allocated to Class B common stock | $ | |||
| Weighted Average Class B common stock – basic and diluted | ||||
| Basic and diluted net loss per share – Class B common stock | $ | |||
| For the six months ended June 30, 2021 | ||||
| Numerator: total net income | $ | |||
| Redeemable Class A common stock: | ||||
| Net income allocated to Class A common stock | $ | |||
| Weighted Average Redeemable Class A common stock – basic and diluted | ||||
| Basic and diluted net loss per share – Class A common stock | $ | |||
| Class B common stock: | ||||
| Net income allocated to Class B common stock | $ | |||
| Weighted Average Class B common stock – basic and diluted | ||||
| Basic and diluted net loss per share – Class B common stock | $ | |||
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 (“SAB”) Topic 5A—“Expenses of Offering”. Offering costs consist principally
of professional and registration fees incurred through the balance sheet date that are related to the Public Offering. Offering costs
are charged to stockholders’ equity or the Statement of Operations based on the residual method of the Public and Private Warrants
to the proceeds received from the Units sold upon the completion of the IPO. Accordingly, as of March 31, 2021, offering costs totaling
$
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature. The fair value of the warrant liabilities are discussed below.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. Derivative instruments are recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company has determined the warrants are a derivative instrument.
FASB ASC 470-20, Debt with Conversion and Other Options addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The Company applies this guidance to allocate IPO proceeds from the Units between Class A common stock and warrants, using the residual method by allocating IPO proceeds first to fair value of the warrants and then to the Class A common stock.
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Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Income Taxes
The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statement and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2021. 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 has identified the United States as its only “major” tax jurisdiction.
The Company may be subject to potential examination by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Recently Adopted Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU 2020- 06 did not have an impact on the Company’s financial statements.
Recent Accounting Standards
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
Note 4 — Initial Public Offering
On March 8, 2021, the Company consummated the IPO of
The underwriters were granted a 45-day option from the
effective date of the IPO (March 3, 2021) to purchase up to an additional
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Warrants
Each whole warrant entitles the registered holder to purchase
one whole share of the Company’s Class A common stock at a price of $
Pursuant to the warrant agreement, a warrantholder may exercise its warrants only for a whole number of shares of Class A common stock. This means that only a whole warrant may be exercised at any given time by a warrantholder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least three units, you will not be able to receive or trade a whole warrant. The warrants will expire five years after the completion of the Company’s initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying the Company’s obligations described below with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of Class A common stock underlying such unit.
The Company has agreed that as soon as practicable, but in no event later than thirty (30) days, after the closing of the Company’s initial business combination, the Company will use commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the warrants. The Company will use commercially reasonable efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective within 90 days after the closing of the Company’s initial business combination, warrant holders may, under the circumstances specified in the warrant agreement and until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis.
Once the warrants become exercisable, the Company may call the warrants for redemption:
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and |
| ● | if, and only if, the reported last sale price of the Class
A common stock equals or exceeds $ |
If and when the warrants become redeemable by the Company, the Company may exercise the Company’s redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
The Company has established the last of the redemption
criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise
price. If the foregoing conditions are satisfied and the Company issues a notice of redemption of the warrants, each warrant holder will
be entitled to exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the Class A common stock
may fall below the $
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If the Company calls the warrants for redemption as described above, the Company’s management will have the option to require any holder that wishes to exercise his, her or its warrant to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless basis,” the Company’s management will consider, among other factors, the Company’s cash position, the number of warrants that are outstanding and the dilutive effect on the Company’s stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of the Company’s warrants. If the Company’s management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. If the Company’s management takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of shares of Class A common stock to be received upon exercise of the warrants, including the “fair market value” in such case. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption. We believe this feature is an attractive option to the Company if the Company does not need the cash from the exercise of the warrants after the Company’s initial business combination. If the Company calls the Company’s warrants for redemption and the Company’s management does not take advantage of this option, the Company’s sponsor and its permitted transferees would still be entitled to exercise their private placement warrants contained in the private placement warrants for cash or on a cashless basis using the same formula described above that other warrant holders would have been required to use had all warrant holders been required to exercise their warrants on a cashless basis, as described in more detail below.
