Notes to Condensed Financial Statements
(Unaudited)
Note 1—Description of Organization, Business Operations and
Basis of Presentation
Colicity Inc. (the “Company”)
was incorporated in Delaware on October 19, 2020. The Company was 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 (the “Business Combination”).
Although the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, the Company
intends to initially focus its search on identifying a prospective target business in the technology, media and telecommunications industries
in the United States and other developed countries.
All activity for the period
from October 19, 2020 (inception) through September 30, 2021 relates to the Company’s formation, its Initial Public Offering (as defined
below), and identifying a target company for a Business Combination. The Company will not generate any operating revenues until after
the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from
the proceeds of the Initial Public Offering.
The Company’s sponsor
is X-icity Holdings Corporation, a Washington corporation (the “sponsor”). The registration statement for the Initial Public
Offering was declared effective on February 23, 2021. On February 26, 2021, the Company consummated the Initial Public Offering of 34,500,000
units (the “Units” and the shares of Class A common stock included in the Units, the “Public Shares”), including
the underwriters’ exercise of their full over-allotment option of 4,500,000 units, at $10.00 per Unit (“Over-Allotment Option”),
generating gross proceeds of $345.0 million (the “Initial Public Offering”), and incurring offering costs of approximately
$18.8 million, inclusive of approximately $11.8 million in deferred underwriting commissions (see Note 7).
Simultaneously with the closing
of the Initial Public Offering, the Company completed the private sale (the “Private Placement”) of an aggregate of 5,933,333
warrants (the “Private Placement Warrants”) to the Company’s sponsor, X-icity Holdings Corporation, at a purchase price
of $1.50 per Private Placement Warrant, generating gross proceeds to the Company of $8.9 million.
Upon the closing of the Initial
Public Offering and the Private Placement, a total of $345.0 million ($10.00 per Unit), consisting of the net proceeds of the Initial
Public Offering and certain of the proceeds of the Private Placement, was placed in a trust account (“Trust Account”),
located in the United States at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as
trustee, and will only be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment
Company Act of 1940, as amended (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, until the earlier of (i) the completion of a Business Combination or (ii) the distribution
of the Trust Account as described below.
The Company’s management
has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business
Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete
one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account
(net of amounts disbursed to management for working capital purposes and excluding the amount of any deferred underwriting discount held
in trust) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business
Combination if the post-transaction company owns or acquires 50% or more of the voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company
Act.
The Company will provide
holders of the Company’s outstanding shares of Class A common stock, par value $0.0001 per share, sold in the Initial Public
Offering (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion
of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or
(ii) without a stockholder vote by means of a tender offer. The decision as to whether the Company will seek stockholder approval
of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will
be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to
be $10.00 per Public Share). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not
be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 7). These Public Shares
are recorded at a redemption value and classified as temporary equity in accordance with the Financial Accounting Standards Board’s
(“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC
480”). The Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business
Combination. The Company will not redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001.
If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons,
the Company will, pursuant to its Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions
pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents
with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the
Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with
a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Stockholder may
elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder
approval in connection with a Business Combination, the initial stockholders (as defined below) have agreed to vote their Founder Shares
(as defined below in Note 6) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination.
In addition, the initial stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares
in connection with the completion of a Business Combination.
The Company’s Certificate
of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such
stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)), is restricted from redeeming its shares with respect to more than an aggregate of 20% or
more of the Public Shares, without the prior consent of the Company.
The sponsor and the Company’s
officers and directors (the “initial stockholders”) have agreed not to propose an amendment to the Certificate of Incorporation
to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete
a Business Combination within the Combination Period (as defined below) or with respect to any other material provisions relating to stockholders’
rights or pre-initial Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem
their Public Shares in conjunction with any such amendment.
If the Company is unable
to complete a Business Combination by February 26, 2023 (the “Combination Period”), the Company 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
(less amounts released to pay taxes and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of the remaining stockholders and the Company’s board of directors, liquidate and dissolve, subject, in each case, to its obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights
or liquidating distributions with respect to the warrants, which will expire worthless if the Company fails to complete a Business Combination
within the 24- month time period.
