ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
(Address of principal executive offices) |
(Zip Code) |
Title of Each Class: |
Trading Symbol(s) |
Name of Each Exchange on Which Registered: | ||
one-third of one redeemable warrant |
||||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
Auditor PCAOB ID Number: |
Auditor Name: |
Auditor Location: | ||
PART I |
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Item 1. |
4 |
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Item 1A. |
25 |
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Item 1B. |
25 |
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Item 2. |
25 |
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Item 3. |
25 |
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Item 4. |
25 |
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PART II |
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Item 5. |
25 |
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Item 6. |
26 |
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Item 7. |
26 |
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Item 7A. |
32 |
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Item 8. |
33 |
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Item 9. |
33 |
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Item 9A. |
33 |
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Item 9B. |
34 |
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PART III |
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Item 10. |
34 |
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Item 11. |
43 |
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Item 12. |
44 |
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Item 13. |
46 |
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Item 14. |
47 |
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PART IV |
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Item 15. |
48 |
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Item 16. |
50 |
• |
“amended and restated certificate of incorporation” are to the second amended and restated certificate of incorporation that the Company adopted prior to the consummation of our initial public offering (the “Initial Public Offering”); |
• |
“Board” are to our board of directors; |
• |
“common stock” are to our Class A common stock and our Class B common stock, collectively; |
• |
“DGCL” are to the Delaware General Corporation Law as the same may be amended from time to time; |
• |
“Founder Shares” are to shares of our Class B common stock initially issued to our Sponsor in a private placement prior to the Initial Public Offering, including those shares subsequently contributed by our Sponsor to Share Our Strength, the additional 253,000 shares of Class B common stock that may be issued prior to or in connection with our initial Business Combination (as defined below) (the “Discretionary Allocation Shares”) and the shares of our Class A common stock that will be issued upon the automatic conversion of the Class B common stock at the time of our initial Business Combination (for the avoidance of doubt, such shares of our Class A common stock will not be “public shares”); |
• | “management” or our “management team” are to our executive officers and directors (including our director nominees who will become directors in connection with the consummation of the Initial Public Offering); |
• | “public shares” are to shares of our Class A common stock sold as part of the units in the Initial Public Offering (whether they were purchased in the Initial Public Offering or thereafter in the open market); |
• | “public stockholders” are to the holders of our public shares, including our Sponsor and management team to the extent our Sponsor and/or members of our management team purchase public shares, provided that our Sponsor’s and each member of our management team’s status as a “public stockholder” will only exist with respect to such public shares; |
• | “public warrants” are to our warrants sold as part of the units in the Initial Public Offering (whether they were purchased in the Initial Public Offering or thereafter in the open market) and to any Private Placement Warrants (as defined below) or warrants issued upon conversion of working capital loans that are sold to third parties that are not initial purchasers or officers or directors (or permitted transferees) following the consummation of our initial Business Combination; |
• | “Sponsor” are to USHG Investments, LLC, a Delaware limited liability company; |
• | “USHG” are to Union Square Hospitality Group, LLC, an affiliate of our Sponsor; and |
• | “we,” “us,” “our,” the “Company” or “our company” are to USHG Acquisition Corp., a Delaware corporation. |
• | our ability to select an appropriate target business or businesses; |
• | our ability to complete our initial Business Combination; |
• | our expectations around the performance of a prospective target business or businesses; |
• | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial Business Combination; |
• | our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial Business Combination; |
• | our potential ability to obtain additional financing to complete our initial Business Combination; |
• | our pool of prospective target businesses; |
• | our ability to consummate an initial Business Combination due to the uncertainty resulting from the COVID-19 pandemic; |
• | the ability of our officers and directors to generate a number of potential Business Combination opportunities; |
• | our public securities’ potential liquidity and trading; |
• | the lack of a market for our securities; |
• | the use of proceeds not held in the Trust Account (as defined below) or available to us from interest income on the Trust Account balance; |
• | the Trust Account not being subject to claims of third parties; or |
• | our financial performance following the Initial Public Offering. |
Item 1. |
Business |
• | Unique Culture of “ Enlightened Hospitality ” |
• | Enlightened Hospitality can enable organizations to attract and retain the best talent, by taking care of team members first, and creating a unifying purpose to company culture. |
• | Enlightened Hospitality can drive deep and emotional connections with customers, resulting in long- term brand value. |
• | Enlightened Hospitality can lead to responsible growth by being mindful of a brand’s obligations towards all stakeholders, while creating long-term shareholder value. |
• | Building Category Disruptive Brands direct-to-consumer |
• | Scaling & Expanding Rapidly: |
brands. USHG has created 30 brands, including Shake Shack, which began as a humble hot dog cart in Madison Square Park in 2004, and has now grown to become a publicly traded company with over 300 locations across 15 countries. USHG’s catering and events, venue management and consulting business operates at the premium end of its industries and has expanded in recent years to become a national brand. We believe USHG’s track record of growth and innovation will make the strong ties of several members of our management team to USHG a valuable resource for us. |
• | Deep Relevance of Enlightened Hospitality |
• | Blue- Chip Reputation and Broad Public & Private Company Experience |
• | Notable Operating & Investing Track Record e-Commerce and technology sectors. Their experience will provide us deep cross-functional expertise in branding, marketing, technology, real estate, organizational culture, and leadership development. By deploying these capabilities, our management team will be well-positioned to amplify the growth of companies within their platforms. |
