Item
1. Condensed Financial Statements
FTAC PARNASSUS ACQUISITION CORP.
CONDENSED BALANCE SHEETS
| |
March 31, | | |
December 31, | |
| |
2022 | | |
2021 | |
Assets: | |
(Unaudited) | | |
| |
Current assets: | |
| | |
| |
Cash | |
$ | 403,681 | | |
$ | 811,005 | |
Prepaid expenses | |
| 294,622 | | |
| 299,803 | |
Total current assets | |
| 698,303 | | |
| 1,110,808 | |
| |
| | | |
| | |
Investments held in Trust Account | |
| 250,042,153 | | |
| 250,019,865 | |
Total Assets | |
$ | 250,740,456 | | |
$ | 251,130,673 | |
| |
| | | |
| | |
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit: | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accrued expenses | |
$ | 120,914 | | |
$ | 87,208 | |
Franchise tax payable | |
| 50,000 | | |
| 161,762 | |
Total current liabilities | |
| 170,914 | | |
| 248,970 | |
| |
| | | |
| | |
Derivative warrant liabilities | |
| 2,444,005 | | |
| 7,456,605 | |
Deferred underwriting commissions | |
| 10,600,000 | | |
| 10,600,000 | |
Total liabilities | |
| 13,214,919 | | |
| 18,305,575 | |
| |
| | | |
| | |
Commitments and Contingencies | |
| | | |
| | |
Class A common stock subject to possible redemption, $0.0001 par value; 25,000,000 shares issued and outstanding at $10.00 per share redemption value as of March 31, 2022 and December 31, 2021 | |
| 250,000,000 | | |
| 250,000,000 | |
| |
| | | |
| | |
Stockholders’ Deficit: | |
| | | |
| | |
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding | |
| — | | |
| — | |
Class A common stock, $0.0001 par value; 60,000,000 shares authorized; 690,000 non-redeemable shares issued and outstanding as of March 31, 2022 and December 31, 2021 | |
| 69 | | |
| 69 | |
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 8,563,333 shares issued and outstanding as of March 31, 2022 and December 31, 2021 | |
| 856 | | |
| 856 | |
Additional paid-in capital | |
| — | | |
| — | |
Accumulated deficit | |
| (12,475,388 | ) | |
| (17,175,827 | ) |
Total Stockholders’ Deficit | |
| (12,474,463 | ) | |
| (17,174,902 | ) |
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit | |
$ | 250,740,456 | | |
$ | 251,130,673 | |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
FTAC PARNASSUS ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS
| |
For the Three Months Ended March 31, | | |
For the Three Months Ended March 31, | |
| |
2022 | | |
2021 | |
| |
(Unaudited) | | |
(Unaudited) | |
| |
| | |
| |
General and administrative expenses | |
$ | 334,449 | | |
$ | 96,793 | |
Loss from operations | |
| (334,449 | ) | |
| (96,793 | ) |
| |
| | | |
| | |
Other income (expense): | |
| | | |
| | |
Change in fair value of derivative warrant liabilities | |
| 5,012,600 | | |
| 322,850 | |
Offering costs associated with derivative warrant liabilities | |
| — | | |
| (522,300 | ) |
Interest earned on investments held in Trust Account | |
| 22,288 | | |
| 1,028 | |
Total Other income (expense), net | |
| 5,034,888 | | |
| (198,422 | ) |
| |
| | | |
| | |
Net income (loss) | |
$ | 4,700,439 | | |
$ | (295,215 | ) |
| |
| | | |
| | |
Weighted average number of shares outstanding of Class A common stock | |
| 25,690,000 | | |
| 4,567,111 | |
Basic and diluted net income (loss) per share, Class A common stock | |
$ | 0.14 | | |
$ | (0.02 | ) |
Weighted average number of shares outstanding of Class B common stock | |
| 8,563,333 | | |
| 7,741,111 | |
Basic and diluted net income (loss) per share, Class B common stock | |
$ | 0.14 | | |
$ | (0.02 | ) |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
FTAC PARNASSUS ACQUISITION CORP.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’
(DEFICIT) EQUITY
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2022
| |
Common Stock | | |
Additional | | |
| | |
Total Stockholders’ | |
| |
Class A | | |
Class B | | |
Paid-In | | |
Accumulated | | |
(Deficit) | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity | |
Balance – January 1, 2022 | |
| 690,000 | | |
$ | 69 | | |
| 8,563,333 | | |
$ | 856 | | |
$ | — | | |
$ | (17,175,827 | ) | |
$ | (17,174,902 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 4,700,439 | | |
| 4,700,439 | |
Balance – March 31, 2022 (Unaudited) | |
| 690,000 | | |
$ | 69 | | |
| 8,563,333 | | |
$ | 856 | | |
$ | — | | |
$ | (12,475,388 | ) | |
$ | (12,474,463 | ) |
FOR THE THREE MONTHS ENDED MARCH 31, 2021
| |
Common Stock | | |
Additional | | |
| | |
Total Stockholders’ | |
| |
Class A | | |
Class B | | |
Paid-In | | |
Accumulated | | |
(Deficit) | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity | |
Balance – January 1, 2021 | |
| — | | |
$ | — | | |
| 8,663,333 | | |
$ | 866 | | |
$ | 24,134 | | |
$ | (1,503 | ) | |
$ | 23,497 | |
Sale of private placement units, less fair value of derivative warrant liabilities | |
| 690,000 | | |
| 69 | | |
| — | | |
| — | | |
| 6,615,301 | | |
| — | | |
| 6,615,370 | |
Forfeiture of Class B common stock | |
| — | | |
| — | | |
| (100,000 | ) | |
| (10 | ) | |
| 10 | | |
| — | | |
| — | |
Accretion of Class A common stock subject to possible redemption amount | |
| — | | |
| — | | |
| — | | |
| — | | |
| (6,639,445 | ) | |
| (16,990,621 | ) | |
| (23,630,066 | ) |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (295,215 | ) | |
| (295,215 | ) |
Balance – March 31, 2021 (Unaudited) | |
| 690,000 | | |
$ | 69 | | |
| 8,563,333 | | |
$ | 856 | | |
$ | — | | |
$ | (17,287,339 | ) | |
$ | (17,286,414 | ) |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
FTAC PARNASSUS ACQUISITION CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| |
For the Three
Months Ended
March 31, | | |
For the Three
Months Ended
March 31, | |
| |
2022 | | |
2021 | |
Cash Flows from Operating Activities: | |
| | |
| |
Net income (loss) | |
$ | 4,700,439 | | |
$ | (295,215 | ) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |
| | | |
| | |
Interest earned on investments held in Trust Account | |
| (22,288 | ) | |
| (1,028 | ) |
Change in fair value of derivative warrant liabilities | |
| (5,012,600 | ) | |
| (322,850 | ) |
Offering costs associated with derivative warrant liabilities | |
| — | | |
| 522,300 | |
General and administrative expenses paid by related party under promissory note | |
| — | | |
| 875 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| 5,181 | | |
| (510,153 | ) |
Franchise tax payable | |
| (111,762 | ) | |
| 48,269 | |
Accrued expenses | |
| 33,706 | | |
| 3,331 | |
Net cash used in operating activities | |
| (407,324 | ) | |
| (554,471 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities: | |
| | | |
| | |
Investment of cash into Trust Account | |
| — | | |
| (250,000,000 | ) |
Net cash used in investing activities | |
| — | | |
| (250,000,000 | ) |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
Proceeds from stock subscription receivable | |
| — | | |
| 25,000 | |
Repayment of note payable to related party | |
| — | | |
| (66,928 | ) |
Proceeds received from Initial Public Offering, gross | |
| — | | |
| 250,000,000 | |