The initial stockholders
have agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company
fails to complete a Business Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in
or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public
Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their
rights to the deferred underwriting commission (see Note 7) held in the Trust Account in the event the Company does not complete a Business
Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust
Account that will be available to fund the redemption of the Public Shares. 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 only $10.00. In order
to protect the amounts held in the Trust Account, the sponsor has agreed to be liable to the Company if and to the extent any claims by
a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to
the Company, or a prospective target business with which the Company has entered into a letter of intent, confidentiality or other similar
agreement or business combination agreement (a “Target”), reduce the amount of funds in the Trust Account to below the lesser
of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation
of the Trust Account, if less than $10.00 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided
that such liability will not apply to any claims by a third party or Target that executed a waiver of any and all rights to the monies
held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity
of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933,
as amended (the “Securities Act”). The Company will seek to reduce the possibility that the sponsor will have to indemnify
the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent
registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements
with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Note 2—Summary of Significant Accounting
Policies
Basis of Presentation
The accompanying unaudited
condensed financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions
to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements
prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial
reporting. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting
of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows
for the periods presented. The Company has selected December 31 as its fiscal year end.
The accompanying unaudited
condensed financial statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering filed
with the SEC on February 25, 2021 (the “Prospectus”), as well as the Company’s Current Report on Form 8-K filed with
the SEC on March 4, 2021 (see Note 3). The financial information as of December 31, 2020 is derived from the audited financial statements
presented in the Prospectus. The interim results for the three and nine months ended September 30, 2021 are not necessarily indicative
of the results to be expected for the year ending December 31, 2021 or for any future interim periods.
Emerging Growth Company
The Company is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of
2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable
to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the
independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding
a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that
apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such
extended transition period, which means that when a standard is issued or revised and it has different application dates for public or
private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt
the new or revised standard. This may make comparison of the Company’s financial statements with those of another public company
that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Liquidity and Capital
Resources
As of September 30, 2021,
the Company had approximately $1.0 million in its operating bank account and working capital of approximately $1.2 million.
Prior to the completion
of the Initial Public Offering, the Company’s liquidity needs had been satisfied through the receipt of $25,000 from the
sponsor in exchange for the issuance of the Founder Shares, and a promissory note (the “Note”) issued by the sponsor
(see Note 6). The Company repaid the Note on February 26, 2021. Subsequent to the consummation of the Initial Public Offering and
Private Placement, the Company’s liquidity needs have been satisfied with the proceeds from the consummation of the Private
Placement not held in the Trust Account. In addition, in order to finance transaction costs in connection with a Business
Combination, the sponsor may provide the Company Working Capital Loans (as defined in Note 6). As of September 30, 2021 and
December 31, 2020, there were no Working Capital Loans outstanding.
Based on the foregoing, management
believes that the Company has sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation
of a Business Combination or one year from the date of these financial statements. Over this time period, the Company will be using these
funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing
due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire,
and structuring, negotiating and consummating the Business Combination.
Use of Estimates
The preparation of financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period.
Making estimates requires
management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate,
could change in the near term due to one or more future events. One of the more significant accounting estimates included in these financial
statements is the determination of fair value of the Private Placement Warrant liability. Such estimates may be subject to change as more
current information becomes available and accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all
short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have
any cash equivalents as of September 30, 2021 and December 31, 2020.
Marketable Securities Held in Trust Account
At September 30, 2021, substantially
all of the assets held in the Trust Account were held in U.S. Treasury securities. As of September 30, 2021, the Company had not withdrawn
any of the interest earned on the Trust Account to pay franchise or income tax obligations. The Company did not have any marketable securities
held in a trust account at December 31, 2020.
Offering Costs Associated with the Initial Public
Offering
Offering costs consist of
legal, accounting, underwriting fees and other costs incurred that are directly related to the Initial Public Offering. Offering costs
amounted to $18.8 million of which $0.5 million were allocated to the warrant liabilities and expensed immediately and $18.3 million were
charged to temporary equity upon the completion of the Initial Public Offering and the exercise of the Over-Allotment Option.
Warrant Liabilities
The Company accounts for
warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms
and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers
whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480,
meet the definition of a derivative pursuant to ASC 815, and whether the warrants meet all of the requirements for equity classification
under ASC 815, including whether the warrants are indexed to the Company’s common stock, among other conditions for equity classification.
