References to the "Company," "FAST Acquisition Corp.," "our," "us" or "we" refer
to FAST Acquisition Corp. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the unaudited condensed consolidated financial statements and the notes thereto
contained elsewhere in this report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties.
Cautionary 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. 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. For information identifying important factors that could cause
actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's Annual Report on Form 10-K filed with the SEC. 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 in Delaware on June 4, 2020 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 are an emerging growth company and, as such, we are subject to
all of the risks associated with emerging growth companies.
Our Sponsor is FAST Sponsor, LLC, a Delaware limited liability company. The
registration statement for our Initial Public Offering was declared effective on
August 20, 2020. On August 25, 2020, we consummated our Initial Public Offering
of 20,000,000 Units, at $10.00 per Unit, generating gross proceeds of $200.0
million, and incurring offering costs of approximately $11.5 million, inclusive
of $7.0 million in deferred underwriting commissions. The underwriters were
granted a 45-day option from the date of the final prospectus relating to the
Initial Public Offering to purchase up to 3,000,000 additional Units to cover
over-allotments, if any, at $10.00 per Unit. The over-allotment expired
unexercised on October 9, 2020.
Simultaneously with the closing of the Initial Public Offering, we consummated
the Private Placement of 6,000,000 Private Placement Warrants to our Sponsor,
each exercisable to purchase one share of Class A common stock at $11.50 per
share, at a price of $1.00 per Private Placement Warrant, generating gross
proceeds to us of $6.0 million.
Upon the closing of the Initial Public Offering and the Private Placement,
$200.0 million ($10.00 per Unit) of the net proceeds of the sale of the Units in
the Initial Public Offering and the Private Placement was placed in the Trust
Account located in the United States at JP Morgan Chase Bank, N.A. with
Continental Stock Transfer & Trust Company acting as trustee, and has been
invested only in U.S. "government securities," within the meaning of Section
2(a)(16) of the Investment Company Act having a maturity of 185 days or less or
in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act which invest only in direct U.S. government
treasury obligations, as determined by the Company, until the earlier of: (i)
the completion of a Business Combination and (ii) the distribution of the Trust
Account as described below.
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Termination of Proposed Business Combination and Settlement
On February 1, 2021, we entered into the Merger Agreement with FEI, FAST Merger
Corp. and Merger Sub. However, on December 9, 2021, we entered into the
Settlement Agreement with FEI, FAST Merger Corp., Merger Sub and the Sponsor,
pursuant to which the parties agreed to mutually terminate the Merger Agreement
as of December 9, 2021 and fully and finally resolve all disputes that have
arisen between them relating to FEI's purported termination of the Merger
Agreement. The Settlement Agreement mutually terminated the Merger Agreement as
of December 9, 2021. By virtue of the termination of the Merger Agreement, the
PIPE Subscription Agreements and all other Ancillary Agreements (as defined in
the Merger Agreement) terminated in accordance with their terms. The Settlement
Agreement provides for both immediate and deferred payments from FEI to the
Company. The Settlement Agreement provides that FEI will pay $6.0 million to the
Company within three business days of the Effective Date (as defined in the
Settlement Agreement) of the Settlement Agreement and will further loan $1.0
million to the Company within five business days of the Effective Date of the
Settlement Agreement. The Settlement Agreement provides that FEI will further
pay to the Company either (i) $10.0 million in the event that the Company
consummates an initial business combination, or (ii) $26.0 million if the
Company does not consummate an initial business combination by August 1, 2022
and determines to redeem its Public Shares and liquidate and dissolve. The
Settlement Agreement contains mutual releases by all parties, for all claims
known and unknown, relating and arising out of, or relating to, among other
things, the Merger Agreement and FEI's purported termination notice dated
December 1, 2021. The Settlement Agreement also contains a covenant not to sue
and other customary terms. As of December 31, 2021, we received the $6.0 million
in cash and the $1.0 million loan proceeds. The $1.0 million loan agreement was
entered into December 14, 2021 and is convertible, in any amount, at the option
of the payee into warrants to purchase shares of Class A common stock of the
Company at a conversion price of $1.00 per warrant. If converted the warrants
would be identical to the Private Placement Warrants. The Convertible Promissory
Note bears no interest and matures on the date of a business combination.