Proceeds received from Private Placement | |
| — | | |
| 6,900,000 | |
Offering costs paid | |
| — | | |
| (4,768,653 | ) |
Net cash provided by financing activities | |
| — | | |
| 252,089,419 | |
| |
| | | |
| | |
Net Change in Cash | |
| (407,324 | ) | |
| 1,534,948 | |
Cash – Beginning of period | |
| 811,005 | | |
| — | |
Cash – End of period | |
$ | 403,681 | | |
$ | 1,534,948 | |
| |
| | | |
| | |
Non-cash investing and financing activities: | |
| | | |
| | |
Offering costs included in accounts payable and accrued expenses | |
$ | — | | |
$ | 92,660 | |
Offering costs paid by related party under promissory note | |
$ | — | | |
$ | 66,053 | |
Reversal of accrued offering costs | |
$ | — | | |
$ | 5,785 | |
Deferred underwriting commissions in connection with Initial Public Offering | |
$ | — | | |
$ | 10,600,000 | |
The accompanying notes are an integral part
of these unaudited condensed financial statements.
FTAC PARNASSUS ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 - Description of Organization and Business
Operations
FTAC Parnassus Acquisition
Corp. (the “Company”), formerly known as FTAC General Acquisition Corp., is a blank check company incorporated in Delaware
on December 18, 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”). The Company is an
emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of March 31, 2022, the
Company had not commenced any operations. All activity through March 31, 2022 relates to the Company’s formation and the initial
public offering (the “Initial Public Offering”) described below, and, subsequent to the Initial Public Offering, identifying
a target company for a Business Combination. The Company will not generate any operating revenues until after completion of its initial
Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds
derived from the Initial Public Offering and certain of the proceeds of the Private Placement.
The Company’s sponsors are FTAC Parnassus Sponsor, LLC, and FTAC
Parnassus Advisors, LLC, each a Delaware limited liability company (collectively, the “Sponsor”). The registration statement
for the Company’s Initial Public Offering was declared effective on March 11, 2021. On March 16, 2021, the Company consummated its
Initial Public Offering of 25,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units
being offered, the “Public Shares”), including the issuance of 3,000,000 additional Units as a result of the underwriter’s
partial exercise of its over-allotment option (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds
of $250.0 million, and incurring offering costs of approximately $15.5 million, of which $10.6 million was for deferred underwriting commissions
(see Note 5).
Simultaneously with the closing of the Initial Public Offering, the
Company consummated the private placement (“Private Placement”) of 690,000 units (each, a “Private Placement Unit”
and collectively, the “Private Placement Units”), at a price of $10.00 per Private Placement Unit, generating gross proceeds
of $6.9 million (see Note 4). The Private Placement Units were purchased by Millennium Management LLC (“Millennium”) (345,000
Units) and one of the Company’s Sponsors, FTAC Parnassus Sponsor, LLC (345,000 Units).
Upon the closing of the Initial Public Offering and the Private Placement,
$250.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement
were placed in a trust account (“Trust Account”) and 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”), with a maturity of 185
days or less, or in money market funds meeting certain conditions under Rule 2a-7 of the Investment Company Act and that invest only in
direct U.S. government obligations, until the earlier of (i) the consummation of a Business Combination; (ii) the redemption of any Public
Shares in connection with a stockholder vote to amend the Company’s Amended and Restated Certificate of Incorporation (A) to modify
the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if it does not complete an initial Business
Combination within 24 months from the consummation of the Initial Public Offering, or March 16, 2023 (the “Combination Period”)
or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity; or (iii)
the distribution of the Trust Account, as described below, except that interest earned on the Trust Account can be released to pay the
Company’s tax obligations, if the Company is unable to complete an initial Business Combination within the Combination Period or
upon any earlier liquidation of the Company.
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 the Private
Placement Units, 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 successfully effect a Business Combination. Nasdaq rules provide that the Company
must complete a Business Combination with one or more target businesses that together have an aggregate fair market value of at least
80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on interest earned on the
Trust Account) at the time of signing a definitive agreement in connection with a Business Combination. The Company will only complete
a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding 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 Public Shares (“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) 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 stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount
then on deposit in the Trust Account (at $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account
and not previously released to the Company to pay its tax obligations). The per-share amount to be distributed to stockholders who redeem
their shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note
5). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The
Class A common stock subject to redemption were recorded at redemption value and classified as temporary equity, in accordance with the
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing
Liabilities from Equity” (“ASC 480”).
FTAC PARNASSUS ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company will proceed with a Business Combination if the Company
has net tangible assets of at least $5,000,001 upon consummation of a Business Combination and, if the Company seeks stockholder approval,
a majority of the outstanding shares voted are voted in favor of the Business Combination. 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 Amended
and Restated 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 other
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. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor and the Company’s
officers and directors (the “Insiders”) agreed to vote their Founder Shares (as defined in Note 4), the shares of Class A
common stock included in the Private Placement Units (the “Placement Shares”) and any Public Shares held by them in favor
of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares irrespective of whether
they vote for or against the proposed transaction.