• | Differentiated Access to Investment Opportunities |
• | Has a Distinct People-First Culture that Aligns with Our Core Values |
• | Has a Superior Leadership Team with a Clear Vision and Strategy |
• | Is Growth-Oriented and Scalable with a Large, Addressable Market Opportunity |
• | Is Positioned at a Key Inflection Point of its Growth Trajectory |
• | subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial Business Combination; and |
• | cause us to depend on the marketing and sale of a single product or limited number of products or services. |
Type of Transaction |
Whether Stockholder Approval is Required |
|||
Purchase of assets |
No | |||
Purchase of stock of target not involving merger with the company |
No | |||
Merger of target into a subsidiary of the company |
No | |||
Merger of the company with a target |
Yes |
• | We issue shares of common stock that will be equal to or in excess of 20% of the number of our shares of common stock then-outstanding (other than in a public offering); |
• | Any of our directors, officers or substantial security holder (as defined by the NYSE rules) has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in issued and outstanding common stock or voting power of 1% or more (or 5% or more if the related party involved is classified as such solely because such person is a substantial security holder); or |
• | The issuance or potential issuance of common stock will result in our undergoing a change of control. |
• | the timing of the transaction, including in the event we determine stockholder approval would require additional time and there is either not enough time to seek stockholder approval or doing so would place the company at a disadvantage in the transaction or result in other additional burdens on the company; |
• | the expected cost of holding a stockholder vote; |
• | the risk that the stockholders would fail to approve the proposed Business Combination; |
• | other time and budget constraints of the company; and |
• | additional legal complexities of a proposed Business Combination that would be time-consuming and burdensome to present to stockholders. |
Item 1A. |
Risk Factors |
Item 1B. |
Unresolved Staff Comments |
Item 2. |
Properties |
Item 3. |
Legal Proceedings |
Item 4. |
Mine Safety Disclosures |
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities |
Item 6. |
Selected Financial Data |
Item 7. |
Management’s Discussion And Analysis Of Financial Condition And Results Of Operations |
Gross proceeds |
$ | 287,500,000 | ||
Less: |
||||
Deferred underwriting fees and other offering costs |
(15,887,831 | ) | ||
Proceeds allocated to public warrants |
(13,129,167 | ) | ||
Plus: |
||||
Total accretion of carrying value to redemption value |
29,016,998 | |||
|
|
|||
Class A common stock subject to possible redemption |
$ |
287,500,000 |
||
|
|
Item 7A. |
Quantitative and Qualitative Disclosures about Market Risk |
Item 8. |
Financial Statements and Supplementary Data |
Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
Item 9A. |
Controls and Procedures. |
Item 9B. |
Other Information |
Item 10. |
Directors, Executive Officers and Corporate Governance |
Name |
Age |
Position | ||
Danny Meyer | 63 | Chairman | ||
Adam D. Sokoloff | 59 | Chief Executive Officer and Director | ||
Tiffany F. Daniele | 39 | Chief Financial Officer | ||
J. Kristofer Galashan | 43 | Director | ||
Lisa Skeete Tatum | 54 | Director | ||
Mark Leavitt | 63 | Director | ||
Walter Robb | 68 | Director | ||
Randy Garutti | 46 | Director | ||
Heidi Messer | 52 | Director | ||
Robert K. Steel | 70 | Director |
• | meeting with our independent registered public accounting firm regarding, among other issues, audits, and adequacy of our accounting and control systems; |
• | monitoring the independence of the independent registered public accounting firm; |
• | verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; |
• | inquiring and discussing with management our compliance with applicable laws and regulations; |
• | pre-approving all audit services and permitted non-audit services to be performed by our independent registered public accounting firm, including the fees and terms of the services to be performed; |
• | appointing or replacing the independent registered public accounting firm; |
• | determining the compensation and oversight of the work of the independent registered public accounting firm (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; |
• | establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; |
• | monitoring compliance on a quarterly basis with the terms of the Initial Public Offering and, if any noncompliance is identified, immediately taking all action necessary to rectify such noncompliance or otherwise causing compliance with the terms of the Initial Public Offering; and |
• | reviewing and approving all payments made to our existing stockholders, executive officers or directors and their respective affiliates. Any payments made to members of our audit committee will be reviewed and approved by our Board, with the interested director or directors abstaining from such review and approval. |
• | should have demonstrated notable or significant achievements in business, education or public service; |
• | should possess the requisite intelligence, education and experience to make a significant contribution to the Board and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and |
• | should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the stockholders. |
• | reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation; |
• | reviewing and approving the compensation of all of our other Section 16 executive officers; |
• | reviewing our executive compensation policies and plans; |
• | implementing and administering our incentive compensation equity-based remuneration plans; |
• | assisting management in complying with our proxy statement and annual report disclosure requirements; |
• | approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees; |
• | producing a report on executive compensation to be included in our annual proxy statement; and |
• | reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. |
Item 11. |
Executive Compensation |
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
• | each person known by us to be the beneficial owner of more than 5% of our issued and outstanding shares of common stock; |
• | each of our executive officers and directors; and |
• | all our executive officers and directors as a group. |
Class A Common Stock |
Class B Common Stock |
Approximate Percentage of Outstanding Common Stock |
||||||||||||||||||
Name and Address of Beneficial Owner(1) |
Number of Shares Beneficially Owned |
Approximate Percentage of Class |
Number of Shares Beneficially Owned(2) |
Approximate Percentage of Class |
||||||||||||||||
Danny Meyer |
— | — | — | — | — | |||||||||||||||
Adam D. Sokoloff |
— | — | — | — | — | |||||||||||||||
Tiffany F. Daniele |
— | — | — | — | — | |||||||||||||||
J. Kristofer Galashan |
— | — | — | — | — | |||||||||||||||
Lisa Skeete Tatum |
— | — | — | — | — | |||||||||||||||
Mark Leavitt |
— | — | — | — | — | |||||||||||||||
Walter Robb |
— | — | — | — | — | |||||||||||||||
Randy Garutti |
— | — | — | — | — | |||||||||||||||
Heidi Messer |
— | — | — | — | — | |||||||||||||||
Robert K. Steel |
— | — | — | — | — | |||||||||||||||
All directors and officers members as a group (10 individuals)(2) |
— | — | — | — | — | |||||||||||||||
5% or More Holders: |
||||||||||||||||||||
Davidson Kempner Capital Management(3) |
