The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto which are included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Overview
We are a blank check company incorporated on
We presently have no revenue, have had losses since inception from incurring formation costs and have had no operations other than the active solicitation of a target business with which to complete a business combination.
Recent Developments
Proposed Business Combination
On
The Merger Agreement and the transactions contemplated thereby were unanimously
approved by the Board of Directors of the Company and the Board of Directors of
Footprint (the "Footprint Board") on
The Merger Agreement
Merger Consideration
Pursuant to the terms of the Merger Agreement, at the effective time of the
First Merger, (a) each share of (i) Footprint's common stock, par value
55 --------------------------------------------------------------------------------
Agreement to be listed on the Nasdaq Capital Market (the "NASDAQ") at the closing of the Proposed Business Combination.
Pursuant to the Merger Agreement, the aggregate merger consideration payable at
the closing of the Proposed Business Combination to all of the stockholders,
holders of stock options of Footprint, holders of Footprint Warrants and holders
of Footprint Convertible Promissory Notes will be an aggregate of 161,776,650
shares of Company Class A Stock (deemed to have a value of
In addition to the consideration to be paid at the closing of the Proposed Business Combination, certain stockholders and holders of stock options of Footprint will be entitled to receive, pursuant to the Merger Agreement or the Parent Performance Plan (as defined in the Merger Agreement), additional shares of Company Class A Stock or performance-based restricted stock units from the Company, as applicable, subject to the terms provided in the Merger Agreement or the Parent Performance Plan.
Treatment of Footprint's Stock Options
Pursuant to the Merger Agreement, at the closing of the Proposed Business Combination, each of Footprint's stock options, to the extent then outstanding and unexercised, will automatically be converted into an option to acquire a certain number of shares of Company Class A Stock and at an adjusted exercise price per share as determined pursuant to the terms of the Merger Agreement. Each such converted option will be subject to the same terms and conditions as were applicable to the corresponding Footprint stock option as of immediately prior to the closing of the Proposed Business Combination.
Representations, Warranties and Covenants
The parties to the Merger Agreement have made representations, warranties and covenants that are customary for transactions of this nature. The representations and warranties of the respective parties to the Merger Agreement will not survive the closing of the Proposed Business Combination.
Covenants
The Merger Agreement includes customary covenants of the parties with respect to operation of their respective businesses prior to consummation of the Proposed Business Combination and efforts to satisfy conditions to consummation of the Proposed Business Combination. The Merger Agreement also contains additional covenants of the parties, including, among others, (a) covenants providing for the Company and Footprint to use their reasonable best efforts to obtain all necessary regulatory approvals and (b) covenants providing for the Company and Footprint to cooperate in the preparation of the Registration Statement and Proxy Statement (as each such term is defined in the Merger Agreement) required to be filed in connection with the Proposed Business Combination. The covenants of the parties to the Merger Agreement will not survive the closing of the Proposed Business Combination, except for those covenants that by their terms expressly apply in whole or in part after the closing of the Proposed Business Combination.
Conditions to Consummation of the Proposed Business Combination
The consummation of the Proposed Business Combination is conditioned upon, among
other things, (a) the expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (b) the
absence of any governmental order, statute, rule or regulation enjoining or
prohibiting the consummation of the Proposed Business Combination, (c) the
Company having at least
56 --------------------------------------------------------------------------------
(ii) official notice of listing, and (h) the Closing Parent Cash (as defined in
the Merger Agreement) being equal to or exceeding
Following approval of the Merger Agreement and the transactions contemplated thereby by the Footprint Board, and receipt of the recommendation of the Footprint Board to adopt the Merger Agreement and approve the transactions contemplated thereby, Footprint stockholders holding a sufficient amount of Footprint Common Stock delivered a written consent adopting the Merger Agreement and approving the transactions contemplated by the Merger Agreement, and no further approval of Footprint's stockholders is required with respect to the consummation of the transactions contemplated by the Merger Agreement.
Termination
The Merger Agreement may be terminated at any time prior to the consummation of
the Mergers (whether before or after the required Company stockholder vote and
Footprint Stockholder Approval has been obtained) by mutual written consent of
the Company and Footprint and in certain other circumstances, including if the
Proposed Business Combination has not been consummated by
The foregoing description of the Merger Agreement and the transactions contemplated thereby, including the Mergers, does not purport to be complete and is qualified in its entirety by the terms and conditions of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The Merger Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of such agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties to the Merger Agreement and are subject to important qualifications and limitations agreed to by the contracting parties in connection with negotiating the Merger Agreement. The Merger Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company or any other party to the Merger Agreement. In particular, the representations, warranties, covenants and agreements contained in the Merger Agreement, which were made only for purposes of the Merger Agreement and as of specific dates, were solely for the benefit of the respective parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties (including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the respective parties to the Merger Agreement instead of establishing these matters as facts) and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to the Company's investors and security holders. Company investors and security holders are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties or covenants of any party to the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company's public disclosures.