The foregoing description of the Settlement Agreement does not purport to be
complete and is qualified in its entirety by reference to the text of the
Settlement Agreement, a copy of which was filed with the SEC on a Current Report
on Form 8-K on December 10, 2021.
Recent Developments
Dissolution and Liquidation
Following the termination of the Merger Agreement with FEI, we re-commenced a
search for initial business combination candidates and considered various
potential target companies. We entered into a letter of intent with one of such
potential targets and, thereafter, engaged in due diligence of the potential
target's business. We also negotiated a definitive acquisition agreement and
other transaction documents with the potential target, and negotiated financing
documents with financing providers, in each of these cases, to the point of near
finalization. However, despite our continued efforts to enter into and
consummate the transaction, the seller of such target company is not moving
forward with definitive agreements.
As a result of our inability to consummate a Business Combination, given the
August 25, 2022 deadline to consummate a Business Combination under our Charter,
on August 2, 2022, our board of directors has determined that, pursuant to the
terms and requirements of our Charter, promptly following August 25, 2022, we
will redeem all of the Public Shares and dissolve and liquidate the Company in
accordance with the terms of our Charter.
Accordingly, effective August 26, 2022, and pursuant to the terms and
requirements of our Charter, 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, equal to the aggregate amount then on deposit in the Trust
Account, including interest earned on the funds held in the Trust Account,
divided by the number of then outstanding Public Shares, which redemption will
completely extinguish Public Stockholders' rights as stockholders (including any
right to receive further liquidating distributions), and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of the
remaining stockholders and the board of directors, liquidate and dissolve,
subject in each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. We will not withhold
any amount from the Trust Account to pay dissolution expenses, despite the
provision that we are permitted to do so up to $100,000 of interest. In
accordance with the foregoing terms and requirements of our Charter, any funds
received pursuant to the Settlement Agreement that are remaining after the
payment of expenses will not be part of any distributions with respect to the
Public Shares.
Deferred Underwriting Commission
In accordance with the terms of the underwriting agreement entered into in
connection with the Initial Public Offering, because we will not consummate an
initial Business Combination within the Combination Period, the deferred
underwriting commission will be included in the distribution of the proceeds
held in the Trust Account made to the Public Shareholders upon liquidation. In
connection with such liquidation, the underwriters forfeit any rights or claims
to the deferred underwriting commission.
Going Concern Consideration and Capital Resources
As of June 30, 2022, we had approximately $2.6 million in our operating bank
account and working capital deficit of approximately $1.2 million.
Prior to the completion of the Initial Public Offering, our liquidity needs were
satisfied through a payment of $25,000 from our Sponsor in exchange for the
issuance of Founder Shares, the loan under the Note as well as advancement of
funds from our Sponsor in an aggregate amount of approximately $354,000 to us to
cover for offering costs in connection with the Initial Public Offering.
Subsequent to the consummation of the Initial Public Offering on August 25,
2020, our liquidity needs had been satisfied with the net proceeds from the
consummation of the Private Placement not held in the Trust Account. We fully
repaid the Note and advanced funds on August 25, 2020. In addition, in order to
finance transaction costs in connection with a Business Combination, our
officers, directors and initial stockholders may, but are not obligated to,
provide us Working Capital Loans. As of June 30, 2022 and December 31, 2021,
there were no amounts outstanding under any Working Capital Loans.
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In connection with the Settlement Agreement with FEI as discussed above, in
December 2021, we received an aggregate of $7.0 million from FEI and issued FEI
the Convertible Promissory Note with a principal value of $1.0 million and a
fair value of approximately $1.3 million as of June 30, 2022. The Settlement
Agreement provides that FEI will further pay to us either (i) $10.0 million in
the event that we consummate an initial Business Combination, or (ii) $26.0
million if we do not consummate an initial Business Combination by August 1,
2022 and determines to redeem ours Public Shares and liquidate and dissolve.