This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent
quarterly period end date while the warrants are outstanding.
For issued or modified warrants
that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in
capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants
are required to be recorded at their initial fair value on the date of issuance, and at fair value at each balance sheet date thereafter.
Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the condensed statements of operations.
The fair value of the warrants as of September 30, 2021, was estimated using a Monte Carlo simulation approach for the Private Placement
Warrants and market price for the public warrants (see Note 9).
Class A Common Stock Subject
to Possible Redemption
The Company accounts for
its common stock subject to possible redemption in accordance with the guidance in ASC 480. Common stock subject to mandatory redemption
is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that
features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events
not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’
equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s
control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2021, all of the Company’s 34,500,000
shares of Class A common stock are subject to possible redemption and are presented at redemption amount as temporary equity, outside
of the stockholders’ equity (deficit) section of the Company’s condensed balance sheet. The Company did not have any Class A
common stock subject to possible redemption at December 31, 2020.
As part of the revision of
its financial statements (discussed in Note 3), the Company has classified all of its shares of Class A common stock as redeemable. Immediately
upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount. The
change in the carrying value of redeemable shares of Class A common stock resulted in charges against additional paid-in capital and accumulated
deficit.
The Class A common stock
subject to possible redemption reflected on the balance sheet as of September 30, 2021 is reconciled in the following table:
Gross proceeds
|
|
$
|
345,000,000
|
|
Less:
|
|
|
|
|
Proceeds allocated to public warrants
|
|
|
(8,901,000
|
)
|
Class A common stock offering costs
|
|
|
(18,337,669
|
)
|
Plus:
|
|
|
|
|
Accretion of carrying value to redemption amount
|
|
|
27,238,669
|
|
Class A common stock subject to possible redemption
|
|
$
|
345,000,000
|
|
Income Taxes
The Company follows the asset
and liability method of accounting for income taxes under FASB ASC 740, Income Taxes (“ASC 740”). Deferred tax assets
and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement 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 included the enactment
date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition
threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be
taken in a tax return. For those 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 benefits as income tax expense.
There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2021 and December 31, 2020.
The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation
from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The Company’s currently
taxable income primarily consists of interest income on funds held in the Trust Account less any franchise taxes. The Company’s
general and administrative costs are generally considered start-up costs and are not currently deductible. During the three and nine months
ended September 30, 2021, the Company recorded no income tax expense. The Company’s effective tax rate for the three and nine months
ended September 30, 2021, was 0%, which differs from the expected income tax rate primarily due to the recognition of gain or loss from
the change in the fair value of warrant liabilities, which is not recognized for tax purposes, and recording a full valuation allowance
on the Company’s deferred tax assets as of September 30, 2021.
Net Income per Common Share
Net income per common share
is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period. The Company has
not considered the effect of warrants sold in the Initial Public Offering and the Private Placement to purchase 12,833,333 shares of Class A
common stock in the calculation of diluted net income per share, since the average market price of the Company’s Class A common
stock for the three and nine months ended September 30, 2021 was below the warrants’ $11.50 exercise price and the exercise of the
warrants is contingent upon the occurrence of future events. As a result, diluted net income per common share is the same as basic net
income per common share for the periods presented.
The Company has two
classes of common 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 common shares as long as a business combination is consummated. Accretion associated with the
redeemable shares of Class A common stock is excluded from net income per share as the redemption amount approximates fair
value.
The table below presents a reconciliation of the numerator and denominator
used to compute basic and diluted net income per share for each class of common stock (in dollars, except share amounts):
|
|
Three Months Ended
September 30, 2021
|
|
|
Nine Months Ended
September 30, 2021
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income
|
|
$
|
7,409,558
|
|
|
$
|
1,852,389
|
|
|
$
|
4,224,608
|
|
|
$
|
1,328,707
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding
|
|
|
34,500,000
|
|
|
|
8,625,000
|
|
|
|
27,423,077
|
|
|
|
8,625,000
|
|
Basic and diluted net income per common share
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.15
|
|
|
$
|
0.15
|
|
Concentration of Credit Risk
Financial instruments that
potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times,
may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on these accounts
and management believes the Company is not exposed to significant risks on such accounts.