A holder of a warrant may notify the Company in writing
in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent
that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual
knowledge, would beneficially own in excess of
If the number of outstanding shares of Class A common stock is increased by a stock dividend payable in shares of Class A common stock, or by a split-up of shares of Class A common stock or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of Class A common stock issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding shares of Class A common stock. A rights offering to holders of Class A common stock entitling holders to purchase shares of Class A common stock at a price less than the fair market value will be deemed a stock dividend of a number of shares of Class A common stock equal to the product of (i) the number of shares of Class A common stock actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A common stock) multiplied by (ii) one (1) minus the quotient of (x) the price per share of Class A
common stock paid in such rights offering divided by (y) the fair market value. For these purposes (i) if the rights offering is for securities convertible into or exercisable for Class A common stock, in determining the price payable for Class A common stock, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) fair market value means the volume weighted average price of Class A common stock as reported during the ten (10) trading day period ending on the trading day prior to the first date on which the shares of Class A common stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.
In addition, if the Company, at any time while the warrants
are outstanding and unexpired, pays a dividend or makes a distribution in cash, securities or other assets to the holders of Class A
common stock on account of such shares of Class A common stock (or other shares of the Company’s capital stock into which the warrants
are convertible), other than (a) as described above, (b) certain ordinary cash dividends of which are dividends up to $
If the number of outstanding shares of the Company’s Class A common stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Class A common stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Class A common stock issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding shares of Class A common stock.
Whenever the number of shares of Class A common stock purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of shares of Class A common stock purchasable upon the exercise of the warrants immediately prior to such adjustment, and (y) the denominator of which will be the number of shares of Class A common stock so purchasable immediately thereafter.
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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 Company’s
initial business combination at an issue price or effective issue price of less than $
In case of any reclassification or reorganization
of the outstanding shares of Class A common stock (other than those described above or any that solely affects the par value of such
shares of Class A common stock), or in the case of any merger or consolidation of the Company with or into another corporation
(other than a consolidation or merger in which the Company is are the continuing corporation and that does not result in any
reclassification or reorganization of the Company’s outstanding shares of Class A common stock), or in the case of any sale or
conveyance to another corporation or entity of the assets or other property of the Company as an entirety or substantially as an
entirety in connection with which the Company is dissolved, the holders of the warrants will thereafter have the right to purchase
and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of the shares of the
Company’s Class A common stock immediately theretofore purchasable and receivable upon the exercise of the rights represented
thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such
reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the
holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event. However, if
such holders were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable
upon such consolidation or merger, then the kind and amount of securities, cash or other assets for which each warrant will become
exercisable will be deemed to be the weighted average of the kind and amount received per share by such holders in such
consolidation or merger that affirmatively make such election, and if a tender, exchange or redemption offer has been made to and
accepted by such holders (other than a tender, exchange or redemption offer made by the company in connection with redemption rights
held by stockholders of the company as provided for in the company’s amended and restated certificate of incorporation or as a
result of the repurchase of shares of Class A common stock by the company if a proposed initial business combination is presented to
the stockholders of the company for approval) under circumstances in which, upon completion of such tender or exchange offer, the
maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such
maker is a part, and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange
Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of
Rule 13d-3 under the Exchange Act) more than
The warrants will be issued in registered form under a
warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and the Company. The warrant agreement provides
that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any mistake, including
to conform the provisions of the warrant agreement to the description of the terms of the warrants and the warrant agreement set forth
in this prospectus, or to correct any defective provision, but requires the approval by the holders of at least
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The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to the Company, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of Class A common stock and any voting rights until they exercise their warrants and receive shares of Class A common stock. After the issuance of shares of Class A common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
Warrants may be exercised only for a whole number of shares of Class A common stock. No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, the Company will, upon exercise, round down to the nearest whole number the number of shares of Class A common stock to be issued to the warrant holder. As a result, warrant holders not purchasing an even number of warrants must sell any odd number of warrants in order to obtain full value from the fractional interest that will not be issued.
The private placement warrants (including the 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 the Company’s initial business combination (except, among other limited exceptions as described under “Principal Stockholders— Transfers of Founder Shares and Private Placement Warrants,” to the Company’s officers and directors and other persons or entities affiliated with the sponsor) and they will not be redeemable by the Company so long as they are held by the sponsor or its permitted transferees. Otherwise, the private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in the IPO. If the private placement warrants are held by holders other than the sponsor or its permitted transferees, the private placement warrants will be redeemable by the Company and exercisable by the holders on the same basis as the warrants included in the units being sold in the IPO.