1,946,426 | 6.77 | % | — | — | 5.45 | % | |||||||||||||
USHG Investments, LLC(4) |
— | — | 6,819,500 | 98.342 | % | 19.11 | % |
* | less than 1% |
(1) | Unless otherwise noted, the business address of each of our stockholders is 853 Broadway, 17th Floor, New York, NY 10003. |
(2) | Interests shown consist solely of Founder Shares, classified as Class B common stock. Such shares will automatically convert into Class A common stock at the time of our initial Business Combination as described in the section entitled “Description of Securities.” |
(3) | According to the Schedule 13G/A filed on February 10, 2022. M.H. Davidson & Co. (“CO”) has shared voting and dispositive power over 54,695 shares of HUGS Class A Stock. Davidson Kempner Partners (“DKP”) has shared voting and dispositive power over 341,792 shares of HUGS Class A Stock. Davidson Kempner Institutional Partners, L.P. (“DKIP”) has shared voting and dispositive power over shares of HUGS Class A Stock. Davidson Kempner International, Ltd. (“DKIL”) has shared voting and dispositive power over 819,445 shares of HUGS Class A Stock. Davidson Kempner Capital Management LP (“DKCM”) has shared voting and dispositive power over 1,946,426 shares of HUGS Class A Stock. Anthony A. Yoseloff (“Mr. Yoseloff”) has shared voting and dispositive power over 1,946,426 shares of HUGS Class A Stock. M.H. Davidson & Co. GP, L.L.C., a Delaware limited liability company, is the general partner of CO. DKCM, a registered investment adviser with the SEC, acts as investment manager to each of CO, DKP, DKIP and DKIL either directly or by virtue of a sub-advisory agreement with the investment manager of the relevant fund. DKCM GP LLC, a Delaware limited liability company, is the general partner of DKCM. The managing members of DKCM are Mr. Yoseloff, Eric P. Epstein, Conor Bastable, Shulamit Leviant, Morgan P. Blackwell, Patrick W. Dennis, Gabriel T. Schwartz, Zachary Z. Altschuler, Joshua D. Morris and Suzanne K. Gibbons. Mr. Yoseloff, through DKCM, is responsible for the voting and investment decisions relating to the securities held by CO, DKP, DKIP and DKIL. The address of the principal business office of each of the foregoing persons is c/o Davidson Kempner Capital Management LP, 520 Madison Avenue, 30th Floor, New York, New York 10022. |
(4) | The shares reported above are held in the name of our Sponsor. Our Sponsor is controlled by USHG. Certain of our directors, officers and their affiliates hold membership interests in our Sponsor. |
Item 13. |
Certain Relationships and Related Transactions, and Director Independence |
Item 14. |
Principal Accountant Fees and Services. |
(a) | The following is a summary of fees paid or to be paid to WithumSmith+Brown, PC (“Withum”) for services rendered. |
(b) |
Audit Fees year-end financial statements and services that are normally provided by Withum in connection with regulatory filings. The aggregate fees of Withum related to audit and review services in connection with our Initial Public Offering and regulatory filings totaled approximately $105,495 for the year ended December 31, 2021. |
(c) |
Audit-Related Fees Audit Fees |
(d) |
Tax Fees |
(e) |
All Other Fees |
Item 15. |
Exhibits, Financial Statements and Financial Statement Schedules |
(f) | The following documents are filed as part of this Form 10-K: |
(1) | Financial Statements |
(2) | Financial Statements Schedule |
(3) | Exhibits |
* | Filed herewith |
** | Furnished herewith |
(1) | Incorporated by reference to the Company’s Form 8-K, filed with the SEC on March 1, 2021. |
(2) | Incorporated by reference to the Company’s Form S-1, as amended, initially filed with the SEC on February 5, 2021. |
(3) | Incorporated by reference to the Company’s Form 8-K, filed with the SEC on November 9, 2021. |
Item 16. |
Form 10-K Summary |
March 14, 2022 | USHG Acquisition Corp. | |||||
By: | /s/ Adam Sokoloff | |||||
Name: | Adam Sokoloff | |||||
Title: | Chief Executive Officer | |||||
(Principal Executive Officer) |
Name |
Position |
Date | ||
/s/ Daniel H. Meyer |
Chairman | March 14, 2022 | ||
Daniel H. Meyer | ||||
/s/ Adam D. Sokoloff Adam D. Sokoloff |
Chief Executive Officer and Director | March 14, 2022 | ||
(Principal Executive Officer) |
||||
/s/ Tiffany F. Daniele |
Chief Financial Officer | March 14, 2022 | ||
Tiffany F. Daniele | (Principal Financial and Accounting Officer) |
|||
/s/ J. Kristofer Galashan |
Director | March 14, 2022 | ||
J. Kristofer Galashan | ||||
/s/ Randy Garutti |
Director | March 14, 2022 | ||
Randy Garutti | ||||
/s/ Mark Leavitt |
Director | March 14, 2022 | ||
Mark Leavitt | ||||
/s/ Heidi Messer |
Director | March 14, 2022 | ||
Heidi Messer | ||||
/s/ Walter Robb |
Director | March 14, 2022 | ||
Walter Robb | ||||
/s/ Robert K. Steel |
Director | March 14, 2022 | ||
Robert K. Steel | ||||
/s/ Lisa Skeete Tatum |
Director | March 14, 2022 | ||
Lisa Skeete Tatum |
Item 15. |
Exhibits, Financial Statements and Financial Statement Schedules |
(1) | Financial Statements |
F-2 |
||||
Financial Statements: |
||||
F-3 |
||||
F-4 |
||||
F-5 |
||||
F-6 |
||||
F-7 |
December 31, 2021 |
December 31, 2020 |
|||||||
ASSETS |
||||||||
Cash |
$ | $ | ||||||
Deferred offering costs associated with proposed public offering |
— | |||||||
Prepaid expenses |
— | |||||||
Total current assets |
||||||||
Marketable securities held in trust account |
— | |||||||
Other assets |
— | |||||||
Total assets |
$ |
$ |
||||||
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | $ | — | |||||
Franchise tax payable |
— | |||||||
Accrued expenses |
||||||||
Total current liabilities |
||||||||
Warrant liabilities |
— | |||||||
Deferred underwriting compensation |
— | |||||||
Deferred legal fees |
— | |||||||
Total liabilities |
||||||||
Commitments and Contingencies |
||||||||
Common stock subject to possible redemption, |
— | |||||||
Stockholders’ Equity (Deficit): |
||||||||
Preferred stock, $ |
||||||||
Class A common stock, $ |
— | |||||||
Class B common stock, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total stockholders’ (deficit) equity |
( |
) | ||||||
Total Liabilities and Stockholders’ (Deficit) Equity |
$ |
$ |
||||||
For The Year Ended December 31, 2021 |
For The Period From December 4, 2020 (Inception) Through December 31, 2020 |
|||||||
Formation and operating costs |
$ | $ | ||||||
Franchise tax expense |
— | |||||||
Loss from operations |
( |
) |
( |
) | ||||
Other Income (Expense): |
||||||||
Change in fair value of warrant liabilities |
( |
) | — | |||||
Offering costs allocated to derivative warrant liabilities |
( |
) | — | |||||
Interest on marketable securities |
— | |||||||
Net loss |
$ |
( |
) |
$ |
( |
) | ||
Weighted average shares outstanding of Class A common stock, basic and diluted |
— | |||||||
Basic and diluted net income per share of Class A common stock |
$ |
( |
) |
$ |
( |
) | ||
Weighted average shares outstanding of Class B common stock, basic and diluted |
||||||||
Basic and diluted net income per share of Class B common stock |
$ |
( |
) |
$ |
( |
) | ||
Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Total Stockholders’ Equity (Deficit) |
|||||||||||||||||
Class B |
||||||||||||||||||||
Shares |
Amount |
|||||||||||||||||||
Balance as of January 1, 2021 |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
Excess cash received over fair value of Private Placement Warrants |
— | — | — | |||||||||||||||||
Accretion of Class A Common Stock to redemption value |
— | — | ( |
) | ( |
) | ( |
) | ||||||||||||
Net loss |
— | — | — | ( |
) | ( |
) | |||||||||||||
Balance as of December 31, 2021 |
$ |