Financial Instruments
The fair value of the Company’s
assets and liabilities, which qualify as financial instruments under FASB ASC 820, Fair Value Measurements and Disclosures, approximates
the carrying amounts represented in the condensed balance sheets.
Recent Accounting Pronouncements
In
August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options
(Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”)
to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial
conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining
to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible
debt and freestanding instruments that are indexed to and settled in an entity’s own equity and amends the diluted earnings per
share guidance, including the requirement to use the if-converted method for all convertible instruments. As an emerging growth
company under the JOBS Act, the provisions of ASU 2020-06 are effective for the Company beginning
on January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January
1, 2021. The Company is currently evaluating the impact of this standard on its financial statements but does not expect the adoption
of ASU 2020-06 will have a material effect on its financial statements.
The Company’s management
does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material
effect on the accompanying financial statements.
Note 3 —Revision of Previously Issued Financial Statement
During the third quarter of 2021, the
Company determined that it was appropriate to revise the presentation of Class A common stock subject to redemption to reflect all
such shares within temporary equity since the Class A common stock redemption feature is not solely within the control of the
Company. Previously, the Company classified a portion of its common stock subject to redemption as permanent equity in order to
maintain net tangible assets of at least $5 million as required by its amended and restated certificate of incorporation. However,
after further review, the Company believes classifying all of its common stock subject to redemption as temporary equity does not
invalidate the $5 million requirement. Additionally, the Company notes that all of its Class A common stock is
“subject to redemption” although, as discussed above in Note 1, the Company will not redeem its Class A common stock in
an amount that would cause its net tangible assets to be less than $5,000,001.
The accompanying statements of changes in stockholders’
equity (deficit) and cash flows no longer present the change in redeemable shares to align with the presentation of all Class A common
stock as temporary equity. In addition, the Company’s condensed statements of changes in stockholders’ equity (deficit) for
the three months ended March 31, 2021 and June 30, 2021 in these financial statements have been revised to reflect the classification
of all of its Class A common stock as temporary equity. There has been no change to the Company’s total assets, liabilities
or operating results.
In connection with the change
in presentation for the Class A common stock subject to redemption, the Company also revised its net income per share calculation to allocate
net income evenly to Class A common stock and Class B common stock. This presentation contemplates a business combination as the
most likely outcome, in which case, both classes of stock share pro rata in the net income/loss of the Company.
The following tables summarizes
the effect of the revision on specific line items in the Company’s February 26, 2021 audited closing date balance sheet:
|
|
As
Previously
Reported
|
|
|
Revision
Adjustments
|
|
|
As Revised
|
|
Balance Sheet as of February 26, 2021
(in dollars, except share amounts)
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption
|
|
$
|
312,303,500
|
|
|
$
|
32,696,500
|
|
|
$
|
345,000,000
|
|
Class A common stock
|
|
|
327
|
|
|
|
(327
|
)
|
|
|
-
|
|
Additional paid-in capital
|
|
|
5,501,637
|
|
|
|
(5,501,637
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(502,822
|
)
|
|
|
(27,194,536
|
)
|
|
|
(27,697,358
|
)
|
Total stockholders’ equity (deficit)
|
|
|
5,000,005
|
|
|
|
(32,696,500
|
)
|
|
|
(27,696,495
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Class A common shares subject to redemption
|
|
|
33,010,450
|
|
|
|
1,489,550
|
|
|
|
34,500,000
|
|
Note 4—Initial Public Offering
On February 26, 2021, the
Company consummated the Initial Public Offering of 34,500,000 Units, including the underwriters’ exercise of their full Over-Allotment
Option, at $10.00 per Unit, generating gross proceeds of $345.0 million, and incurring offering costs of approximately $18.8 million,
inclusive of approximately $11.8 million in deferred underwriting commissions.
Each Unit consists of one
share of Class A common stock, par value $0.0001 per share, and one-fifth of one redeemable warrant (each, a “Public Warrant”).
Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject
to adjustment (see Note 8).