If holders of the private placement warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or its warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The reason that the Company has agreed that these warrants will be exercisable on a cashless basis so long as they are held by the Company’s sponsor and permitted transferees is because it is not known at this time whether they will be affiliated with the Company following a business combination. If they remain affiliated with the Company, their ability to sell the Company’s securities in the open market will be significantly limited. We expect to have policies in place that prohibit insiders from selling the Company’s securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell the Company’s securities, an insider cannot trade in the Company’s securities if he or she is in possession of material non-public information. Accordingly, unlike public stockholders who could exercise their warrants and sell the shares of Class A common stock received upon such exercise freely in the open market in order to recoup the cost of such exercise, the insiders could be significantly restricted from selling such securities. As a result, The Company believes that allowing the holders to exercise such warrants on a cashless basis is appropriate.
In order to finance transaction costs in connection with
an intended initial business combination, the Company’s sponsor or an affiliate of the Company’s sponsor or certain of the
Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required. If the Company completes
the Company’s initial business combination, the Company would repay such loaned amounts out of the proceeds of the trust account
released to the Company. In the event that the Company’s initial business combination does not close, the Company may use a portion
of the working capital held outside the trust account to repay such loaned amounts but no proceeds from the Company’s trust account
would be used to repay such loaned amounts. Up to $
Note 5 — Private Placement
Simultaneously with the closing of the IPO, the Sponsor
and the Representatives purchased an aggregate of
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Note 6 — Related Party Transactions
Founder Shares
On December 31, 2020, the Sponsor purchased
The Company’s initial stockholders have agreed not
to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion of the Company’s
initial Business Combination, or earlier if, subsequent to the Company’s initial Business Combination, the last sale price of the
Company’s common stock equals or exceeds $
Due to Related Party
The amount due to related parties prior to the closing
of the IPO of $
As of June 30, 2021, the amount due to related parties
was $
Working Capital Loans
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 the working capital held outside the Trust Account to repay the Working Capital Loans
but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $
Note 7 — Commitments and Contingencies
Registration Rights
The holders of the founder shares and private placement warrants and any warrants that may be issued upon conversion of working capital loans (and any Class A common stock issuable upon the exercise of the private placement warrants and warrants that may be issued upon conversion of working capital loans) will be entitled to registration rights pursuant to a registration and stockholder rights agreement to be signed prior to or on the effective date of the IPO. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s completion of the Company’s initial business combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
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Underwriters Agreement
On March 8, 2021, the underwriters were paid a cash underwriting
discount of
The Company has entered into agreements with certain advisors and professionals who will receive payments under contingent fee arrangements upon completion of the transactions contemplated by the Merger Agreement (see Note 10). The ultimate amount of such payments will be quantified at or near the time of closing.
Note 8 — Stockholders’ Equity
Preferred Stock — The Company is authorized
to issue a total of
Class A common stock — The Company
is authorized to issue a total of
Class B common stock — The Company
is authorized to issue a total of
The Company’s initial stockholders have agreed not
to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion of the Company’s
initial Business Combination, or earlier if, subsequent to the Company’s initial Business Combination, the last sale price of the
Company’s common stock equals or exceeds $
The shares of Class B common stock will automatically convert
into shares of Class A common stock at the time of our 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 excess of the
amounts sold in the IPO and related to the closing of the business combination, the ratio at which shares of Class B common stock shall
convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common
stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common
stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis,
With respect to any other matter submitted to a vote of our stockholders, including any vote in connection with our initial business combination, except as required by law, holders of our founder shares and holders of our public shares will vote together as a single class, with each share entitling the holder to one vote.
Note 9 — Recurring Fair Value Measurements
Investment Held in Trust Account
As of June 30, 2021, investment securities
in the Company’s Trust Account consisted of a mutual funds that invest primarily in U.S. government securities in the amount of
$
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Warrant Liability
At June 30, 2021, the Company’s warrants liability
were valued at $
Overallotment Option
Upon completion the IPO, the underwriters held an overallotment
option which expired 45 days later. The overallotment option represents a financials instrument which was recognized at fair value as
a liability instrument at inception. The principal assumptions going into the fair value computation were as follows: Term – 45
days; Unit price $
The change in the fair value of the overallotment liability for the period ended June 20, 2021 is summarized as follows:
| Overallotment Option (as restated) | ||||
| Fair value at issuance March 8 2021 | $ | |||
| Change in fair value | ( | ) | ||
| Fair Value at March 31, 2021 | ||||
| Change in fair value | ( | ) | ||
| Fair Value at June 30, 2021 | $ | |||
Recurring Fair Value Measurements
The Company’s investments consist of mutual funds that invest primarily in U.S. government securities. Fair values of these investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets. The Company’s warrant liability is based on a valuation model utilizing management judgment and pricing inputs from observable and unobservable markets with less volume and transaction frequency than active markets. Significant deviations from these estimates and inputs could result in a material change in fair value. The fair value of the Warrant liability is classified within Level 3 of the fair value hierarchy. The Public Warrants were transferred to Level 1 for the period ending June 30, 2021.