The Company will also provide
the Public Stockholders with the opportunity to redeem all or a portion of their Public Shares in connection with any stockholder vote
to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation (i) that would affect the substance or
timing of the Company’s obligation to redeem 100% of the Public Shares if it does not complete an initial Business Combination within
the Combination Period or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination
activity. There will be no redemption rights with respect to the Company’s warrants in connection with a stockholder vote to approve
such an amendment to the Company’s Amended and Restated Certificate of Incorporation. Notwithstanding the foregoing, the Company
may not redeem shares in an amount that would cause its net tangible assets to be less than $5,000,001. The Insiders have agreed to vote
any Founder Shares, any Placement Shares and any Public Shares held by them in favor of any such amendment.
The Company will have until
the expiration of the Combination Period to consummate its initial Business Combination. If the Company is unable to consummate a Business
Combination within the Combination Period, the Company will (i) cease all operations except for the purposes 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 any interest earned on the Trust Account not previously
released to the Company to pay its tax obligations 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), subject to applicable law; and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors,
dissolve and liquidate, subject in each case to the Company’s 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 Company’s
warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
The Insiders and Millennium
agreed to waive their redemption rights with respect to any Founder Shares and Placement Shares, as applicable, (i) in connection with
the consummation of a Business Combination, (ii) in connection with a stockholder vote to amend the Company’s Amended and Restated
Certificate of Incorporation (A) to modify the substance or timing of the Company’s obligation to redeem 100% of its Public Shares
if it does not complete its initial Business Combination within the Combination Period or (B) with respect to any other provision relating
to stockholders’ rights or pre-initial business combination activity, and (iii) if the Company fails to consummate a Business Combination
within the Combination Period. The Insiders have also agreed to waive their redemption rights with respect to any Public Shares held by
them in connection with the consummation of a Business Combination and in connection with a stockholder vote to amend the Company’s
Amended and Restated Certificate of Incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of
its Public Shares if it does not complete its initial Business Combination within the Combination Period. However, the Insiders will be
entitled to redemption rights with respect to Public Shares if the Company fails to consummate a Business Combination or liquidates within
the Combination Period. The representative agreed to waive its rights to deferred underwriting commissions held in the Trust Account in
the event the Company does not consummate a Business Combination within the Combination Period and, in such event, such amounts will be
included with the 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 less than the initial public offering price per Unit in the Initial Public Offering. Placing funds in the Trust
Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, service
providers (other than the Company’s independent registered public accounting firm), prospective target businesses or other entities
it engages, execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is
no guarantee that such persons will execute such agreements. The Sponsor agreed that it will be liable under certain circumstances to
ensure that the proceeds in the Trust Account are not reduced to below $10.00 per share by the claims of target businesses or vendors
or other entities that are owed money by the Company for service rendered, contracted for or products sold to the Company. However, it
may not be able to satisfy those obligations should they arise.
Notwithstanding the foregoing
redemption rights, if the Company seeks stockholder approval of its Business Combination and it does not conduct redemptions in connection
with its Business Combination pursuant to the tender offer rules, the Amended and Restated 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 Exchange Act), will be restricted from redeeming its shares with respect
to an aggregate of 20.0% or more of the shares sold in the Initial Public Offering. However, there is no restriction on the Company’s
stockholders’ ability to vote all of their shares for or against a Business Combination.
FTAC PARNASSUS ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 result from the outcome of this uncertainty.
In February 2022, the Russian
Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including
the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and
related sanctions on the world economy are not determinable as of the date of these condensed financial statements. The specific impact
on the Company's financial condition, results of operations, and cash flows is also not determinable as of the date of these condensed
financial statements.
Liquidity and Capital Resources
As of March 31, 2022, the
Company had approximately $0.4 million in its operating bank account and working capital of approximately $0.5 million.
The Company’s liquidity
needs through March 31, 2022 were satisfied through a payment of $25,000 from the Sponsor to purchase the Founder Shares, the loan of
approximately $67,000 from the Sponsor under the Note (as defined in Note 4), and the proceeds from the consummation of the Private Placement
not held in the Trust Account. The Company repaid the Note in full on March 16, 2021. Subsequent to the repayment, the facility was no
longer available to the Company. 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, provide the Company
Working Capital Loans (as defined in Note 4). As of March 31, 2022 and December 31, 2021, there were no amounts outstanding under any
Working Capital Loans.
Based on the foregoing, management
believes that the Company will have sufficient working capital and borrowing capacity from the Sponsor or an affiliate of the Sponsor,
or certain of the Company’s officers and directors to meet its needs through the earlier of the consummation of a Business Combination
or one year from this filing. Over this time period, the Company will be using the funds held outside of the Trust Account 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.
Going Concern
In connection with the Company’s assessment of going concern
considerations in accordance with FASB Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about
an Entity’s Ability to Continue as a Going Concern,” the Company has until March 16, 2023 to consummate a Business Combination.
It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated
by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the mandatory
liquidation, should a Business Combination not occur, and potential subsequent dissolution raises substantial doubt about the Company’s
ability to continue as a going concern. Management intends to complete a Business Combination by close of business on March 16, 2023.
No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after March
16, 2023.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited
condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United
States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation
S-X and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required
by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal
recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the
three months ended March 31, 2022 are not necessarily indicative of the results that may be expected through December 31, 2022, or any
future period.
The accompanying unaudited
condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K as filed with the SEC
on March 17, 2022.
FTAC PARNASSUS ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 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 unaudited condensed financial statements with 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.
Use of Estimates
The preparation of the financial statements in conformity with 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 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 confirming events. One of the more significant accounting estimates included in
these financial statements is the determination of the fair value of the warrant liabilities. 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 had no cash
equivalents as of March 31, 2022 and December 31, 2021.
Investments Held in the Trust Account
At March 31, 2022 and December 31, 2021, substantially all of the assets
held in the Trust Account were held in money market funds which are invested primarily in U.S. Treasury securities. Interest income is
recognized when earned. The Company’s portfolio of marketable securities is comprised solely of U.S. government securities, within
the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment
company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4)
of Rule 2a-7 of the Investment Company Act. Upon the closing of the Initial Public Offering and the Private Placement, $250 million was
placed in the Trust Account and invested in money market funds that invest in U.S. government securities. All of the Company’s investments
held in the Trust Account are classified as trading securities. Trading securities are presented on the condensed balance sheet at fair
value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account
are included in interest earned on marketable securities held in Trust Account in the accompanying unaudited condensed statements of operations.