Pendrell Corporation, the
parent of the sponsor (“Pendrell”), and an affiliate of Craig McCaw, the Company’s chief executive officer, purchased
an aggregate of 400,000 Units in the Initial Public Offering at the public offering price. The underwriters did not receive any underwriting
discounts or commissions on the Units purchased by these parties. If the Company submits its initial Business Combination to its Public
Stockholders for a vote, its initial stockholders have agreed to vote their Founder Shares and any Public Shares purchased during or after
the Initial Public Offering in favor of the initial Business Combination. As a result, in addition to the initial stockholders’
Founder Shares and the shares underlying the Units purchased by these parties in the Initial Public Offering, the Company would need 12,537,501,
or 36.3%, of the 34,500,000 Public Shares sold in the Initial Public Offering to be voted in favor of an initial Business Combination
in order to have the initial Business Combination approved (assuming all outstanding shares are voted).
Note 5—Private Placement
Simultaneously with the closing
of the Initial Public Offering, the Company completed the Private Placement of an aggregate of 5,933,333 Private Placement Warrants to
the Company’s sponsor, X-icity Holdings Corporation, at a purchase price of $1.50 per Private Placement Warrant, generating gross
proceeds to the Company of $8.9 million. Each whole Private Placement Warrant is exercisable for one whole share of Class A common
stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants to the sponsor was added
to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination
within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable for
cash and exercisable on a cashless basis so long as they are held by the sponsor or its permitted transferees unless the Company calls
for a redemption of all warrants when the reported price of the Class A common stock is at least $10.00 per share and no more than $18.00
per share.
The sponsor and the Company’s
officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants
until 30 days after the completion of the initial Business Combination.
Note 6—Related Party Transactions
Founder Shares
On October 20, 2020, the
sponsor paid for certain offering costs for an aggregate price of $25,000 in exchange for issuance of 7,187,500 shares of the Company’s
Class B common stock, par value $0.0001 per share, (the “Founder Shares”). On February 3, 2021, the Company effected
a 312,500 share stock dividend, on February 8, 2021, the Company effected a 1.0541667-for-1 common stock split and on February 23, 2021,
the Company effected a 1.0909091-for-1 common stock split, resulting in an aggregate of 8,625,000 shares of Class B common stock
outstanding. The sponsor transferred 40,250 Founder Shares to each of Wayne Perry, Dennis Weibling and Cathleen A. Massey, independent
director nominees; 195,500 Founder Shares to Craig O. McCaw, director and Chief Executive Officer; 115,000 Founder Shares to Randy Russell,
Chief Investment Officer; 97,750 Founder Shares to R. Gerard Salemme, director; 57,500 Founder Shares to Steve Ednie, Chief Financial
Officer; and 329,648 Founder Shares to other directors, officers, employees, consultants and affiliates of Pendrell, in each case for
approximately the same per-share price initially paid by the sponsor, resulting in the sponsor holding 7,708,852 Founder Shares. The Founder
Shares, on an as-converted basis, represent 20.0% of the Company’s issued and outstanding shares.
The initial stockholders
have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (i) one
year after the completion of the initial Business Combination and (ii) the date following the completion of the initial Business
Combination on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in
all of the Company’s stockholders having the right to exchange their common stock for cash, securities or other property. Notwithstanding
the foregoing, if the closing price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for
stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day
period commencing at least 150 days after the initial Business Combination or (2) if the Company consummates a transaction after
the initial Business Combination which results in the stockholders having the right to exchange their shares for cash, securities or other
property, the Founder Shares will be released from the lock-up.
Related Party Loans
On October 20, 2020, the
sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to
the Note. The Note was non-interest bearing, unsecured and due at the earlier of May 31, 2021 or the completion of the Initial Public
Offering. The Note was repaid upon the closing of the Initial Public Offering out of the $1.0 million of offering proceeds that had been
allocated to the payment of offering expenses.
In addition, in order to
finance transaction costs in connection with a Business Combination, the sponsor or an affiliate of the sponsor, or certain of the Company’s
officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”).
If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account
released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the
event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the
Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing,
the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans.
The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up
to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50
per warrant. The warrants would be identical to the Private Placement Warrants. At September 30, 2021 and December 31, 2020, the Company
did not have any borrowings under the Working Capital Loans.