The following table presents fair value information as of June 30, 2021 of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
| Carrying Value | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Assets: | ||||||||||||||||
| Investments held in Trust Account – U.S. Treasury Securities Money Market Fund | $ | $ | $ | |||||||||||||
| Liabilities: | ||||||||||||||||
| Private Placement Warrants | ||||||||||||||||
| Public Warrants | ||||||||||||||||
Measurement
The Company established the initial fair value
for the Warrants as of March 8, 2021, which was the date of the consummation of the Company’s IPO, and on March 31, 2021. On
June 30, 2021 the fair value was remeasured. For the initial periods, neither the Public Warrants nor the Private Warrants were
separately traded on an open market, but the Public Warrants did commence separate trading as of April 26, 2021. As such, the
Company used a Monte Carlo simulation model to value the Warrants for the initial periods and valued the Public Warrants based upon
market values for the June 30, 2021 remeasurement. The Company allocated the proceeds received from (i) the sale of Units (which is
inclusive of one share of Class A common stock and one-third of one Public Warrant), (ii) the sale of Private Warrants, and (iii)
the issuance of Class B common stock, first to the Warrants based on their fair values as determined at initial measurement, with
the remaining proceeds allocated to Class A common stock subject to possible redemption (temporary equity), Class A common stock
(permanent equity) and Class B common stock (permanent equity) based on their relative fair values at the initial measurement date.
The Warrants were classified within Level 3 of the fair value hierarchy at the initial measurement dates due to the use of
unobservable inputs. The aggregate fair value of the Public Warrants, which amounted to $
| Input | March 8, 2021 (Initial Measurement) | June 30, 2021 | ||||||
| Risk-free interest rate | | % | | % | ||||
| Expected term (years) | ||||||||
| Expected volatility | % | % | ||||||
| Exercise price | $ | $ | ||||||
| Probability of completing a business combination | % | % | ||||||
| Dividend yield | % | % | ||||||
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The change in the fair value of the warrant liabilities for the period ended June 30, 2021 is summarized as follows (Restated):
| Public Warrants | Private Warrants | Total Warrants | ||||||||||
| Fair value at issuance March 8 2021 | $ | $ | $ | |||||||||
| Change in fair value | ( | ) | ( | ) | ||||||||
| Fair Value at June 30, 2021 | $ | $ | $ | |||||||||
Note 10 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Except as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
Proposed Business Combination and Related Agreements
On August 16, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Syniverse Corporation, a Delaware corporation (“Syniverse”), and Blue Steel Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), pursuant to which Merger Sub will merge with and into Syniverse, with Syniverse surviving the merger as a wholly owned subsidiary of the Company (the “Merger”).
Subject to the terms of the Merger Agreement, the aggregate purchase
price to be paid by the Company to Syniverse’s stockholders at the closing of the Merger (the “Closing”) is expected
to be approximately $
At the effective time of the Merger, each Syniverse Share that is issued and outstanding immediately prior to the effective time of the Merger will be cancelled and converted into the right to receive a portion of the Aggregate Merger Consideration equal to (a) the Exchange Ratio multiplied by (b) the number of Syniverse Shares held by the applicable holder as of immediately prior to the effective time of the Merger, rounded to the nearest whole share. At the effective time of the Merger, all share incentive plan or similar equity-based compensation plans maintained for employees of Syniverse, all outstanding options to purchase Syniverse Shares and each restricted stock unit award with respect to Syniverse Shares will be assumed by the Company, in each case on the terms and subject to the conditions in the Merger Agreement.