The estimated fair values of investments held in Trust Account are determined using available market information.
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. As of March 31, 2022 and 2021, the Company had not experienced losses on these accounts and management believes
the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities which
qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements,” equals or approximates the carrying
amounts represented in the condensed balance sheets.
FTAC PARNASSUS ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Fair Value Measurements
Fair value is defined as the price that would be received for sale
of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes
a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority
to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). These tiers consist of:
|
● |
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
|
● |
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
|
● |
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the
inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair
value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the
fair value measurement.
Derivative Warrant Liabilities
The Company does not use
derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial
instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The
classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed
at the end of each reporting period.
The Public Warrants and the Private Placement Warrants are recognized
as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair
value and adjusts the carrying value of the instruments to fair value at each reporting period until they are exercised. The initial fair
value of the Public Warrants issued in connection with the Initial Public Offering were estimated using a binomial lattice model in a
risk-neutral framework. The fair value of the Public Warrants as of March 31, 2022 and December 31, 2021 were based on observable listed
prices for such warrants. The fair value of the Private Placement Warrants as of March 31, 2022 and December 31, 2021 were determined
using a Black-Scholes option pricing model. The determination of the fair value of the warrant liability may be subject to change as more
current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are
classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require
the creation of current liabilities.
Offering Costs Associated with the Initial
Public Offering
Offering costs consisted of legal, accounting, underwriting fees and
other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs were
allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared
to total proceeds received. Offering costs associated with derivative warrant liabilities were expensed as incurred and presented as non-operating
expenses in the unaudited condensed statements of operations. Offering costs associated with the Class A common stock issued were charged
against the carrying value of the shares of Class A common stock upon the completion of the Initial Public Offering. The Company classifies
deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current
assets or require the creation of current liabilities.
Class A Common Stock Subject to Possible
Redemption
The Company accounts for its Class A common stock subject to possible
redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity.” Class A common stock
subject to mandatory redemption (if any) is classified as liability instruments and is measured at fair value. Conditionally redeemable
Class A common stock (including Class A common stock that features redemption rights that are 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, Class A common stock is classified as stockholders’ equity. As part of the Private Placement, the Company
issued 690,000 shares of Class A common stock to the Sponsor and Millennium (“Private Placement Shares”). These Private Placement
Shares will not be transferable, assignable or salable until 30 days after the completion of the Company’s initial business combination,
as such are considered non-redeemable and presented as permanent equity in the Company’s March 31, 2022 condensed balance sheet.
Excluding the Private Placement Shares, 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 the occurrence of uncertain future events. Accordingly, as of the Initial
Public Offering, 25,000,000 shares of Class A common stock subject to possible redemption are presented at redemption value as temporary
equity, outside of the stockholders’ deficit section of the Company’s condensed balance sheets.
FTAC PARNASSUS ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Effective with the closing
of the Initial Public Offering and the over-allotment option, the Company recognized the accretion from initial book value to redemption
amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.
Net Income (Loss) Per Common Share
The Company complies
with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares,
which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes
of shares. Net income (loss) per common share is calculated by dividing net income (loss) by the weighted average shares of common stock
outstanding for the respective period.
The calculation of diluted net
income (loss) per common share does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering (including
the consummation of the over-allotment) and the private placement warrants to purchase an aggregate of 6,422,500 shares of Class A common
stock, because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method.
As a result, diluted net income (loss) per common share is the same as basic net income (loss) per common share for the three months ended
March 31, 2022. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value
approximates fair value.
The table below presents
a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share for each class of common
stock:
| |
For the Three Months Ended
March 31, | | |
For the Three Months Ended
March 31, | |
| |
2022 | | |
2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income (loss) per share: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income (loss) | |
$ | 3,525,329 | | |
$ | 1,175,110 | | |
$ | (109,543 | ) | |
$ | (185,672 | ) |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 25,690,000 | | |
| 8,563,333 | | |
| 4,567,111 | | |
| 7,741,111 | |
Basic and diluted net income (loss) per common share | |
$ | 0.14 | | |
$ | 0.14 | | |
$ | (0.02 | ) | |
$ | (0.02 | ) |
Income Taxes
The Company follows the asset and liability method of accounting for
income taxes under FASB ASC Topic 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. As of March 31, 2022 and December
31, 2021, the Company had a full valuation allowance against the deferred tax assets.
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. There were no unrecognized
tax benefits as of March 31, 2022 and December 31, 2021. The Company recognizes accrued interest and penalties related to unrecognized
tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of March 31, 2022 and December
31, 2021. 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.
Recent Accounting Pronouncements
In August 2020, the FASB
issued ASU No. 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”
(“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under
current GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope
exception, and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years
beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company is
currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
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 unaudited condensed financial statements.
FTAC PARNASSUS ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 3. INITIAL PUBLIC OFFERING
On March 16, 2021, the Company
consummated its Initial Public Offering of 25,000,000 Units, including the issuance of 3,000,000 Over-Allotment Units as a result of the
underwriter’s partial exercise of its over-allotment option, at $10.00 per Unit, generating gross proceeds of $250.0 million, and
incurring offering costs of approximately $15.5 million, of which $10.6 million was for deferred underwriting commissions.
Each Unit consists of one
share of Class A common stock and one-fourth of one warrant (“Public Warrant”). Each whole Public Warrant entitles the holder
to purchase one share of Class A common stock at an exercise price of $11.50 (see Note 8).