Administrative Services Agreement
The Company entered into
an agreement whereby, commencing on February 23, 2021 and continuing until the earlier of the Company’s consummation of a Business
Combination or the Company’s liquidation, the Company will pay an affiliate of the sponsor a total of $10,000 per month for office
space, secretarial and administrative services. For the three and nine months ended September 30, 2021, the Company incurred $30,000 and
$71,786, respectively, in fees for these services.
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 the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations.
The Company’s audit committee will review on a quarterly basis all payments that were made to the sponsor, officers, directors or
their affiliates.
Note 7—Commitments and Contingencies
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, 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 are entitled to certain demand and “piggyback” registration rights. The Company will bear the expenses incurred in
connection with the filing of any such registration statement. The registration rights agreement does not provide for any maximum cash
penalties nor any penalties connected with delays in registering the Company’s common stock.
Risks and Uncertainties
Management continues to evaluate
the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a
negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific
impact is not readily determinable as of the date of these condensed financial statements. The condensed financial statements do not include
any adjustments that might results from the outcome of this uncertainty.
Underwriting Agreement
The underwriters received
an underwriting discount of $0.20 per unit (excluding the 400,000 units purchased by Pendrell and an affiliate of Craig McCaw as well
as 517,500 shares purchased by certain other parties (total of 917,500 shares) with respect to which no underwriting discount is payable),
or $6,716,500 in the aggregate, upon the closing of the Initial Public Offering. $0.35 per unit (excluding the 400,000 units purchased
by Pendrell and an affiliate of Craig McCaw as well as 517,500 shares purchased by certain other parties (total of 917,500 shares) with
respect to which no underwriting discount is payable), or $11,753,875 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 the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Note 8 — Stockholders’ Equity (Deficit)
Class A Common
Stock — The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per
share. At September 30, 2021, there were no shares of Class A common stock issued or outstanding classified as equity as all of the 34,500,000
shares of Class A common stock issued and outstanding at September 30, 2021 are subject to possible redemption and have been reflected
in temporary equity on the Company’s balance sheet. There were no shares of Class A common stock issued or outstanding at December
31, 2020.
Class B Common
Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per
share. In October 2020, the Company issued 7,187,500 shares of Class B common stock, on February 3, 2021, the Company effected
a 312,500 share stock dividend, on February 8, 2021, the Company effected a 1.0541667-for-1 common stock split and on February 23, 2021,
the Company effected a 1.0909091-for-1 common stock split, resulting in an aggregate of 8,625,000 shares of Class B common stock outstanding.
Stockholders of record are
entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of Class A common stock and holders
of Class B common stock will vote together as a single class on all matters submitted to a vote of the Company’s stockholders
except as required by law.
The Class B common stock
will automatically convert into Class A common stock at the time of the initial Business Combination on a one-for-one basis, subject
to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as
provided herein. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued
in connection with the initial Business Combination, the number of shares of Class A common stock issuable upon conversion of all
Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock
outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by Public Stockholders),
including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of
any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of
the initial Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable
for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial Business Combination
and any Private Placement Warrants issued to the sponsor, officers or directors upon conversion of Working Capital Loans, provided that
such conversion of Founder Shares will never occur on a less than one-for-one basis.
Preferred Stock —
The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and
other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2021
and December 31, 2020, there were no shares of preferred stock issued or outstanding.
Note 9 — Warrant Liabilities
Public Warrants may only
be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public
Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination
or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration
statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants and
a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis
and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable,
but in no event later than 15 business days, after the closing of a Business Combination, the Company will use its best efforts to file
with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable
upon exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the
effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in
accordance with the provisions of the warrant agreement. Notwithstanding the above, if the Class A common stock is at the time of
any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security”
under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their
warrants to do so on a “cashless” basis, and, in the event the Company so elects, the Company will not be required to file
or maintain in effect a registration statement, but the Company will be required to use its best efforts to register or qualify the shares
under applicable blue sky laws to the extent an exemption is not available. The Public Warrants will expire five years after the completion
of a Business Combination or earlier upon redemption or liquidation.