Private Placement
Concurrently with the execution of the Merger Agreement, the Company
entered into (a) a subscription agreement with the Sponsor pursuant to which the Sponsor has agreed to purchase an aggregate of
Twilio Investment
Concurrently with the execution of the Merger Agreement, the Company
entered into a subscription agreement with Twilio Inc., a Delaware corporation (“Twilio”), pursuant to which Twilio has agreed
to purchase Class A common stock and, if applicable, shares of newly issued Class C common stock, par value $
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Stockholders Agreement
The Merger Agreement contemplates that, at the Closing, the Company, Carlyle Partners V Holdings, L.P., a Delaware limited partnership and Syniverse’s majority stockholder (“Carlyle”), Twilio and the Sponsor will enter into a stockholders agreement (the “Stockholders Agreement”), pursuant to which, among other things, (a) Carlyle will be entitled to appoint directors (initially five, but subject to downward adjustment depending on its continuing percentage ownership relative to its initial ownership) to the Company’s board of directors so long as Carlyle holds at least 5% of the outstanding common stock; (b) Twilio will be entitled to appoint directors (initially four, but subject to downward adjustment depending on its continuing percentage ownership relative to its initial ownership) to the Company’s board of directors so long as Twilio holds at least 5% of the outstanding common stock; and (c) the Sponsor will be entitled to appoint two directors to the Company’s board of directors so long as the Sponsor continues to hold 50% of the shares of Class A common stock it held at the Closing (and one director so long as it holds 33.33% of such shares).
The Stockholders Agreement contains certain restrictions on transfer
with respect to shares of common stock held by Carlyle, Twilio and the Sponsor immediately following the Closing (the “Locked-Up
Shares”). Such restrictions include, among others, a prohibition on transfers of Locked-Up Shares, subject to limited exceptions,
until the earlier to occur of (a) the 12-month anniversary of the Closing and (b) the date on which the per share closing price for the
Class A common stock has been equal to or greater than $
In addition, the Stockholders Agreement will provide (a) consent rights
to Carlyle and Twilio in respect of certain significant transactions by the Company following the Closing, subject to specified ownership
thresholds, and (b) a right of first offer to Twilio, subject to certain exceptions, with respect to any privately negotiated sale by
Carlyle (or its affiliates) of more than
Sponsor Agreement
Concurrently with the execution of the Merger Agreement, the Company, the Sponsor, an individual (together with the Sponsor, the “Sponsor Parties”) and Syniverse entered into a sponsor support agreement (the “Sponsor Agreement”), pursuant to which, among other things, in accordance with the terms and subject to the conditions set forth therein, the Sponsor Parties have agreed to vote their shares of Class B common stock and any shares of common stock the Sponsor Parties subsequently acquire to approve the transactions contemplated by the Merger Agreement and against any inconsistent proposals during the term of the Sponsor Agreement and to not redeem such shares.
The Sponsor Agreement also provides that 70% of such shares of Class B common stock will vest and be available to the Sponsor Parties at the Closing, and the remaining 30% of such shares will vest on the first trading day that the closing price of Class A common stock equals or exceeds $12.50 per share for any 20 trading days within any consecutive 30-trading day period following the Closing, subject to earlier vesting in certain circumstances as described therein.
Registration Rights Agreement
At the Closing, the Company, the Sponsor, Carlyle, Twilio and the PIPE Investors will enter into a registration rights agreement, pursuant to which the Company will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of Class A common stock, including Class A common stock underlying the Convertible Preferred Stock, and other equity securities of the Company that are held by the foregoing parties from time to time.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to M3-Brigade Acquisition II Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to M3-Brigade Sponsor LP. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements other than statements of historical fact included in this Form 10-Q including statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated as a Delaware corporation on December 16, 2020 and 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. We intend to consummate an initial business combination using cash from the proceeds of our Public Offering (the “Public Offering”) that closed on March 8, 2021 (the “Closing Date”) and the Private Placement, and from additional issuances of, if any, our equity and our debt, or a combination of cash, equity and debt.
