References to the "Company," "our," "us" or "we" refer to
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Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible partnering transactions and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Form 10-K. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our otherSecurities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated in
Our registration statements for our initial public offering (the "Initial Public Offering") became effective onSeptember 15, 2020 . OnSeptember 18, 2020 , we consummated the Initial Public Offering of 16,560,000 (41,400,000 after giving effect to the Stock Split) CAPS TM (with respect to the Class A common stock included in the CAPS TM being offered, the "Public Shares"), which included 2,160,000 CAPS TM (5,400,000 CAPS TM after giving effect to the Stock Split) issued as a result of the underwriters' exercise in full of their over-allotment option, at$25.00 per CAPS TM ($10.00 per CAPS TM after giving effect to the Stock Split), generating gross proceeds of$414.0 million , and incurring offering costs of approximately$4.8 million . Concurrently with the closing of the Initial Public Offering, we completed the private sale of 245,600 (614,000 after giving effect to the Stock Split) private placement CAPS TM ("Private Placement CAPS TM "), at a price of$25.00 per Private Placement CAPS TM ($10.00 per Private Placement CAPS TM after giving effect to the Stock Split) to the Sponsor (the "Private Placement"), generating gross proceeds to us of approximately$6.1 million . Upon the closing of the Initial Public Offering and the sale of Private Placement CAPS TM ,$414.0 million ($10.00 per CAPS TM after giving effect to the Stock Split) of the net proceeds of the sale of the CAPS TM in the Initial Public Offering and the Private Placement were placed in a trust account ("Trust Account") located inthe United States withContinental Stock Transfer & Trust Company acting as trustee, and held as cash or invested only inU.S. "government securities," within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in money market funds meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 under the Investment Company Act, which invest only in directU.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Partnering Transaction and (ii) the distribution of the Trust Account as described below. We have 24 months from the closing of the Initial Public Offering, orSeptember 18, 2022 (or 27 months, orDecember 18, 2022 , if we have executed a letter of intent, agreement in principle or definitive agreement for the Partnering Transaction within 24 months) to complete its initial Partnering Transaction (the "Partnering Period"). If we do not complete a Partnering Transaction within this period of time (and stockholders do not approve an amendment to the certificate of incorporation to extend this date), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, of$25.00 , and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations underDelaware law to provide for claims of creditors and in all cases subject to the other requirements of applicable law. 56
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Results of Operations
Our entire activity since inception throughDecember 31, 2021 related to our formation, the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering, the search for a prospective initial Partnering Transaction. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our initial Partnering Transaction, at the earliest. We will generate non-operating income in the form of interest income on investments held in the Trust Account. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the year ended
For the period from
Going Concern
As of
Our liquidity needs up to the closing of the Initial Public Offering and the sale of Private Placement CAPS TM had been satisfied through a capital contribution of$25,000 from our Sponsor to purchase Class F and Class B common stock, a certain portion of the net proceeds from the consummation of the Private Placement not held in the Trust Account, and a loan under our note agreement with our Sponsor of approximately$171,000 (the "Note") to cover for offering costs in connection with the Initial Public Offering, we fully repaid the Note onSeptember 22, 2020 . In addition, in order to finance transaction costs in connection with a Partnering Transaction, our officers, directors and initial stockholders may, but are not obligated to, provide us working capital loans (the "Working Capital Loans"). As ofDecember 31, 2021 and 2020, we had$430,000 and$0 note outstanding under the Working Capital Loans.
In connection with our assessment of going concern considerations in accordance
with Financial Accounting Standard Board's Accounting Standards Update ("ASU")
2014-15,
"Disclosures of Uncertainties about an Entity's Ability to Continue as a Going
Concern," we have until
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Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that the specific impact is not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Related Party Transactions
Founder Shares and Performance Shares
On
The Initial Stockholders agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (i) 180 days after the completion of the Partnering Transaction and (ii) the date on which we completes a liquidation, merger, capital stock exchange or other similar transaction after the Partnering Transaction that results in all of the stockholders having the right to exchange their Class A common stock for cash, securities or other property; except to certain permitted transferees.
Private Placement CAPS TM Substantially concurrently with the closing of the Initial Public Offering, we completed the private sale of 245,600 Private Placement CAPS TM (614,000 Private Placement CAPS TM after giving effect to the Stock Split), at a price of$25.00 per Private Placement CAPS TM ($10.00 per Private Placement CAPS TM after giving effect to the Stock Split) to the Sponsor, generating gross proceeds to us of approximately$6.1 million . Each Private Placement CAPS TM consists of one share of Class A common stock and one-quarter of one redeemable warrant (each, a "Private Placement Warrant"). Each Private Placement Warrant entitles the holder to purchase one share of Class A common stock at$28.75 per share ($11.50 per share after giving effect to the Stock Split). A portion of the proceeds from the sale of the Private Placement CAPS TM was added to the proceeds from the Initial Public Offering held in the Trust Account. If we do not complete a Partnering Transaction, then the proceeds will be part of the liquidating distribution to the Public Stockholders and the warrants will expire worthless.