On
Each Subscription Agreement will terminate with no further force and effect upon the earliest to occur of: (a) such date and time as the Merger Agreement is terminated in accordance with its terms; (b) upon the mutual written agreement of the parties to such Subscription Agreement; (c) if any of the conditions to closing set forth in such Subscription Agreement are not satisfied or waived on or prior to the closing and, as a result thereof, the transactions contemplated by such Subscription Agreement are not consummated at the closing; and (d) 30 days after the Outside Date, if the closing of the Proposed Business Combination shall not have occurred by such date other than as a result of a breach of the investor's obligations under the Subscription Agreement. As of the date hereof, the shares of Company Class A Stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act of 1933, as amended (the "Securities Act"). The Company will, within 30 days after the closing, file with the Securities and
57 --------------------------------------------------------------------------------
The Sponsor Subscription Agreement is substantially similar to the Individual Investor Subscription Agreements, except that the Sponsor has the right to assign its commitment to purchase the Company Class A Stock under the Sponsor Subscription Agreement in advance of the closing of the Proposed Business Combination. The Institutional Investor Subscription Agreement is substantially similar to the Individual Investor Subscription Agreement.
The foregoing description of the PIPE Subscription Agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the PIPE Subscription Agreements, a form of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Waiver and Share Surrender Agreement
On
The foregoing description of the Waiver Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Waiver Agreement, a copy of which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
Results of Operations
For the period from
As indicated in the accompanying unaudited financial statements, at
Liquidity and Capital Resources
On
On
58 --------------------------------------------------------------------------------
our Sponsor, at a price of
Prior to the completion of the Public Offering, the Sponsor loaned the Company
an aggregate of
On
As of
In addition, at
We intend to use substantially all of the funds held in the Trust Account, including interest (which interest shall be net of Regulatory Withdrawals and taxes payable) to consummate our Business Combination. Moreover, we may need to obtain additional financing either to complete a Business Combination or because we become obligated to redeem a significant number of shares of our Class A Common Stock upon completion of a 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. To the extent that our capital stock or debt is used, in whole or in part, as consideration to consummate our Business Combination, the remaining proceeds held in our Trust Account, if any, will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategy. Following the closing of a Business Combination, we do not expect there to be remaining proceeds in our Trust Account.
As of
The underwriter is entitled to underwriting discounts and commissions of 5.5%
(
59 --------------------------------------------------------------------------------
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. The underwriter is not entitled to any interest accrued on the Deferred Discount.
Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in
Offering Costs
The Company complies with the requirements of the Accounting Standards
Codification (the "ASC") 340-10-S99-1 and
Net loss per common share
The Company has two classes of shares, which are referred to as Class A Common
Stock and the Founders Shares. Net income/(loss) per common share is computed
utilizing the two-class method. The two-class method is an earnings allocation
formula that determines earnings per share separately for each class of common
stock based on an allocation of undistributed earnings per the rights of each
class. At
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, "Income Taxes." Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
For those liabilities or benefits to be recognized, a tax position must be
more-likely-than-not to be sustained upon examination by taxing authorities. The
Company recognizes accrued interest and penalties related to unrecognized tax
liabilities as income tax expense. No amounts were accrued for the payment of
interest and penalties at
The Company may be subject to potential examination by
The Company is incorporated in the
60 --------------------------------------------------------------------------------
Recently issued accounting pronouncements not yet adopted
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company's financial statements based on current operations of the Company. The impact of any recently issued accounting standards will be re-evaluated on a regular basis or if a business combination is completed where the impact could be material.
Going Concern Consideration
If the Company does not complete its Business Combination by
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 Public Offering. In addition, if the Company fails to complete its Business
Combination by
In addition, at
Critical Accounting Policies and Critical Accounting Estimates
The preparation of consolidated financial statements and related disclosures in
conformity with accounting principles generally accepted in
Warrant Liability
We account for the warrants issued in connection with our initial public
offering in accordance with the guidance contained in ASC 815-40 under which the
warrants do not meet the criteria for equity treatment and must be recorded as
liabilities. Accordingly, we classify the warrants as liabilities at their fair
value and adjust the warrants to fair value at each reporting period. This
liability is subject to re-measurement at each balance sheet date until
exercised, and any change in fair value is recognized in our statement of
operations. The Company utilizes a Monte Carlo simulation methodology to value
the warrants at each reporting period, with changes in fair value recognized in
the statement of operations. The key assumptions in the option pricing model
utilized are assumptions related to expected share-price volatility, expected
term, risk-free interest rate and dividend yield. The expected volatility as of
the IPO Closing Date was derived from observable public warrant pricing on
comparable 'blank-check' companies that went public in 2020 and 2021. The
risk-free interest rate is based on the interpolated
61
--------------------------------------------------------------------------------
© Edgar Online, source