Overview
We are a blank check company incorporated as a Delaware corporation 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 consummated our initial Public Offering on March 29,
2021. We intend to use the cash proceeds from our Public Offering and Private
Placement as well as additional issuances, if any, of our capital stock, debt or
a combination of cash, stock and debt to complete the Business Combination.
We expect to incur significant costs in the pursuit of our acquisition plans.
There can be no assurance that our plans to raise capital or to complete our
initial Business Combination will be successful.
Liquidity and Capital resources
On March 29, 2021, we consummated a $500,000,000 Public Offering consisting of
50,000,000 Units at a price of $10.00 per Unit. Each Unit consists of one share
of the Company's Class A common stock, $0.0001 par value and one-fourth of one
redeemable Public Warrant. Simultaneously, with the closing of the Public
Offering, we consummated a $12,500,000 Private Placement of an aggregate of
8,333,333 Sponsor Warrants at a price of $1.50 per warrant. Upon closing of the
Public Offering and Private Placement on March 29, 2021, $500,000,000 in
proceeds (including $17,500,000 of deferred underwriting commissions) from the
Public Offering and Private Placement was placed in the Trust Account. The
remaining $12,500,000 held outside of trust was used to pay underwriting
commissions of $10,000,000, loans to our Sponsors, and deferred offering and
formation costs, and for working capital.
As of December 31, 2021, we had an unrestricted balance of $41,301 as well as
cash and accrued interest held in the Trust Account of $500,031,065. Our working
capital needs will be satisfied through the funds, held outside of the Trust
Account, from the Public Offering. Interest on funds held in the Trust Account
may be used to pay income taxes and franchise taxes, if any. Further, TJF and
JUSH have agreed, pursuant to the Convertible Notes, to loan us up to $750,000,
each, or an aggregate of $1,500,000, as may be required for ongoing business
expenses and the Business Combination. As of December 31, 2021, $853,712 had
been borrowed under the Convertible Notes. TJF and JUSH will each have the
option to convert any amounts outstanding under their respective Convertible
Note into warrants at a price of $1.50 per warrant which would be identical to
the Sponsor Warrants.
Going Concern
In connection with our assessment of going concern considerations in accordance
with the authoritative guidance in Financial Accounting Standard Board ("FASB")
Accounting Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about
an Entity's Ability to Continue as a Going Concern," management has determined
that the mandatory liquidation and subsequent dissolution, should we be unable
to complete a Business Combination before March 29, 2023, raises substantial
doubt about our ability to continue as a going concern. If a Business
Combination is not consummated by March 29, 2023, there will be a mandatory
liquidation and subsequent dissolution. No adjustments have been made to the
carrying amounts of assets or liabilities should the Company be required to
liquidate after March 29, 2023.
We did not have any off-balance sheet arrangements as of December 31, 2021.
As of December 31, 2021, we did not have any long-term debt, capital, purchase
or operating lease obligations or other long-term liabilities. We have recorded
deferred underwriting commissions payable upon the completion of the Business
Combination.
We entered into an administrative services agreement in which the Company pays
Fertitta Entertainment, Inc. an affiliate of TJF, for office space, secretarial
and administrative services provided to members of the Company's management
team, in an amount not to exceed $20,000 per month.
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Results of Operations
We have neither engaged in any significant business operations nor generated any
revenues to date. All activities to date relate to the Company's formation and
its initial Public Offering and search for a suitable Business Combination. We
generate non-operating income in the form of interest income on cash, cash
equivalents, and marketable securities 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 as we locate a suitable Business Combination.
For the years ended December 31, 2021, and the period from August 13, 2020
(inception) to December 31, 2020, we had a net income of $9,194,076 and $0,
respectively. The income for the year ended December 31, 2021, relates to
$1,986,266 of general and administrative costs related to the formation of the
Company and on-going expenses as we search for a Business Combination, $200,000
of management fees for administrative services, and $942,390 in offering costs
expensed, offset by $31,065 in earnings on the Trust Account assets and gain on
warrant derivative liability of $12,291,667.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. The
Company has identified the following as its critical accounting policies:
Warrant Derivative Liability
In accordance with FASB ASC 815-40, Derivatives and Hedging: Contracts in an
Entities Own Equity, an entity must consider whether to classify contracts that
may be settled in its own stock, such as warrants, as equity of the entity or as
an asset or liability. If an event that is not within the entity's control could
require net cash settlement, then the contract should be classified as an asset
or a liability rather than as equity. We have determined because the terms of
Public Warrants include a provision that entitles all warrant holders to cash
for their warrants in the event of a qualifying cash tender offer, while only
certain of the holders of the underlying shares of common stock would be
entitled to cash, our warrants should be classified as derivative liability
measured at fair value, with changes in fair value each period reported in
earnings. Further if our Sponsor Warrants are held by someone other than initial
purchasers of the Sponsor Warrants or their permitted transferees, the Sponsor
Warrants will be redeemable by the Company and exercisable by such holders on
the same basis as the Public Warrants. Because the terms of the Sponsor Warrants
and Public Warrants are so similar, we classified both types of warrants as a
derivative liability measured at fair value. Volatility in our Class A common
stock and Public Warrants may result in significant changes in the value of the
derivatives and resulting gains and losses on our statement of operations.
Redeemable Shares
All of the 50,000,000 Public Shares sold as part of the Public Offering contain
a redemption feature as described in this Annual Report. 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. Although the Company's second amended and restated
certificate of incorporation provides a minimum net tangible asset threshold of
$5,000,001, the Company has determined all of the 50,000,000 Public Shares
should be included in temporary equity, classified outside of permanent equity,
regardless of the minimum net tangible assets required by the Company's second
amended and restated certificate of incorporation.
Net Income per Common Share
Basic net income per common share is computed by dividing net income applicable
to common stockholders by the weighted average number of common shares
outstanding during the period. All shares of Class B common stock are assumed to
convert to shares of Class A common stock on a one-for-one basis. For the year
ended December 31, 2021, the Company did not have any dilutive warrants,
securities or other contracts that could, potentially, be exercised or converted
into common stock. As a result, diluted income per common share is the same as
basic income per common share for all periods presented. The earnings per share
calculation allocates income shared pro rata between Class A and Class B common
stock. As a result, the calculated net income per share is the same for Class A
and Class B shares of common stock. For the year ended December 31, 2021, the
Company reported basic and diluted net income per common share of $0.15.
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Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
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