$ |
$ |
( |
) |
$ |
( |
) | ||||||||||||
Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Total Stockholders’ Equity |
|||||||||||||||||
Class B |
||||||||||||||||||||
Shares |
Amount |
|||||||||||||||||||
Balance as of December 4, 2020 (Inception) |
$ |
$ |
$ |
$ |
||||||||||||||||
Issuance of common stock to Sponsor |
— | |||||||||||||||||||
Net loss |
— | — | — | ( |
) | ( |
) | |||||||||||||
Balance as of December 31, 2020 |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
For The Year Ended December 31, 2021 |
For The Period From December 4, 2020 (Inception) Through December 31, 2020 |
|||||||
Cash Flows from Operating Activities |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities |
||||||||
Change in fair value of warrant liabilities |
||||||||
Offering costs allocated to derivative warrant liabilities |
||||||||
Interest earned on marketable securities in Trust Accoun t |
( |
) | ||||||
Changes in operating assets and liabilities |
||||||||
Prepaid expenses |
( |
) | ||||||
Other assets |
( |
) | ||||||
Accounts payable |
||||||||
Franchise tax payable |
||||||||
Accrued expenses |
||||||||
Deferred legal fees |
||||||||
|
|
|
|
|||||
Net cash used by operating activities |
( |
) | ||||||
|
|
|
|
|||||
Cash Flows from Investing Activities |
||||||||
Cash deposited in Trust Account |
( |
) | ||||||
|
|
|
|
|||||
Net cash used in investing activities |
( |
) | ||||||
|
|
|
|
|||||
Cash Flows from Financing Activities |
||||||||
Proceeds from issuance of Class B common stock to Sponsor |
||||||||
Proceeds from issuance of Class A common stock and warrants |
||||||||
Proceeds from note payable and advances from related party |
||||||||
Repayment of note payable and advances from related party |
( |
) | ||||||
Payment of offering costs |
( |
) | ||||||
|
|
|
|
|||||
Net cash provided by financing activities |
||||||||
|
|
|
|
|||||
Net increase in cash |
||||||||
Cash—beginning of period |
||||||||
|
|
|
|
|||||
Cash—end of period |
$ | $ | ||||||
|
|
|
|
|||||
Supplemental disclosure of noncash investing and financing activities: |
||||||||
Deferred legal fees related to Initial Public Offering |
$ | $ | ||||||
|
|
|
|
|||||
Deferred underwriting compensation |
$ | $ | ||||||
|
|
|
|
|||||
Deferred offering costs included in accrued expenses |
$ | $ | ||||||
|
|
|
|
|||||
Deferred offering costs paid through prepaid legal expense funded by sponsor |
$ | $ | ||||||
|
|
|
|
Gross proceeds |
$ | |||
Less: |
||||
Deferred underwriting fees and other offering costs |
( |
) | ||
Proceeds allocated to public warrants |
( |
) | ||
Plus: |
||||
Total accretion of carrying value to redemption value |
||||
Class A common stock subject to possible redemption |
$ |
|||
• | Level 1, defined as observable inputs such as quoted prices 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. |
For The Year Ended December 31, 2021 |
For The Period from December 04, 2020 (Inception) through December 31, 2020 |
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Redeemable Class A Common Stock |
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Numerator: Net loss allocable to Redeemable Class A Common Stock |
$ | ( |
) | $ | ||||
Denominator: Weighted Average Share Outstanding, Redeemable Class A Common Stock |
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Basic and diluted weighted average shares outstanding, Redeemable Class A |
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Basic and diluted net earnings per share, Redeemable Class A |
$ | ( |
) | $ | ( |
) | ||
Non-Redeemable Class B Common Stock |
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Numerator: Net loss allocable to non-redeemable Class B Common Stock |
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Net loss allocable to non-redeemable Class B Common Stock |
$ | ( |
) | $ | ( |
) | ||
Denominator: Weighted Average Non-Redeemable Class B Common Stock |
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Basic and diluted weighted average shares outstanding, Non-Redeemable Class B |
$ | ( |
) | $ | ( |
) | ||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
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Federal |
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Current |
$ | $ | ||||||
Deferred |
( |
) | ( |
) | ||||
State and Local |
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Current |
$ | $ | ||||||
Deferred |
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Change in valuation allowance |
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Income tax provision |
$ | $ | ||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
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Deferred tax asset |
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Net Operating Loss Carryforward |
$ | $ | ||||||
Total deferred tax assets |
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Valuation allowance |
( |
) | ( |
) | ||||
Deferred tax asset, net of allowance |
$ | $ | ||||||
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
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Statutory federal income tax rate |
% | % | ||||||
State taxes, net of federal tax benefit |
% | % | ||||||
Change in fair value of derivative liabilities |
( |
%) | % | |||||
Transaction costs allocated to warrant issuance |
( |
%) | % | |||||
Change in valuation allowance |
( |
%) | ( |
%) | ||||
Income tax provision |
% | % | ||||||
• | in whole and not in part; |
• | at a price of $ |
• | upon a minimum of |
• | if, and only if, the last reported sale price (the “closing price”) of shares of Class A common stock equals or exceeds $ |
• | in whole and not in part; |
• | at $ |
• | if, and only if, the last reported sale price of Class A common stock equals or exceeds $ |
Held-To-Maturity |
Level |
Fair Value |
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U.S. Treasury Marketable securities held in Trust Account—U.S. Treasury Securities Money Market Fund |
1 | $ | ||||||
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
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Warrant liabilities: |
|
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Public Warrants |
$ | $ | $ | $ | ||||||||||||
Private Placement Warrants |
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|
|
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|
|
|
|
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Total warrant liabilities |
$ | $ | $ | $ | ||||||||||||
|
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|
|
|
|
|
|
As of December 31, 2021 |
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Exercise price |
$ | |||
IPO price |
$ | |||
Underlying asset price (per share) |
$ | |||
Volatility |
% | |||
Time to Maturity (Years) |
||||
Risk-free rate |
% | |||
Dividend yield |
% |
Public Warrant Liability |
Private Warrant Liability |
Total |
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Fair value, March 01, 2021 |
$ | $ | $ | |||||||||
Recognized loss on change in fair value |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
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Fair value, December 31, 2021 |
$ | $ | $ | |||||||||
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|
Exhibit 4.5
Description of the Companys Securities Registered
Under Section 12 of the Exchange Act of 1934
The following description of our units, common stock and warrants is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to our amended and restated certificate of incorporation, bylaws and warrant agreement, each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.5 is a part.