If (x) the Company issues
additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing
of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock
(with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case
of any such issuance to the initial stockholders or their affiliates, without taking into account any Founder Shares held by the initial
stockholders or such affiliates, as applicable, prior to such issuance), (y) the aggregate gross proceeds from such issuances represent
more than 50% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination (net of
redemptions), and (z) the volume weighted average trading price of the Class A common stock during the 10 trading day period
starting on the trading day after the day on which the Company consummates the initial Business Combination (such price, the “Market
Value”) is below $9.20 per share, the exercise price of the Public Warrants will be adjusted (to the nearest cent) to be equal to
115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price of the Public Warrants
will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants
are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable
upon exercise of the Private Placement Warrants will not be transferable, assignable or saleable until 30 days after the completion of
a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so
long as they are held by the sponsor or its permitted transferees, unless the Company calls for a redemption of all warrants when the
reported price of the Class A common stock is at least $10.00 per share and no more than $18.00 per share (subject to the conditions described
in more detail below). If the Private Placement Warrants are held by someone other than the sponsor or its permitted transferees, the
Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
The Company may call only
the Public Warrants for redemption:
|
●
|
in whole and not in part;
|
|
●
|
at a price of $0.01 per warrant;
|
|
●
|
upon a minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
if, and only if, (i) the warrants are currently exercisable, (ii) there is an effective registration statement covering the Class A common stock issuable upon exercise of the warrants and (iii) the last sales price of the Class A common stock equals or exceeds $18.00 per share on each of 20 trading days within the 30-trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders.
|
If the Company calls the
Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do
so on a “cashless basis,” as described in the warrant agreement.
The Company may call both the Private Placement
Warrants and the Public Warrants for redemption:
|
●
|
in whole and not in part;
|
|
●
|
at a price of $0.10 per warrant;
|
|
●
|
upon a minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
if, and only if, (i) there is an effective registration statement covering the Class A common stock issuable upon exercise of the warrants, and a current prospectus relating thereto, available throughout the 30-day redemption period, and (ii) the last reported sales price of the Class A common stock reported has been at least $10.00 per share on the trading day prior to the date on which notice of the redemption is given.
|
During this 30-day redemption
period in connection with a redemption of warrants when the price of the Class A common stock is at least $10.00 per share and no more
than $18.00 per share, the holders of the warrants may elect to receive, in lieu of the redemption price, a number of shares of Class
A common stock per warrant determined by reference to the table as set forth in the warrant agreement.
If the Company is unable
to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders
of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s
assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
Note 10 — Fair Value Measurements
At September 30, 2021, assets
held in the Trust Account were comprised of $345,023,876 in money market funds which are invested in U.S. Treasury securities. As of September
30, 2021, the Company had not withdrawn any of the interest earned in the Trust Account to pay franchise or income tax obligations. There
were no funds held in the Trust Account at December 31, 2020.
At September 30, 2021, there
were 6,900,000 Public Warrants and 5,933,333 Private Placement Warrants outstanding. There were no Public or Private Placement Warrants
outstanding at December 31, 2020.
The fair value of the Company’s
financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with
the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants
at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the
use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
|
|
Level 3:
|
Unobservable inputs based on an assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The following table presents
information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30,
2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
|
|
|
|
|
September 30,
|
|
Description
|
|
Level
|
|
|
2021
|
|
Assets:
|
|
|
|
|
|
|
Marketable securities held in Trust Account - U.S. Treasury Securities Money Market Fund
|
|
|
1
|
|
|
$
|
345,023,876
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Warrant liabilities - Public Warrants
|
|
|
1
|
|
|
$
|
5,589,000
|
|
Warrant liabilities - Private Placement Warrants
|
|
|
3
|
|
|
|
5,518,000
|
|
Total warrant liabilities
|
|
|
|
|
|
$
|
11,107,000
|
|
The Company did not have any assets
and liabilities measured at fair value on a recurring basis as of December 31, 2020.
Warrants
The warrants are accounted
for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the condensed balance sheets. The warrant
liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair
value of warrant liabilities in the condensed statements of operations.