Based on the foregoing, management believes that we will have sufficient
borrowing capacity to meet our needs through the consummation of a Business
Combination or liquidation. However, in connection with the management
assessment of going concern considerations in accordance with ASC 205-40,
management has determined that mandatory liquidation and subsequent dissolution
raise substantial doubt about our ability to continue as a going concern. No
adjustments have been made to the carrying amounts of assets or liabilities
should we be required to liquidate after August 25, 2022. The unaudited
condensed consolidated financial statements do not include any adjustment that
might be necessary if we are unable to continue as a going concern.
Risks and Uncertainties
Our 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
these unaudited condensed consolidated financial statements. The unaudited
condensed consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and Belarus commenced a military action
with the country of Ukraine. As a result of this action, various nations,
including the United States, have instituted economic sanctions against the
Russian Federation and Belarus. Further, the impact of this action and related
sanctions on the world economy are not determinable as of the date of these
unaudited condensed consolidated financial statements and the specific impact on
the our financial condition, results of operations, and cash flows is also not
determinable as of the date of these unaudited condensed consolidated financial
statements.
Results of Operations
Our entire activity from inception up to June 30, 2022, was in preparation for
our formation, the Initial Public Offering, and since the closing of our Initial
Public Offering, a search for Business Combination candidates. We will not
generate any operating revenues until the closing and completion of our initial
Business Combination, at the earliest.
For the three months ended June 30, 2022, we had a net income of approximately
$14.2 million, which consisted of approximately $16.7 million of gain from
changes in fair value of derivative warrant liabilities, approximately $286,000
of gain from changes in fair value of the Convertible Promissory Note, and
approximately $250,000 from income from our investments held in the Trust
Account, partially offset by general and administrative fees of approximately
$2.9 million, related party administrative fees of $45,000, franchise tax
expenses of approximately $51,000, and income tax expenses of approximately
$50,000.
For the six months ended June 30, 2022, we had a net income of approximately
$57.9 million, which consisted of approximately $58.9 million of gain from
changes in fair value of derivative warrant liabilities, approximately $3.5
million of gain from changes in fair value of the Convertible Promissory Note,
and approximately $196,000 from income from our investments held in the Trust
Account, partially offset by general and administrative expenses of
approximately $4.6 million, related party administrative fees of approximately
$90,000, franchise tax expenses of $100,000 and income tax expenses of
approximately $50,000.
For the three months ended June 30, 2021, we had a net loss of approximately
$2.3 million which consisted of approximately $1.7 million in change in the fair
value of derivative warrant liabilities, approximately $0.5 million in general
and administrative expenses, approximately $47,000 of franchise taxes, and a
loss of approximately $2,000 from our investments held in the Trust Account.
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For the six months ended June 30, 2021, we had a net loss of approximately $23.1
million which consisted of approximately $2.3 million in general and
administrative expenses, approximately $97,000 in franchise tax expense, and
approximately $20.6 million in change in fair value of derivative warrant
liabilities, partially offset by approximately $22,000 of income from our
investments held in the Trust Account.
Contractual Obligations
Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may
be issued upon conversion of Working Capital Loans, if any (and any shares of
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 and upon conversion of the Founder Shares), are entitled to registration
rights pursuant to a registration rights agreement. These holders will be
entitled to certain demand and "piggyback" registration rights. We will bear the
expenses incurred in connection with the filing of any such registration
statements.
Underwriting Agreement
The underwriters were entitled to an underwriting discount of $0.20 per Unit, or
$4.0 million in the aggregate, paid upon the closing of the Initial Public
Offering. In addition, $0.35 per Unit, or $7.0 million in the aggregate will be
payable to the underwriters for deferred underwriting commissions. The deferred
fee will become payable to the underwriters from the amounts held in the Trust
Account solely in the event that we complete a Business Combination, subject to
the terms of the underwriting agreement.