Units
Each unit consists of one share of our Class A common stock and one-third of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as described below. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of the shares of the Companys Class A common stock. This means only a whole warrant may be exercised at any given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least three units, you will not be able to receive or trade a whole warrant.
Holders have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into Class A common stock and warrants.
Additionally, the units will automatically separate into their component parts and will not be traded after completion of our initial Business Combination.
Common Stock
Pursuant to our amended and restated certificate of incorporation, our authorized capital stock consists of 200,000,000 shares of our Class A common stock, $0.0001 par value, 20,000,000 shares of our Class B common stock, $0.0001 par value, and 1,000,000 shares of undesignated preferred stock, $0.0001 par value. The following description summarizes the material terms of our capital stock.
Stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of shares of our Class A common stock and holders of shares of our Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders except as required by law. Unless specified in our amended and restated certificate of incorporation, or as required by applicable provisions of the DGCL or applicable stock exchange rules, the affirmative vote of a majority of our shares of common stock that are voted is required to approve any such matter voted on by our stockholders. Our board of directors is divided into three classes, each of which serves for a term of three years with only one class of directors being elected in each year. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors. Our stockholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor. Prior to our initial Business Combination, only holders of our founder shares have the right to vote on the appointment of directors. Holders of our public shares are not entitled to vote on the appointment of directors during such time. In addition, prior to the completion of an initial Business Combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason. These provisions of our amended and restated certificate of incorporation may be amended only by approval of at least 90% of the shares of our Class B common stock voting in an annual meeting.
Because our amended and restated certificate of incorporation authorizes the issuance of up to 200,000,000 shares of our Class A common stock, if we were to enter into a Business Combination, we may (depending on the terms of such a Business Combination) be required to increase the number of shares of our Class A common stock which we will be authorized to issue at the same time as our stockholders vote on the initial Business Combination to the extent we seek stockholder approval in connection with our initial Business Combination.
We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial Business Combination at a per-stock price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of our initial Business Combination, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes divided by the number of the then-outstanding public shares, subject to the limitations described herein. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. The redemption rights will include the requirement that a beneficial owner must identify itself in order to validly redeem its shares. Unlike many blank check companies that hold stockholder votes and conduct proxy solicitations in conjunction with their initial Business Combinations and provide for related redemptions of public shares for cash upon completion of such initial Business Combinations even when a vote is not required by law, if a stockholder vote is not required by applicable law or stock exchange listing requirements and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC prior to completing our initial Business Combination. Our amended and restated certificate of incorporation requires these tender offer documents to contain substantially the same financial and other information about the initial Business Combination and the redemption rights as is required under the SECs proxy rules. If, however, a stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or we decide to obtain stockholder approval for business or other reasons, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek stockholder approval, we will complete our initial Business Combination only if a majority of the shares of common stock voted are voted in favor of our initial Business Combination. For purposes of seeking approval of the majority of our outstanding shares of common stock, non-votes will have no effect on the approval of our initial Business Combination once a quorum is obtained.
If we seek stockholder approval of our initial Business Combination and we do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer rules, our 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 Excess Shares, without our prior consent. However, we would not be restricting our stockholders ability to vote all of their shares (including Excess Shares) for or against our initial Business Combination. Our stockholders inability to redeem the Excess Shares will reduce their influence over our ability to complete our initial Business Combination, and such stockholders could suffer a material loss in their investment if they sell such Excess Shares on the open market. Additionally, such stockholders will not receive redemption distributions with respect to the Excess Shares if we complete our initial Business Combination. And, as a result, such stockholders will continue to hold that number of shares exceeding 15% and, in order to dispose such shares would be required to sell their shares in open market transactions, potentially at a loss.
Pursuant to our amended and restated certificate of incorporation, if we have not consummated an initial Business Combination within 24 months from the closing of the Initial Public Offering, we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-stock price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes divided by the number of the then-outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
In the event of a liquidation, dissolution or winding up of the Company after a Business Combination, our stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of shares, if any, having preference over the common stock. Our stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that we will provide our public stockholders with the opportunity to redeem their public
shares for cash at a per stock price equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, upon the completion of our initial Business Combination, subject to the limitations described herein.
Public Stockholders Warrants
We have issued warrants to purchase 9,583,333 of our Class A common stock. Each whole warrant entitles the registered holder to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the later of one year from the closing of our Initial Public Offering and 30 days after the completion of our initial Business Combination, except as discussed in the immediately succeeding paragraph. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of our Class A common stock. This means only a whole warrant may be exercised at a given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants trade. Accordingly, unless a holder purchases at least three units, they are not able to receive or trade a whole warrant. The warrants will expire five years after the completion of our initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
We are not obligated to deliver any Class A common stock pursuant to the exercise of a warrant and have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of our Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration, or a valid exemption from registration is available. No warrant is exercisable and we are not obligated to issue a share of our Class A common stock upon exercise of a warrant unless the share of our Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will we be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of our Class A common stock underlying such unit.
We have agreed that as soon as practicable, but in no event later than twenty business days after the closing of our initial Business Combination, we will use our commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon exercise of the warrants, and we will use our commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of our initial Business Combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of our Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement; provided that if our Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a covered security under Section 18(b)(1) of the Securities Act, we may, at our 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 we so elect, we will not be required to file or maintain in effect a registration statement, but we will use our commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the 60th day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when we will have failed to maintain an effective registration statement, exercise warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption, but we will use our commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of our Class A common stock equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number of shares of our Class A common stock underlying the warrants, multiplied by the excess of the fair market value (defined below) less the exercise price of the warrants by (y) the fair market value and (B) 0.361 per warrant. The fair market value as used in this paragraph shall mean the volume weighted average price
of the Class A common stock for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent.
Redemption of Warrants When the Price Per Share of our Class A Common Stock Equals or Exceeds $18.00
Once the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants):
| in whole and not in part; |
| at a price of $0.01 per warrant; |
| upon a minimum of 30 days prior written notice of redemption to each warrant holder; and |
| if, and only if, the closing price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise prices of a warrant) on the trading day prior to the date on which we send the notice of redemption to the warrant holders. |
We will not redeem the warrants as described above unless a registration statement under the Securities Act covering the issuance of the shares of our Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of our Class A common stock is available throughout the 30-day redemption period. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
We have established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and we issue a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her or its warrant prior to the scheduled redemption date. Any such exercise would not be done on a cashless basis and would require the exercising warrant holder to pay the exercise price for each warrant being exercised. However, the price per share of the Class A common stock may fall below the $18.00 redemption trigger price (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant) as well as the $11.50 (for whole shares) warrant exercise price after the redemption notice is issued.
