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, net of the redemptions in connection with the adoption of our
Extension Amendment, 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 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.
On December 22, 2022, we held the Special Meeting at which our stockholders
approved the Extension Amendment to extend the date by which we must complete a
Business Combination from March 29, 2023 to September 29, 2023. On December 23,
2022, the underwriters waived any entitlement to the Deferred Discount in
respect of any Business Combination. On December 27, 2022, we filed the
Extension Amendment with the Secretary of State of the State of Delaware. In
connection with the Special Meeting, stockholders holding 48,642,463 shares of
Class A common stock exercised their right to redeem such shares for a pro rata
portion of the funds held in our Trust Account as of December 20, 2022,
including any interest earned on the funds held in the Trust Account (net of
taxes payable). As a result, approximately $492.2 million (approximately $10.12
per share) was removed from the Trust Account to pay such holders. Following the
aforementioned redemptions, we have 13,857,537 shares of common stock
outstanding, which includes 1,357,537 shares of Class A common stock and
12,500,000 Founder Shares.
As of December 31, 2022, we had an unrestricted balance of $1,557,716, which
includes approximately $1,479,000 for tax payments in the first quarter of 2023,
as well as cash and accrued interest held in the Trust Account of $13,850,950.
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 A&R Convertible Notes, to loan us up
to $1,250,000, each, or an aggregate of $2,500,000, as may be required for
ongoing business expenses and the Business Combination. As of December 31, 2022,
$1,573,712 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 September 29, 2023, raises substantial
doubt about our ability to continue as a going concern. If a Business
Combination is not consummated by September 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 September 29, 2023.
We did not have any off-balance sheet arrangements as of December 31, 2022 and
2021.
As of December 31, 2022 and 2021, we did not have any long-term debt, capital,
purchase or operating lease obligations or other long-term liabilities.
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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.
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, 2022 and 2021, we had a net income of
$23,970,438 and $9,194,076, respectively. The income for the year ended December
31, 2022, relates to $1,607,995 of general and administrative costs related to
on-going business expenses, $240,000 of management fees for administrative
services, offset by $7,704,725 in earnings on the Trust Account assets a gain on
warrant derivative liability of $18,958,333 and a gain on deferred underwriting
commissions of $582,750. 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
contained 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 Charter
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 Charter. The 1,357,537 Public Shares
that remain outstanding following the redemptions in connection with our
adoption of the Extension Amendment continue to contain a redemption feature as
described in this Annual Report.
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, 2022 and 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
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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, 2022 and 2021, the Company
reported basic and diluted net income per common share of $0.39 and $0.15,
respectively.
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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