NOTE 4. RELATED PARTY TRANSACTIONS
Founder Shares
On December 28, 2020, the
Company issued an aggregate of 1,000 shares of Class B common stock to the Sponsor for an aggregate purchase price of $25,000 which was
subsequently paid by the Sponsor on January 22, 2021. On January 15, 2021, the Company effected a 5,905-for-1 stock split, and on January
27, 2021, the Company effected a stock dividend of 1.46711821 shares of Class B common stock for each share of Class B common stock outstanding
prior to the dividend. All shares and share amounts were retroactively restated to reflect the stock split, resulting in 8,663,333 shares
of Class B common stock being held by the Sponsor (the “Founder Shares”). The 8,663,333 Founder Shares included an aggregate
of up to 1,100,000 shares of Class B common stock which were subject to forfeiture by the Sponsor to the extent that the underwriter’s
overallotment option was not exercised in full or in part, so that the Founder Shares would represent 25% of the Company’s aggregate
Founder Shares, Placement Shares and issued and outstanding Public Shares after the Initial Public Offering. Additionally, upon consummation
of the Business Combination, the Sponsor will transfer 1,380,000 Founder Shares to Millennium for the same price originally paid for such
shares. On March 16, 2021, the underwriter partially exercised the over-allotment option to purchase 3,000,000 additional Units and forfeited
the remainder of its option; thus, an aggregate of 100,000 Founder Shares were forfeited and cancelled by the Company, resulting in 8,563,333
Founder Shares issued and outstanding.
The Insiders and Millennium
agreed not to transfer, assign or sell any of their Founder Shares (except to permitted transferees) until (i) with respect to 25% of
such shares, upon consummation of the Company’s initial Business Combination, (ii) with respect to 25% of such shares, when the
closing price of the Class A common stock exceeds $12.00 for any 20 trading days within a 30-trading day period following the consummation
of a Business Combination, (iii) with respect to 25% of such shares, when the closing price of the Class A common stock exceeds $13.50
for any 20 trading days within a 30-trading day period following the consummation of a Business Combination, and (iv) with respect to
25% of such shares, when the closing price of the Class A common stock exceeds $17.00 for any 20 trading days within a 30-trading day
period following the consummation of a Business Combination or earlier, in any case, if, following a Business Combination, the Company
completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the public
stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Private Placement Units
Simultaneously with the closing
of the Initial Public Offering, the Company consummated the Private Placement of 690,000 Private Placement Units, at a price of $10.00
per Private Placement Unit, generating gross proceeds of $6.9 million. The Private Placement Units were purchased by Millennium (345,000
Units) and one of the Company’s Sponsors, FTAC Parnassus Sponsor, LLC (345,000 Units).
Each Private Placement Unit
consists of one share of Class A common stock and one-fourth of one warrant (the “Private Placement Warrant”). Each whole
Private Placement Warrant is exercisable for one share of Class A common stock at a price of $11.50 per share. The proceeds from the Private
Placement were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business
Combination within the Combination Period, the proceeds from the sale of the Private Placement Units will be used to fund the redemption
of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless. There will
be no redemption rights or liquidating distributions from the Trust Account with respect to the Private Placement Warrants.
Promissory Note
On January 15, 2021, 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
an unsecured promissory note (the “Note”). This Note was non-interest bearing and payable upon the closing date of the Initial
Public Offering. The Company borrowed approximately $67,000 under the Note and repaid the Note in full on March 16, 2021. Subsequent to
the repayment, the facility was no longer available to the Company.
FTAC PARNASSUS ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Working Capital Loans
If needed to finance transaction costs in connection with searching
for a target business or consummating an intended initial Business Combination, the Sponsor, officers, directors or their affiliates may,
but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”). In the event that the initial
Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such
loaned amounts, but no proceeds from the Trust Account would be used for such repayment. Such loans would be evidenced by promissory notes.
The notes would be paid upon consummation of the initial Business Combination, without interest, or, at the lenders’ discretion,
up to $1,500,000 of the Working Capital Loans may be converted upon consummation of the Business Combination into additional private placement
units at a conversion price of $10.00 per unit. Such private placement units will be issued on substantially identical terms to the Private
Placement Units issued at the closing of the Initial Public Offering. 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. As of March 31, 2022 and December 31, 2021,
the Company had no outstanding borrowings under the Working Capital Loans.
Administrative Support Agreement
Commencing on the date that
the Company’s securities were first listed on Nasdaq through the earlier of the Company’s consummation of a Business Combination
and its liquidation, the Company agreed to pay the Sponsor or an affiliate of the Sponsor $20,000 per month for office space, administrative
and shared personnel support services. On June 8, 2021, the administrative services agreement was amended and restated to increase the
monthly charge from $20,000 to $27,500. For the three months ended March 31, 2022 and 2021, the Company incurred and paid expenses of
$82,500 and $20,000 under this agreement, respectively.
NOTE 5. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the Founder
Shares, Private Placement Units (including securities contained therein) and the units that may be issued upon conversion of the Working
Capital Loans (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants or the warrants issued
as part of the units upon conversion of the Working Capital Loans) were entitled to registration rights pursuant to a registration rights
agreement signed upon the effective date of the Initial Public Offering requiring the Company to register such securities for resale (in
the case of the Founder Shares, only after conversion to Class A common stock). The holders of a majority of these securities are entitled
to make up to three demands, excluding short form demands, that the Company register such securities for sale under the Securities Act.
In addition, the holders will have “piggy-back” registration rights to include such securities in other registration statements
filed by the Company and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities
Act. However, the registration rights agreement provides that the Company would not permit any registration statement filed under the
Securities Act to become effective until termination of the applicable lock-up period. The registration rights agreement does not contain
liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company
will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriter was entitled
to a cash underwriting discount of 2.0% of the gross proceeds of the Initial Public Offering, or $4.4 million. In addition, the underwriter
was entitled to a deferred fee of (i) 4.0% of the gross proceeds of the initial 22,000,000 Units sold in the Initial Public Offering,
and (ii) 6.0% of the gross proceeds from the 3,000,000 Over-Allotment Units, for an aggregate of $10.6 million. The deferred fee will
become payable to the representative 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 6. CLASS A COMMON STOCK SUBJECT TO POSSIBLE
REDEMPTION
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 the occurrence of future events. The Company is
authorized to issue 60,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class
A common stock are entitled to one vote for each share. As of March 31, 2022 and December 31, 2021, there were 25,690,000 shares of Class
A common stock outstanding, of which 25,000,000 was subject to possible redemption and is classified outside of permanent equity in the
condensed balance sheets.