Redemption of Warrants When the Price Per Share of our Class A Common Stock Equals or Exceeds $10.00
Once the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants):
| in whole and not in part; |
| at $0.10 per warrant upon a minimum of 30 days prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table below, based on the redemption date and the fair market value of our Class A common stock except as otherwise described below; and |
| if, and only if, the closing price of our Class A common stock equals or exceeds $10.00 per public share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as) on the trading day prior to the date on which we send the notice of redemption to the warrant holders. |
Beginning on the date the notice of redemption is given until the warrants are redeemed or exercised, holders may elect to exercise their warrants on a cashless basis. The numbers in the table below represent the number of shares of our Class A common stock that a warrant holder will receive upon such cashless exercise in connection with a redemption by us pursuant to this redemption feature, based on the fair market value of our Class A common stock on the corresponding redemption date (assuming holders elect to exercise their warrants and such warrants are not redeemed for $0.10 per warrant), determined for these purposes based on the volume weighted average price of our Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants, and the number of months that the corresponding redemption date precedes the expiration date of the warrants, each as set forth in the table below. We will provide our warrant
holders with the final fair market value no later than one business day after the 10-trading day period described above ends.
Pursuant to the warrant agreement, references above to shares of our Class A common stock shall include a security other than shares of our Class A common stock into which the shares of our Class A common stock have been converted or exchanged for in the event we are not the surviving company in our initial Business Combination. The numbers in the table below will not be adjusted when determining the number of shares of our Class A common stock to be issued upon exercise of the warrants if we are not the surviving entity following our initial Business Combination.
The stock prices set forth in the column headings of the table below will be adjusted as of any date on which the number of shares issuable upon exercise of a warrant or the exercise price of a warrant is adjusted as set forth under the heading Anti-dilution Adjustments below. If the number of shares issuable upon exercise of a warrant is adjusted, the adjusted stock prices in the column headings will equal the stock prices immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the exercise price of the warrant after such adjustment and the denominator of which is the exercise price of the warrant immediately prior to such adjustment. In such an event, the number of shares in the table below shall be adjusted by multiplying such share amounts by a fraction, the numerator of which is the number of shares deliverable upon exercise of a warrant immediately prior to such adjustment and the denominator of which is the number of shares deliverable upon exercise of a warrant as so adjusted. If the exercise price of a warrant is adjusted, (a) in the case of an adjustment pursuant to the fifth paragraph under the heading Anti-dilution Adjustments below, the adjusted stock prices in the column headings will equal the unadjusted stock price multiplied by a fraction, the numerator of which is the higher of the Market Value and the Newly Issued Price as set forth under the heading Anti-dilution Adjustments and the denominator of which is $10.00 and (b) in the case of an adjustment pursuant to the second paragraph under the heading Anti-dilution Adjustments below, the adjusted stock prices in the column headings will equal the unadjusted stock price less the decrease in the exercise price of a warrant pursuant to such exercise price adjustment.
Redemption Date (period to expiration of warrants) |
Fair Market Value of Class A Common Stock | |||||||||||||||||||||||||||||||||||
$10.00 | $11.00 | $12.00 | $13.00 | $14.00 | $15.00 | $16.00 | $17.00 | ³ $18.00 | ||||||||||||||||||||||||||||
60 months |
0.261 | 0.281 | 0.297 | 0.311 | 0.324 | 0.337 | 0.348 | 0.358 | 0.361 | |||||||||||||||||||||||||||
57 months |
0.257 | 0.277 | 0.294 | 0.310 | 0.324 | 0.337 | 0.348 | 0.358 | 0.361 | |||||||||||||||||||||||||||
54 months |
0.252 | 0.272 | 0.291 | 0.307 | 0.322 | 0.335 | 0.347 | 0.357 | 0.361 | |||||||||||||||||||||||||||
51 months |
0.246 | 0.268 | 0.287 | 0.304 | 0.320 | 0.333 | 0.346 | 0.357 | 0.361 | |||||||||||||||||||||||||||
48 months |
0.241 | 0.263 | 0.283 | 0.301 | 0.317 | 0.332 | 0.344 | 0.356 | 0.361 | |||||||||||||||||||||||||||
45 months |
0.235 | 0.258 | 0.279 | 0.298 | 0.315 | 0.330 | 0.343 | 0.356 | 0.361 | |||||||||||||||||||||||||||
42 months |
0.228 | 0.252 | 0.274 | 0.294 | 0.312 | 0.328 | 0.342 | 0.355 | 0.361 | |||||||||||||||||||||||||||
39 months |
0.221 | 0.246 | 0.269 | 0.290 | 0.309 | 0.325 | 0.340 | 0.354 | 0.361 | |||||||||||||||||||||||||||
36 months |
0.213 | 0.239 | 0.263 | 0.285 | 0.305 | 0.323 | 0.339 | 0.353 | 0.361 | |||||||||||||||||||||||||||
33 months |
0.205 | 0.232 | 0.257 | 0.280 | 0.301 | 0.320 | 0.337 | 0.352 | 0.361 | |||||||||||||||||||||||||||
30 months |
0.196 | 0.224 | 0.250 | 0.274 | 0.297 | 0.316 | 0.335 | 0.351 | 0.361 | |||||||||||||||||||||||||||
27 months |
0.185 | 0.214 | 0.242 | 0.268 | 0.291 | 0.313 | 0.332 | 0.350 | 0.361 | |||||||||||||||||||||||||||
24 months |
0.173 | 0.204 | 0.233 | 0.260 | 0.285 | 0.308 | 0.329 | 0.348 | 0.361 | |||||||||||||||||||||||||||
21 months |
0.161 | 0.193 | 0.223 | 0.252 | 0.279 | 0.304 | 0.326 | 0.347 | 0.361 | |||||||||||||||||||||||||||
18 months |
0.146 | 0.179 | 0.211 | 0.242 | 0.271 | 0.298 | 0.322 | 0.345 | 0.361 | |||||||||||||||||||||||||||
15 months |
0.130 | 0.164 | 0.197 | 0.230 | 0.262 | 0.291 | 0.317 | 0.342 | 0.361 | |||||||||||||||||||||||||||
12 months |
0.111 | 0.146 | 0.181 | 0.216 | 0.250 | 0.282 | 0.312 | 0.339 | 0.361 | |||||||||||||||||||||||||||
9 months |
0.090 | 0.125 | 0.162 | 0.199 | 0.237 | 0.272 | 0.305 | 0.336 | 0.361 | |||||||||||||||||||||||||||
6 months |
0.065 | 0.099 | 0.137 | 0.178 | 0.219 | 0.259 | 0.296 | 0.331 | 0.361 | |||||||||||||||||||||||||||
3 months |
0.034 | 0.065 | 0.104 | 0.150 | 0.197 | 0.243 | 0.286 | 0.326 | 0.361 | |||||||||||||||||||||||||||
0 months |
| | 0.042 | 0.115 | 0.179 | 0.233 | 0.281 | 0.323 | 0.361 |
The exact fair market value and redemption date may not be set forth in the table above, in which case, if the fair market value is between two values in the table or the redemption date is between two redemption dates in the table, the number of shares of our Class A common stock to be issued for each warrant exercised will be determined by a
straight-line interpolation between the number of shares set forth for the higher and lower fair market values and the earlier and later redemption dates, as applicable, based on a 365 or 366-day year, as applicable.