Results of Operations
For the three months ended June 30, 2021, we incurred a loss from operations of $1,680,557, including professional fees of $1,525,587, insurance expenses of $123,811 and other general operation expenses totaled $31,159. In addition to the loss from operations, we recorded a gain on the change in the fair value of the warrants of $3,221,432, and a gain on the change in the fair value of the overallotment option of $437,575 upon expiration of such option and interest income of $14,298. For the six months ended June 30, 2021, we incurred a loss from operations of $1,726,874, including professional fees of $1,509,215, insurance expenses of $136,916 and other general operation expenses totaled $79,822. In addition to the loss from operations, we incurred other net expenses of $3,452,827 consisting of Public Offering costs of $1,265,712, excess fair value of the warrants sold in the private placement of $529,653, offset by a gain on the fair value of the warrants of $3,820,577, a gain from the change in the fair value the overallotment option of $1,406,950 upon the expiration of such option, and interest income of $20,665. Through June 30, 2021, our efforts have been limited to organizational activities, activities relating to identifying and evaluating prospective acquisition candidates and activities relating to general corporate matters. We have not generated any revenues from operations, other than interest income earned on the proceeds held in the Trust Account. As of June 30, 2021 and December 31, 2020, $400,020,665 and $0.00 was held in the Trust Account, respectively. We had cash outside of trust of $1,511,407 and $0.00 at June 30, 2021 and December 31, 2020, and $1,520,759 accounts payable and accrued expenses at June 30, 2021.
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Except for the withdrawal of interest to pay our taxes and up to $100,000 to pay dissolution expenses, if any, our amended and restated certificate of incorporation (the “Charter”) provides that none of the funds held in trust will be released from the Trust Account until the earliest of (i) the completion of an initial business combination; (ii) the redemption of any of the shares of Class A common stock included in the units sold in the Public Offering (the “Units”) properly submitted in connection with a stockholder vote to amend the Charter to modify the substance or timing of the Company’s obligation to redeem 100% of the common stock included in the Units being sold in the Public Offering if the Company does not complete an initial business combination within 18 months from the closing of the Public Offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity or (iii) the redemption of 100% of the shares of Class A common stock included in the Units sold in the Public Offering if we are unable to complete a business combination within such 18 month period. Through June 30, 2021, we have not withdrawn any funds from interest earned on the trust proceeds. Other than the deferred underwriting discounts and commissions, no amounts are payable to the underwriters of the Public Offering in the event of a business combination.
Liquidity and Capital Resources
As of June 30, 2021, we had cash outside our Trust Account of $1,511,407, available for working capital needs. We intend to use the funds held outside the Trust Account for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
On March 8, 2021, we completed the sale of 40,000,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units being offered, the “Public Shares”) at $10.00 per Unit, generating gross proceeds of $400,000,000.
Simultaneous with the closing of the Public Offering, we completed the sale of 7,500,000 warrants (the “Private Warrants”), at a price of $1.50 per Private Warrant, generating gross proceeds of $11,250,000.
In connection with the Public Offering, the underwriters were granted a 45-day option from the effectiveness date of our IPO (March 3, 2021) to purchase up to 6,000,000 additional Units to cover over-allotments, if any. In April the underwriters’ option expired unexercised.
Following our Initial Public Offering and the sale of the Private Warrants, a total of $400,000,000 ($10.00 per Unit) was placed in the Trust Account. We incurred $22,706,155 in Initial Public Offering related costs, including $8,000,000 of underwriting fees, $14,000,000 of deferred underwriting discount and $706,155 of other costs with $1,265,712 which was allocated to the Public Warrants and Private Warrants, included in the statement of operations and $21,440,443 included in stockholders’ equity.
As of June 30, 2021, we had marketable securities held in the Trust Account of $400,020,665 (including approximately $20,665 of income) consisting of mutual funds. Income on the balance in the Trust Account may be used to pay taxes. Through June 30, 2021, we did not withdraw any interest earned on the Trust Account to pay our taxes.
For six months ended June 30, 2021, cash used in operating activities was $1,057,438. Net income of $1,725,953 was primarily offset by Public Offering costs of $1,265,712 and a non-cash charge to earnings related to the excess fair value of our warrants of $529,653 offset by non-cash gains in earnings of $3,820,577 related to the change in fair value of our warrants and $1,406,950 related to change in the fair value of the overallotment option, and interest income of $20,665 from our trust account. Net cash received for working capital related items was $669,436.
We intend to use substantially all of the funds held in the Trust Account, to acquire a target business and to pay our expenses relating thereto. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
Further, our sponsor, officers and directors or their respective affiliates may, but are not obligated to, loan us funds as may be required (the “Working Capital Loans”). If we complete a business combination, we would repay the Working Capital Loans. In the event that a business combination does not close, we 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. Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a business combination, without interest, or, at the lender’s discretion, or converted upon consummation of a business combination into additional Private Warrants at a price of $1.50 per Private Warrant. As of June 30, 2021, no Working Capital Loans have been issued.