The Class A common stock
subject to possible redemption reflected on the condensed balance sheet is reconciled in the following table:
Gross proceeds from Initial Public Offering | |
$ | 250,000,000 | |
Less: | |
| | |
Fair value of Public Warrants at issuance | |
| (8,625,000 | ) |
Offering costs allocated to Class A common stock subject to possible redemption | |
| (15,005,066 | ) |
Plus: | |
| | |
Accretion on Class A common stock subject to possible redemption amount | |
| 23,630,066 | |
Class A common stock subject to possible redemption | |
$ | 250,000,000 | |
FTAC PARNASSUS ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 7. STOCKHOLDERS’ DEFICIT
Preferred Stock
— The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations,
rights and preferences as may be determined from time to time by the Company’s Board of Directors. As of March 31, 2022 and December
31, 2021, there were no shares of preferred stock issued or outstanding.
Class A Common
Stock — The Company is authorized to issue 60,000,000 shares of Class A common stock with a par value of $0.0001 per share.
Holders of Class A common stock are entitled to one vote for each share. As of March 31, 2022 and December 31, 2021, there were 25,690,000
shares of Class A common stock issue and outstanding, of which 25,000,000 shares were subject to possible redemption and are classified
as temporary equity (see Note 6).
Class B Common
Stock — The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per share.
As of March 31, 2022 and December 31, 2021, there were 8,563,333 shares of Class B common stock issued and outstanding, respectively (see
Note 4).
Holders of Class B common
stock will vote on the election of directors prior to the consummation of a Business Combination. Holders of Class A common stock and
Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders, except as described
below or as required by law.
The shares of Class B common
stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a one-for-one basis, subject
to adjustment. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in excess
of the amounts offered in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares
of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding
shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number
of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted
basis, 25% of the sum of the total number of all shares of common stock issued and outstanding upon completion of the Initial Public Offering,
including Placement Shares, plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection
with a Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination).
NOTE 8. WARRANTS
As of March 31, 2022 and December 31, 2021, the Company had 6,250,000
Public Warrants and 172,500 Private Placement Warrants outstanding.
Public Warrants may only
be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. 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. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon
redemption or liquidation.
The Company will not be obligated
to deliver any shares of Class A common stock pursuant to the exercise for cash of a warrant and will have no obligation to settle such
warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying
the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect
to registration. No warrant will be exercisable, and the Company will not be obligated to issue shares of Class A common stock upon exercise
of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt from
the registration or qualifications requirements of the securities laws of the state of residence of the registered holder of the warrants.
Notwithstanding the foregoing, if a registration statement covering the shares of Class A common stock issuable upon exercise of the Public
Warrants has not been declared effective by the end of 60 business days following the closing of a Business Combination, warrant holders
may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain
an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the
Securities Act.
The Company agreed that as
soon as practicable, but in no event later than 20 business days after the closing of a Business Combination, the Company will use its
best efforts to file with the SEC, and within 60 business days following a Business Combination to have declared effective, a registration
statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current
prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement.
The Company will use its best efforts to maintain the effectiveness of such registration statement, and a current prospectus relating
thereto, until the expiration of the 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” in accordance with Section 3(a)(9) of
the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration
statement, but 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.
FTAC PARNASSUS ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Once the warrants become
exercisable, the Company may redeem the Public Warrants:
| ● | in whole and not in part; |
| ● | at a price of $0.01 per warrant; |
| ● | upon not less than 30 days’ prior written notice of redemption to each warrant holder; and |
| ● | if, and only if, the reported last sale price of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders. |
If and when the warrants
become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying
securities for sale under all applicable state securities laws.
If the Company calls the
Public Warrants for redemption for cash, 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 exercise price and number of shares of Class A
common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend,
or recapitalization, reorganization, merger or consolidation. Additionally, in no event will the Company be required to net cash settle
the warrants.
In addition, 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 a Business Combination at an issue price or effective issue price of less than $9.20 per share (with such issue price or effective
issue price to be determined in good faith by the Company and in the case of any such issuance to the Sponsor or its affiliates, without
taking into account any Founder Shares held by the Insiders or such affiliates, as applicable, prior to such issuance) (the “Newly
Issued Price”), (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 a Business Combination on the date of the completion of a Business Combination (net of redemptions),
and (z) the volume-weighted average trading price of the shares of Class A common stock during the 20 trading day period starting on the
trading day prior to the day on which the Company completes a Business Combination (such price, the “Market Value”) is below
$9.20 per share, the exercise price of the 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 will be adjusted (to the nearest cent) to be equal
to 180% of the higher of the Market Value and the Newly Issued Price. 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 respect to such warrants. Accordingly, the warrants may expire worthless.
The Private Placement Warrants
are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants
and the Class A common stock issuable upon the exercise of the Private Placement Warrants are not transferable, assignable or saleable
until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement
Warrants are non-redeemable so long as they are held by the Sponsor, Millennium or their permitted transferees. If the Private Placement
Warrants are held by someone other than the Sponsor, Millennium or their permitted transferees, the Private Placement Warrants will be
exercisable by such holders on the same basis as the Public Warrants.
NOTE 9. FAIR VALUE MEASUREMENTS
The following tables present information about the Company’s
assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 and indicates the
fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
March 31, 2022 |
Description | |
Quoted Prices in Active Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | |
Assets: | |
| | |
| | |
| |
Investments held in Trust Account - money market funds | |
$ | 250,042,153 | | |
$ | — | | |
$ | — | |
Liabilities: | |
| | | |
| | | |
| | |
Derivative warrant liabilities - Public warrants | |
$ | 2,375,005 | | |
$ | — | | |
$ | — | |
Derivative warrant liabilities - Private placement warrants | |
$ | — | | |
$ | — | | |
$ | 69,000 | |
FTAC PARNASSUS ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
December 31, 2021 |
Description | |
Quoted Prices in Active Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | |
Assets: | |
| | |
| | |
| |
Investments held in Trust Account - money market funds | |
$ | 250,019,865 | | |
$ | — | | |
$ | — | |
Liabilities: | |
| | | |
| | | |
| | |
Derivative warrant liabilities - Public warrants | |
$ | 7,187,505 | | |
$ | — | | |
$ | — | |
Derivative warrant liabilities - Private placement warrants | |
$ | — | | |
$ | — | | |
$ | 269,100 | |
Transfers to/from Levels 1, 2, and 3 are recognized at the beginning
of the reporting period. The estimated fair value of Public Warrants was transferred from a Level 3 fair value measurement to a Level
1 measurement, when the Public Warrants were separately listed and traded in May 2021. There were no other transfers to/from Levels 1,
2, and 3 during the year ended December 31, 2021. There were no transfers during the three months ended March 31, 2022.