This redemption feature differs from the typical warrant redemption features used in many other blank check offerings, which typically only provide for a redemption of warrants for cash (other than the private placement warrants) when the trading price for the Class A common stock exceeds $18.00 per share for a specified period of time. This redemption feature is structured to allow for all of the outstanding warrants to be redeemed when the Class A common stock are trading at or above $10.00 per public share, which may be at a time when the trading price of our Class A common stock is below the exercise price of the warrants. We have established this redemption feature to provide us with the flexibility to redeem the warrants without the warrants having to reach the $18.00 per share threshold set forth above under Redemption of warrants when the price per share of our Class A common stock equals or exceeds $18.00. Holders choosing to exercise their warrants in connection with a redemption pursuant to this feature will, in effect, receive a number of shares for their warrants based on an option pricing model with a fixed volatility input as of this prospectus. This redemption right provides us with an additional mechanism by which to redeem all of the outstanding warrants, and therefore have certainty as to our capital structure as the warrants would no longer be outstanding and would have been exercised or redeemed. We will be required to pay the applicable redemption price to warrant holders if we choose to exercise this redemption right and it will allow us to quickly proceed with a redemption of the warrants if we determine it is in our best interest to do so. As such, we would redeem the warrants in this manner when we believe it is in our best interest to update our capital structure to remove the warrants and pay the redemption price to the warrant holders.
As stated above, we can redeem the warrants when the Class A common stock are trading at a price starting at $10.00 per share, which is below the exercise price of $11.50 per share, because it will provide certainty with respect to our capital structure and cash position while providing warrant holders with the opportunity to exercise their warrants on a cashless basis for the applicable number of shares. If we choose to redeem the warrants when the Class A common stock are trading at a price below the exercise price of the warrants, this could result in the warrant holders receiving fewer shares of our Class A common stock than they would have received if they had chosen to wait to exercise their warrants for shares of our Class A common stock if and when such shares of our Class A common stock were trading at a price higher than the exercise price of $11.50.
No fractional shares of our Class A common stock will be issued upon exercise. If, upon exercise, a holder would be entitled to receive a fractional interest in a share, we will round down to the nearest whole number of the number of shares of our Class A common stock to be issued to the holder. If, at the time of redemption, the warrants are exercisable for a security other than the shares of our Class A common stock pursuant to the warrant agreement (for instance, if we are not the surviving company in our initial Business Combination), the warrants may be exercised for such security. At such time as the warrants become exercisable for a security other than the shares of our Class A common stock, the Company (or surviving company) will use its commercially reasonable efforts to register under the Securities Act the security issuable upon the exercise of the warrants.
A holder of a warrant may notify us in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with such persons affiliates), to the warrant agents actual knowledge, would beneficially own in excess of 9.8% (or such other amount as a holder may specify) of the shares of our Class A common stock issued and outstanding immediately after giving effect to such exercise.
Anti-dilution Adjustments
If the number of outstanding shares of our Class A common stock is increased by a stock dividend payable in shares of our Class A common stock, or by a split-up of common stock or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of our Class A common stock issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding shares of common stock. A rights offering made to all or substantially all holders of common stock entitling holders to purchase Class A common stock at a price less than the historical fair market value (as defined below) will be deemed a stock dividend of a number of shares of our Class A common stock equal to the product of (i) the number of shares of our Class A common stock actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A common stock) and (ii) one minus the
quotient of (x) the price per share of our Class A common stock paid in such rights offering and (y) the historical fair market value. For these purposes, (i) if the rights offering is for securities convertible into or exercisable for shares of our Class A common stock, in determining the price payable for Class A common stock, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) historical fair market value means the volume weighted average price of shares of our Class A common stock as reported during the 10 trading day period ending on the trading day prior to the first date on which the Class A common stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.
In addition, if we, at any time while the warrants are outstanding and unexpired, pay a dividend or make a distribution in cash, securities or other assets to all or substantially all of the holders of shares of our Class A common stock on account of such Class A common stock (or other securities into which the warrants are convertible), other than (a) as described above, (b) any cash dividends or cash distributions which, when combined on a per share basis with all other cash dividends and cash distributions paid on the Class A common stock during the 365-day period ending on the date of declaration of such dividend or distribution does not exceed $0.50 (as adjusted to appropriately reflect any other adjustments and excluding cash dividends or cash distributions that resulted in an adjustment to the exercise price or to the number of shares of our Class A common stock issuable on exercise of each warrant) but only with respect to the amount of the aggregate cash dividends or cash distributions equal to or less than $0.50 per share, (c) to satisfy the redemption rights of the holders of Class A common stock in connection with a proposed initial Business Combination, (d) to satisfy the redemption rights of the holders of Class A common stock in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to provide holders of shares of our Class A common stock the right to have their shares redeemed in connection with our initial Business Combination or to redeem 100% of our public shares if we do not complete our initial Business Combination within 24 months from the closing of the Initial Public Offering or (B) with respect to any other provision relating to the rights of holders of shares of our Class A common stock, or (e) in connection with the redemption of our public shares upon our failure to complete our initial Business Combination, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each share of our Class A common stock in respect of such event.
If the number of outstanding shares of our Class A common stock is decreased by a consolidation, combination, reverse stock split or reclassification of Class A common stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of our Class A common stock issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding shares of our Class A common stock.