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We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our business combination. Moreover, in addition to the access to the Working Capital Loans, we may need to obtain other financing either to complete our business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. If we are unable to complete our business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations..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 these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of June 30, 2021. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial agreements involving assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $14,000,000 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:
Warrant Liabilities
The Company’s Warrants meet the definition of a derivative and are recorded as derivative liabilities on the Balance Sheet and measured at fair value. At each reporting date, changes in the fair value are recognized in the statement of operations in the period of change.
Overallotment Option Liability
The Company’s Overallotment Option meet the definition of a derivative and are recorded as a liability on the Balance Sheet and measured at fair value. At each reporting date changes in the fair value are recognized in the statement of operations in the period of change.
Redeemable Shares of Class A Common Stock
All of the 40,000,000 shares of Class A common stock included in the Units sold as part of the Public Offering contain a redemption feature as described in the prospectus for the Public Offering. In accordance with FASB ASC 480, “Distinguishing Liabilities from Equity”, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. The Charter provides a minimum net tangible asset threshold of $5,000,001. The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security at the end of each reporting period. Increases or decreases in the carrying amount of redeemable shares will be affected by charges against additional paid-in capital.
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Net Loss per Common Stock
Net income (loss) per share of common stock is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for each of the periods. The calculation of diluted income (loss) per common stock does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) Private Placement Warrants since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.
The Company’s statements of operations include a presentation of income (loss) per share for Class A Common Stock subject to possible redemption in a manner similar to the two-class method of income (loss) per common stock. Net income per share of common stock, basic and diluted, for redeemable Class A Common Stock is calculated by dividing the interest income earned on the Trust Account, by the weighted average number of redeemable shares of Class A Common Stock outstanding since original issuance. Net loss per share of common stock, basic and diluted, for non-redeemable Class A and Class B Common Stock is calculated by dividing the net income (loss), adjusted for income attributable to shares of Class A common stock subject to possible redemption, by the weighted average number of non-redeemable shares of Class A and Class B Common Stock outstanding for the period. Non-redeemable Class B Common Stock includes the Founder Shares, as these common stocks do not have any redemption features and do not participate in the income earned on the Trust Account.
Recent accounting standards
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2021. Based upon their evaluation, and in light of the material weakness in internal controls described below, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were not effective for all periods of financial reporting reflected in our financial statements as of June 30, 2021.
Our internal control over financial reporting did not result in the proper timing of the recognition of a merger-related fee and accounting classification of complex financial instruments we issued in March 2021 which, due to their impacts on our financial statements, we determined to be material weaknesses.
Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our final prospectus for our Initial Public Offering filed with the SEC on March 8, 2021. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our final prospectus for our Initial Public Offering filed with the SEC on March 8, 2021. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
On March 8, 2021, we consummated our Initial Public Offering of 40,000,000 Units. The Units were sold at an offering price of $10.00 per Unit, generating total gross proceeds of $400,000,000. Each Unit consisted of one share of Class A common stock of the Company, par value $.0001 per share, and one-third of one redeemable warrant of the Company. Continental Stock Transfer & Trust Company acted as the sole book-running manager of the offering. The securities sold in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333- 253132). The SEC declared the registration statement effective on March 3, 2021.
Simultaneously with the consummation of the Initial Public Offering, we consummated a private placement of 7,500,000 Private Placement Warrants to our Sponsor at a price of $1.50 per Private Placement Warrant, generating total proceeds of $11,250,000. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
The Private Placement Warrants are the same as the warrants underlying the Units sold in the Initial Public Offering, except that Private Placement Warrants are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees.
Of the gross proceeds received from the Initial Public Offering and the Private Placement Warrants, $400,000,000 was placed in the Trust Account.
We paid a total of $8,000,000 underwriting discounts and commissions and $706,155 for other costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer $14,000,000 in underwriting discounts and commissions.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Quarterly Report.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed herewith. |
| ** | Furnished. |
| (1) | Previously filed as an exhibit to our Current Report on Form 8-K filed on March 10, 2021 and incorporated by reference herein. |
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| M3-BRIGADE ACQUISITION II CORP. | ||
| Date: May 23, 2022 | /s/ Mohsin Y. Meghji | |
| Name: | Mohsin Y. Meghji | |
| Title: | Chief Executive Officer (Principal Executive Officer) | |
| Date: May 23, 2022 | /s/ Brian Griffith | |
| Name: | Brian Griffith | |
| Title: | Chief Financial Officer (Principal Financing and Accounting Officer) | |
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