Related Party Loans
On
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In order to finance transaction costs in connection with an intended initial Partnering Transaction, the Sponsor or an affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required (the "Working Capital Loans"). Up to$1.5 million of such loans may be convertible into Private Placement CAPS TM at a price of$25.00 per Private Placement CAPS TM ($10.00 per Private Placement CAPS TM after giving effect to the Stock Split) at the option of the lender. The Working Capital CAPS TM would be identical to the Private Placement CAPS TM issued to the Sponsor. Except as described below, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. OnSeptember 23, 2021 , the Company issued a Working Capital Loan to the Sponsor, pursuant to which the Company borrowed$180,000 for ongoing expenses reasonably related to the business of the Company and the consummation of the Partnering Transaction. OnOctober 27, 2021 , the Company issued a Working Capital Loan to the Sponsor, pursuant to which the Company borrowed$180,000 for ongoing expenses reasonably related to the business of the Company and the consummation of the Partnering Transaction. The Working Capital Loans do not bear any interest. All unpaid principal under the Working Capital Loans will be due and payable in full on the earlier of (i)January 11, 2023 and (ii) the effective date of the Partnering Transaction (such earlier date, the "Maturity Date"). The Sponsor will have the option, at the time of consummation of a Partnering Transaction, to convert any amounts outstanding under the Working Capital Loans into Working Capital CAPS TM .
During the year ended
Administrative Services Agreement
Commencing on the date that our securities were first listed on the
In addition, the Sponsor, executive officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable Partnering Transactions. Our audit committee will review on a quarterly basis all payments that were made to the Sponsor, executive officers or directors, or their affiliates.
Other Contractual Obligations
The holders of the Founder Shares, Performance Shares, private placement warrants and private placement shares underlying Private Placement CAPS TM and private placement CAPS TM that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock into which such securities may convert and that may be issued upon exercise of private placement warrants) are entitled to registration rights pursuant to a registration rights agreement, requiring us to register such securities for resale. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent to the completion of the Partnering Transaction. We will bear the expenses incurred in connection with the filing of any such registration statements.
In
Critical Accounting Policies and Estimates
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with accounting principles generally accepted in
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Class A Common Stock Subject to Possible Redemption 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 features redemption rights that are either within the
control of the holder or subject to redemption upon the occurrence of uncertain
events not solely within our control) is classified as temporary equity. At all
other times, Class A common stock is classified as stockholders' equity. Our
Class A common stock features certain redemption rights that are considered to
be outside of our control and subject to the occurrence of uncertain future
events. Accordingly, as of
Under ASC 480, we have elected to recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Immediately upon the closing of the Initial Public Offering, we recognized the accretion from initial book value to redemption amount value. The change in the carrying value of the redeemable Class A common stock resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.
Net Income per Share of Common Stock
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." We have three classes of shares, which are referred to as
Class A common stock, Class B common stock and Class F common stock. Income and
losses are shared pro rata among the three classes of shares. Net income (loss)
per share of common stock is calculated by dividing the net income (loss) by the
weighted average number of common stock outstanding for the respective period.
The calculation of diluted net income per share of common stock does not
consider the effect of the warrants underlying the CAPS
TM
sold in the Initial Public Offering and the Private Placement Warrants to
purchase 10,503,500 shares of Class A common stock in the calculation of diluted
income per share, because their inclusion would be anti-dilutive under the
treasury stock method. As a result, diluted net income per share of common stock
is the same as basic net income per share of common stock for the year ended
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. We issued 10,350,000 warrants to purchase Class A common stock to investors in our Initial Public Offering and issued 153,500 Private Placement Warrants. All of our outstanding warrants are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, we recognize the warrant instruments as liabilities at fair value and adjust the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations. The fair value of the warrants issued in connection with the Initial Public Offering was initially measured using a Monte-Carlo simulation model and subsequently been measured based on the listed market price of such warrants at each measurement date when separately listed and traded. The fair value of the warrants issued in connection with the Private Placement have been estimated using a Black-Scholes Option Pricing model at each measurement date. The determination of the fair value of the warrant liability may be subject to change as more current information becomes available and, accordingly, the actual results could differ significantly. Derivative warrant liabilities are classified as non-current liabilities, as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Recent Accounting Pronouncements
In
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material impact on our financial statements.
Off-Balance
Sheet Arrangements
As ofDecember 31, 2021 , we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. 60
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JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an "emerging growth company" and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an "emerging growth company," we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO's compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an "emerging growth company," whichever is earlier.
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