Level 1 assets include investments
in money market funds that invest solely in U.S. government securities. The Company uses inputs such as actual trade data, quoted market
prices from dealers or brokers, and other similar sources to determine the fair value of its investments.
For periods where no observable
traded price is available, the fair value of the Public Warrants were estimated using a binomial lattice model and the Private Placement
Warrants have been estimated using a Black-Scholes option pricing model. For periods subsequent to the detachment of the Public Warrants
from the Units, the fair value of the Public Warrants is based on the observable listed price for such warrants. The estimated fair value
of the Public and Private Placement Warrants, prior to the Public Warrants being traded in an active market, was determined using Level
3 inputs. Inherent in a binomial lattice model and Black-Scholes option pricing model are assumptions related to the Unit price, expected
volatility, risk-free interest rate, term to expiration, and dividend yield. The Unit price is based on the publicly traded price of the
Units as of the measurement date. The Company estimated the volatility for the Public and Private Placement Warrants based on the implied
volatility from the traded prices of warrants issued by other special purpose acquisition companies. The risk-free interest rate is based
on interpolated U.S. Treasury rates, commensurate with a similar term to the Public and Private Placement Warrants. The expected life
of the warrants is assumed to be equivalent to their remaining contractual term. Finally, the Company does not anticipate paying a dividend.
Any changes in these assumptions can change the valuation significantly.
The following table provides
quantitative information regarding Level 3 fair value measurements inputs at their measurement dates:
| |
March
31,
2022 | | |
December 31,
2021 | |
Exercise price | |
$ | 11.50 | | |
$ | 11.50 | |
Stock price | |
$ | 9.76 | | |
$ | 9.84 | |
Volatility | |
| 6.7 | % | |
| 24.9 | % |
Term (years) | |
| 5.5 | | |
| 5.5 | |
Risk-free rate | |
| 2.4 | % | |
| 1.3 | % |
Dividend yield | |
| 0.0 | % | |
| 0.0 | % |
The change in the fair value
of the derivative warrant liabilities, measured using Level 3 inputs, for the three months ended March 31, 2022 is summarized as follows:
Derivative warrant liabilities at January 1, 2022 | |
$ | 269,100 | |
Change in fair value of derivative warrant liabilities | |
| (200,100 | ) |
Derivative warrant liabilities at March 31, 2022 (Level 3) | |
$ | 69,000 | |
The change in the fair value
of the derivative warrant liabilities, measured using Level 3 inputs, for the three months ended March 31, 2021 is summarized as follows:
Derivative warrant liabilities at beginning of period | |
$ | — | |
Issuance of Public Warrants | |
| 8,625,000 | |
Issuance of Private Warrants | |
| 284,630 | |
Change in fair value of derivative warrant liabilities | |
| (322,850 | ) |
Derivative warrant liabilities at March 31, 2021 (Level 3) | |
$ | 8,586,780 | |
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred
after the condensed balance sheet date up to the date that the condensed financial statements were issued. Based upon this review, the
Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations.
References to the “Company,” “FTAC
Parnassus Acquisition Corp.,” “FTAC Parnassus,” “our,” “us” or “we” refer to FTAC
Parnassus Acquisition Corp. The following discussion and analysis of the Company’s financial condition and results of operations
should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto contained elsewhere in this
report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve
risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange
Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking
statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of
activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such
as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,”
“believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors
that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
Overview
We are a blank check company
incorporated in Delaware on December 18, 2020. We were formed for the purpose of effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with one or more target businesses (the “Business Combination”).
We intend to effectuate our business combination using cash from the proceeds of our initial public offering and the sale of the placement
units that occurred simultaneously with the completion of our initial public offering, our capital stock, debt or a combination of cash,
stock and debt.
We expect to continue to
incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination
will be successful.
Results of Operations
We have neither engaged in
any operations (other than searching for a Business Combination after the Initial Public Offering) nor generated any revenues to date.
Our only activities from inception through March 31, 2022 were organizational activities, those necessary to prepare for the Initial Public
Offering, described below, and, after the Initial Public Offering, identifying a target company for an initial Business Combination. We
do not expect to generate any operating revenues until after the completion of our Business Combination, at the earliest. We expect to
generate non-operating income in the form of interest income on marketable securities held after the Initial Public Offering. We incur
expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due
diligence expenses.
For the three months ended
March 31, 2022, we had net income of $4,700,439, which consisted of a $5,012,600 non-operating gain resulting from the change in fair
value of derivative warrant liabilities and $22,288 of income from investments held in Trust Account, offset by $334,449 in general and
administrative expenses.
For the three months ended
March 31, 2021, we had a net loss of $295,215, which consisted of a $322,850 non-operating gain resulting from the change in fair value
of derivative warrant liabilities and $1,028 of income from investments held in Trust Account, offset by approximately $96,793 in general
and administrative expenses and $522,300 in offering costs associated with derivative warrant liabilities.
Liquidity and Capital Resources
Our liquidity needs prior to the Initial Public Offering were satisfied
through a payment of $25,000 from the Sponsor to purchase the Founder Shares, the loan of approximately $67,000 from the Sponsor under
the Note (as defined in Note 4 to the financial statements), and the proceeds from the consummation of the Private Placement not held
in the Trust Account. We repaid the Note in full on March 16, 2021. Subsequent to the repayment, the facility was no longer available
to us.
On March 16, 2021, we consummated
the Initial Public Offering of 25,000,000 Units, which included the partial exercise by the underwriter of its over-allotment option in
the amount of 3,000,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $250,000,000. Simultaneously with the closing
of the Initial Public Offering, we consummated the sale of 690,000 Placement Units at a price of $10.00 per Placement Unit in a private
placement to our Sponsor and Millennium, generating gross proceeds of $6,900,000.
Following the Initial Public
Offering, the partial exercise of the over-allotment option, and the sale of the Placement Units, a total of $250,000,000 was placed in
the Trust Account and 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”), with a maturity of 185 days or less, or in money market funds meeting
certain conditions under Rule 2a-7 of the Investment Company Act and that invest only in direct U.S. government obligations. We incurred
$15,527,366 in transaction costs, including $4,400,000 of underwriting fees, $10,600,000 of deferred underwriting fees and $527,366
of other offering costs.