Administrative Services Agreement
Commencing on August 21, 2020 and continuing until the earlier of the
consummation of a Business Combination or our liquidation, we agreed to pay the
Sponsor a total of $15,000 per month for office space, utilities, and
secretarial and administrative support services provided to members of our
management team. We incurred $45,000 for such services for the three months
ended June 30, 2022 and 2021, included as general and administrative expenses -
related parties on the unaudited condensed consolidated statements of
operations. We incurred $90,000 for such services for the six months ended June
30, 2022 and 2021, included as general and administrative expenses - related
parties on the unaudited condensed consolidated statements of operations. As of
June 30, 2022, there was a balance of $15,000 prepaid for such services included
in prepaid expenses on the accompanying condensed consolidated balance sheets.
As of December 31, 2021, there was no amount prepaid and no outstanding balance
for such services included on the accompanying condensed consolidated balance
sheets.
The Sponsor, officers and directors, or any of their respective affiliates will
be reimbursed for any out-of-pocket expenses incurred in connection with
activities performed on our behalf such as identifying potential target
businesses and performing due diligence on suitable business combinations.
Critical Accounting Policies
Investments Held in the Trust Account
Our portfolio of investments held in the Trust Account is comprised of U.S.
government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act, with a maturity of 185 days or less, or investments in
money market funds that invest in U.S. government securities, or a combination
thereof. The investments held in the Trust Account are classified as trading
securities. Trading securities are presented on our condensed consolidated
balance sheets at fair value at the end of each reporting period. Gains and
losses resulting from the change in fair value of these securities are included
in net gain from investments held in Trust Account on the unaudited condensed
consolidated statements of operations. The estimated fair values of investments
held in the Trust Account are determined using available market information.
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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.
The Public Warrants and the Private Placement 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 the Company's unaudited condensed consolidated
statements of operations. The fair value of the public warrants issued in
connection with the Initial Public Offering and Private Placement Warrants were
initially measured at fair value using a Monte Carlo simulation model and
subsequently, the fair value of the Private Placement Warrants was estimated
using a Monte Carlo simulation model each measurement date, and as of June 30,
2022, a Black-Scholes Merton model using the implied volatility derived from a
Monte Carlo Simulation analysis has been employed. The fair value of public
warrants issued in connection with the Initial Public Offering have subsequently
been measured based on the listed market price of such warrants.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in ASC 480. Shares of Class A common stock subject
to mandatory redemption (if any) are classified as liability instruments and are
measured at fair value. Shares of 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 our control) are classified as temporary
equity. At all other times, shares of Class A common stock are 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, at June 30, 2022 and
December 31, 2021, 20,000,000 shares of Class A common stock subject to possible
redemption are presented as temporary equity, outside of the stockholders'
equity section of our condensed consolidated balance sheets.
We recognize changes in redemption value immediately as they occur and adjusts
the carrying value of the Class A common stock subject to possible redemption to
equal the redemption value at the end of each reporting period. Immediately upon
the closing of the Initial Public Offering, we recognized the accretion from
initial book value to redemption amount, which, resulted in charges against
additional paid-in capital (to the extent available) and accumulated deficit.
Net Income (Loss) Per Common Share
We comply with accounting and disclosure requirements of ASC 260. We have two
classes of shares, which are referred to as Class A common stock and Class B
common stock. Income and losses are shared pro rata between the two classes of
shares. Net income (loss) per common share is calculated by dividing the net
income (loss) by the weighted average shares of common stock outstanding for the
respective period.
We did not consider the effect of the warrants issued in connection with the
Initial Public Offering and the Private Placement to purchase an aggregate of
16,000,000 shares of common stock in the calculation of diluted income (loss)
per share because their exercise is contingent upon future events. Accretion
associated with the redeemable Class A common stock is excluded from earnings
per share as the redemption value approximates fair value.
JOBS Act
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
unaudited condensed consolidated financial statements may not be comparable to
companies that comply with new or revised accounting pronouncements as of public
company effective dates.
25
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 Public Company
Accounting Oversight Board 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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