The Company established the
initial fair value for the warrants on February 26, 2021, the date of the Company’s Initial Public Offering, using a Monte Carlo
simulation model. The Company allocated the proceeds received from (i) the sale of Units (which is inclusive of one share of Class A common
stock and one-fifth of one Public Warrant), (ii) the sale of Private Placement Warrants, and (iii) the issuance of Class B common stock,
first to the warrants based on their fair values as determined at initial measurement, with the remaining proceeds allocated to Class
A common stock subject to possible redemption (temporary equity) and Class B common stock (permanent equity) based on their relative fair
values at the initial measurement date.
The warrants were classified
as Level 3 at February 26, 2021 (inception) due to the use of unobservable inputs. In accordance with the terms of the Units as disclosed
in the Prospectus, on April 16, 2021, the shares of Class A common stock and warrants comprising the Units began separate trading on The
Nasdaq Capital Market. As a result, the Company began utilizing the market price to determine the fair value of the Public Warrants and
the Public Warrants moved from Level 3 to Level 1.
The key inputs into the Monte
Carlo simulation model for the Private Placement Warrants were as follows at September 30, 2021:
|
|
September 30,
|
|
Input
|
|
2021
|
|
Risk-free interest rate
|
|
|
1.05
|
%
|
Expected term (years)
|
|
|
5
|
|
Expected volatility
|
|
|
21.00
|
%
|
Exercise price
|
|
$
|
11.50
|
|
|
|
Stock price
|
|
$
|
9.77
|
|
|
|
The Company’s use of
a Monte Carlo simulation model required the use of subjective assumptions as follows:
|
●
|
The risk-free interest rate assumption was based on the U.S. Treasury rate for expected terms, which was commensurate with the contractual term of the warrants, which expire on the earlier of (i) five years after the completion of the initial Business Combination and (ii) upon redemption or liquidation. An increase in the risk-free interest rate, in isolation, would result in an increase in the fair value measurement of the warrant liabilities and vice versa.
|
|
●
|
The expected term was determined based on the exercise period, the warrants become exercisable on the later of (i) 30 days after the completion of a Business Combination and (ii) 12 months from the Initial Public Offering date. An increase in the expected term, in isolation, would result in an increase in the fair value measurement of the warrant liabilities and vice versa.
|
|
●
|
The expected volatility assumption was based on observed volatilities from comparable publicly-traded companies, determined based on the size and proximity of other similar business combinations, as well as the volatility implied by the public trading price of Colicity public warrants and Public Shares. An increase in the expected volatility, in isolation, would result in an increase in the fair value measurement of the warrant liabilities and vice versa.
|
|
●
|
The stock price at Initial Public Offering (inception) represents the unit price less one-fifth of the warrant price at the Initial Public Offering date. Commencing April 16, 2021, the Company’s Units were able to be separately traded as Class A common stock and warrants. As a result, the stock price at September 30, 2021 represents the market price of Class A common stock on that date.
|
Based on the applied volatility
assumption and the expected term to a business combination noted above, the Company determined that the fair value of the warrant liabilities
at February 26, 2021 (inception) was $17.8 million. As of September 30, 2021, the aggregate value of the warrants was $11.1 million. The
aggregate change in the fair value of the warrant liabilities since inception of $6.7 million was recognized in the condensed statements
of operations.
The change in the fair value
of the warrant liabilities classified as Level 3 for the period from February 26, 2021 (inception) through September 30, 2021 is summarized
as follows:
|
|
Warrant
|
|
|
|
Liabilities
|
|
Initial measurement on February 26, 2021
|
|
$
|
17,801,000
|
|
Change in fair value of warrant liabilities
|
|
|
2,667,333
|
|
Fair value as of March 31, 2021
|
|
|
20,468,333
|
|
Transfers out of Level 3
|
|
|
(8,970,000
|
)
|
Change in fair value of warrant liabilities
|
|
|
(1,530,334
|
)
|
Fair value as of June 30, 2021
|
|
|
9,967,999
|
|
Change in fair value of warrant liabilities
|
|
|
(4,449,999
|
)
|
Fair value as of September 30, 2021
|
|
$
|
5,518,000
|
|
Note 11 — Subsequent Events
The Company evaluated subsequent
events and transactions that occurred after the balance sheet date through November 12, 2021, the date the unaudited condensed financial
statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required recognition
or disclosure in the unaudited condensed financial statements.