For the three months ended
March 31, 2022, cash used in operating activities was $407,324. Net income of $4,700,439 was affected by interest earned on marketable
securities held in the Trust Account of $22,288 and change in fair value of warrant liabilities of $5,012,600. Changes in operating assets
and liabilities used $72,875 of cash for operating activities.
For the three months ended
March 31, 2021, cash used in operating activities was $554,471. Net loss of $295,215 was affected by interest earned on marketable securities
held in the Trust Account of $1,028, change in fair value of warrant liabilities of $322,850, transaction costs attributable to warrant
liabilities of $522,300, and general and administrative expenses paid under the promissory note of $875. Changes in operating assets and
liabilities used $458,553 of cash for operating activities. We used $250,000,000 in investing activities to fund our Trust Account, and
we generated $252,089,419 in financing activities from our Initial Public Offering, sale of Placement Units, which was offset by the repayment
of the Promissory Notes – related party.
As of March 31, 2022, we
had cash, investments and marketable securities held in the Trust Account of $250,042,153 (including $42,153 of interest). We intend to
use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account
to complete our Business Combination. We may withdraw interest to pay taxes. During the three months ended March 31, 2022, we did not
withdraw any interest income from the Trust Account. To the extent that our capital stock or debt is used, in whole or in part, as consideration
to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the
operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
Going Concern
We have until March 16, 2023
to consummate a Business Combination. It is uncertain that we will be able to consummate a Business Combination by this time. If a Business
Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution. Management has determined
that the mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution raises substantial doubt
about our ability to continue as a going concern. Management intends to complete a Business Combination prior to March 16, 2023. No adjustments
have been made to the carrying amounts of assets or liabilities should we be required to liquidate after March 16, 2023.
As of March 31, 2022, we
had $403,681 of cash held outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify
and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants
or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements
of prospective target businesses, and structure, negotiate and complete a Business Combination.
In order to finance transaction
costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor, or certain of our directors and officers
may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we may repay such loaned amounts
out of the proceeds of the Trust Account released to us. In the event that a Business Combination does not close, we may use a portion
of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used
for such repayment. Up to $1,500,000 of such loans may be convertible into units, at a price of $10.00 per unit, at the option of the
lender. The units would be identical to the Placement Units. The terms of such loans, if any, have not been determined and no written
agreements exist with respect to such loans. We do not expect to seek loans from parties other than our Sponsor or an affiliate of our
Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek
access to funds in our trust account. As of March 31, 2022, no such loans were outstanding.
We do not believe we will
need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the
costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual
amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover,
we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant
number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt
in connection with such 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.
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 our financial position, results of our operations and/or search for a target company, the specific impact is not readily
determinable as of the date of the condensed financial statements. The condensed financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets
or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2022. We do not participate in transactions that
create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would
have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing
arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial
assets.
Contractual Obligations
We do not have any long-term
debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of
the Sponsor a monthly fee of $20,000 for office space, administrative and shared personnel support services to the Company. We began incurring
these fees on March 12, 2021 and will continue to incur these fees monthly until the earlier of the completion of the business combination
and our liquidation. On June 8, 2021, the administrative services agreement was amended and restated to increase the monthly charge payable
from $20,000 to $27,500. For the three months ended March 31, 2022 and 2021, the Company incurred and paid expenses of $82,500 and $20,000
under this agreement, respectively.
In addition, we have an agreement
to pay the underwriter a deferred fee of $10,600,000. The deferred fee will become payable to the representative of the underwriter from
the amounts held in the Trust Account solely in the event that we complete a business combination, subject to the terms of the underwriting
agreement.
Critical Accounting Policies
The preparation of financial
statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially
differ from those estimates. We have identified the following critical accounting policies:
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow,
market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine
if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity”
(“ASC 480”), and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of
derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of
each reporting period.
The Public Warrants and
the Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, we recognize the warrant instruments
as liabilities at fair value and adjusts the carrying value of the instruments to fair value at each reporting period. The liabilities
are subject to re-measurement at each balance sheet date until exercised. The initial fair value of the Public Warrants issued in connection
with the Initial Public Offering were estimated using a binomial lattice model in a risk-neutral framework. The fair value of the Public
Warrants as of March 31, 2022 is based on observable listed prices for such warrants. The fair value of the Placement Warrants as of March
31, 2022 is determined using a Black-Scholes option pricing model. The determination of the fair value of the warrant liability may be
subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative
warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current
assets or require the creation of current liabilities.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption
in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity.” Class A common stock subject to
mandatory redemption (if any) is classified as liability instruments and is measured at fair value. Conditionally redeemable Class A common
stock (including Class A common stock that features redemption rights that are either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, Class A
common stock is classified as stockholders’ equity. As part of the Private Placement, the Company issued 690,000 shares of Class
A common stock (“Private Placement Shares”). These Private Placement Shares will not be transferable, assignable or salable
until 30 days after the completion of our initial business combination, as such are considered non-redeemable and presented as permanent
equity in the Company’s condensed balance sheet. Excluding the Private Placement Shares, our Class A common stock features
certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly,
as of the Initial Public Offering, 25,000,000 shares of Class A common stock subject to possible redemption are presented at
redemption value as temporary equity, outside of the stockholders’ equity section of our condensed balance sheets.
Effective with the closing of the Initial Public Offering and the over-allotment
option, we recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in
capital (to the extent available) and accumulated deficit (see Note 2).
Net Income (Loss) per Common Share
We comply with accounting
and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” We have two classes of shares, which are referred
to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income
(loss) per common share is calculated by dividing net income (loss) by the weighted average shares of common stock outstanding for the
respective period.
The calculation of diluted
net income (loss) per share does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering (including
the consummation of the over-allotment) and the placement warrants to purchase an aggregate of 6,422,500 shares of Class A common stock,
because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. As
a result, diluted net income (loss) per share is the same as basic net income (loss) per share for the three months ended March 31, 2022.
Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates
fair value.
Recent Accounting Pronouncements
In August 2020, the FASB
issued Accounting Standards Update (“ASU”) No. 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): Accounting for Convertible Instruments and Contracts
in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing
major separation models required under current GAAP. ASU 2020-06 also removes certain settlement conditions that are required for equity-linked
contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas.
The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or
cash flows.
We do not believe that any
other recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the
Company’s condensed financial statements.