Whenever the number of shares of our Class A common stock purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of shares of our Class A common stock purchasable upon the exercise of the warrants immediately prior to such adjustment and (y) the denominator of which will be the number of shares of our Class A common stock so purchasable immediately thereafter.
In addition, if (x) we issue additional shares of our Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial Business Combination at an issue price or effective issue price of less than $9.20 per share of our Class A common stock (with such issue price or effective issue price to be determined in good faith by our Board and, in the case of any such issuance to our Sponsor or its affiliates, without taking into account any founder shares held by our Sponsor or such affiliates, as applicable, prior to such issuance (the Newly Issued Price), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial Business Combination on the date of the consummation of our initial Business Combination (net of redemptions), and
(z) the volume weighted average trading price of our Class A common stock during the 20 trading day period starting on the trading day prior to the day on which we consummate our initial 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 $10.00 and $18.00 per
share redemption trigger price described above under Redemption of Warrants When the Price Per Share of our Class A Common Stock Equals or Exceeds $10.00 and Redemption of Warrants When the Price Per Share of our Class A Common Stock Equals or Exceeds $18.00 will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described above under Redemption of warrants when the price per share of our Class A common stock equals or exceeds $10.00 will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
In case of any reclassification or reorganization of the outstanding Class A common stock (other than those described above or that solely affects the par value of such Class A common stock), or in the case of any merger or consolidation of us with or into another corporation (other than a consolidation or merger in which we are the continuing corporation and that does not result in any reclassification or reorganization of our outstanding Class A common stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of us as an entirety or substantially as an entirety in connection with which we are dissolved, the holders of the warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of the shares of our Class A common stock immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of our Class A common stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event. However, if such holders were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind and amount of securities, cash or other assets for which each warrant will become exercisable will be deemed to be the weighted average of the kind and amount received per share by such holders in such consolidation or merger that affirmatively make such election, and if a tender, exchange or redemption offer has been made to and accepted by such holders (other than a tender, exchange or redemption offer made by the Company in connection with redemption rights held by stockholders of the Company as provided for in the Companys amended and restated certificate of incorporation or as a result of the redemption of Class A common stock by the Company if a proposed initial Business Combination is presented to the stockholders of the Company for approval) under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more than 50% of the issued and outstanding shares of our Class A common stock, the holder of a warrant will be entitled to receive the highest amount of cash, securities or other property to which such holder would actually have been entitled as a stockholder if such warrant holder had exercised the warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the shares of our Class A common stock held by such holder had been purchased pursuant to such tender or exchange offer, subject to adjustment (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in the warrant agreement.
If less than 70% of the consideration receivable by the holders of shares of our Class A common stock in such a transaction is payable in the form of our Class A common stock in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the warrant properly exercises the warrant within thirty days following public disclosure of such transaction, the warrant exercise price will be reduced as specified in the warrant agreement based on the Black-Scholes value (as defined in the warrant agreement) of the warrant. The purpose of such exercise price reduction is to provide additional value to holders of the warrants when an extraordinary transaction occurs during the exercise period of the warrants pursuant to which the holders of the warrants otherwise do not receive the full potential value of the warrants. The purpose of such exercise price reduction is to provide additional value to holders of the warrants when an extraordinary transaction occurs during the exercise period of the warrants pursuant to which the holders of the warrants otherwise do not receive the full potential value of the warrants.
The warrants have been issued in registered form under a warrant agreement between American Stock Transfer & Trust Company, LLC, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity or correct any mistake or
defective provision (ii) amending the provisions relating to cash dividends on shares of common stock as contemplated by and in accordance with the warrant agreement or (iii) adding or changing any provisions with respect to matters or questions arising under the warrant agreement as the parties to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders of the warrants, provided that the approval by the holders of at least 50% of the then-outstanding public warrants is required to make any change that adversely affects the interests of the registered holders. You should review a copy of the warrant agreement, which is filed as an exhibit to Annual Report on Form 10-K of which this Exhibit 4.5 is a part, for a complete description of the terms and conditions applicable to the warrants.
The warrant holders do not have the rights or privileges of holders of common stock and any voting rights until they exercise their warrants and receive Class A common stock. After the issuance of Class A common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
No fractional warrants will be issued upon separation of the units and only whole warrants will trade. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number, the number of shares of our Class A common stock to be issued to the warrant holder.
We have agreed that, subject to applicable law, any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and we irrevocably submit to such jurisdiction, which jurisdiction will be the exclusive forum for any such action, proceeding or claim. This provision applies to claims under the Securities Act but does not apply to claims under the Exchange Act or any claim for which the federal district courts of the United States of America are the sole and exclusive forum.
Dividends
We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial Business Combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial Business Combination. The payment of any cash dividends subsequent to our initial Business Combination will be within the discretion of our Board at such time. Further, if we incur any indebtedness in connection with a Business Combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
Our Amended and Restated Certificate of Incorporation
Our amended and restated certificate of incorporation contains provisions designed to provide certain requirements and restrictions that apply to us until the completion of our initial Business Combination. These provisions cannot be amended without the approval of holders of 65% of our common stock. Our Sponsor and its permitted transferees, if any, and Share Our Strength who collectively beneficially own 19.43% of our common stock, will participate in any vote to amend our amended and restated certificate of incorporation and will have the discretion to vote in any manner they choose. Specifically, our amended and restated certificate of incorporation will provide, among other things, that:
| If we have not consummated an initial Business Combination within 24 months from the closing of the Initial Public Offering, we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem the public shares, at a per-stock price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes as well as expenses relating to the administration of the trust account (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law; |
| Prior to or in connection with our initial Business Combination, we may not issue additional securities that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares (a) on our initial Business Combination or on any other proposal presented to stockholders prior to or in connection with the completion of an initial Business Combination or (b) to approve an amendment to our amended and restated certificate of incorporation to (x) extend the time we have to consummate a Business Combination beyond 24 months from the closing of our Initial Public Offering or (y) amend the foregoing provisions; |
| Although we do not intend to enter into a Business Combination with a target business that is affiliated with our Sponsor, USHG, our directors or our officers, we are not prohibited from doing so. In the event we enter into such a transaction, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or from an independent entity that commonly renders valuation opinions that such a Business Combination is fair to our company from a financial point of view; |
| If a stockholder vote on our initial Business Combination is not required by applicable law or stock exchange listing requirements and we do not decide to hold a stockholder vote for business or other reasons, we will offer to redeem our public shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, and will file tender offer documents with the SEC prior to completing our initial Business Combination which contain substantially the same financial and other information about our initial Business Combination and the redemption rights as is required under Regulation 14A of the Exchange Act; |
| So long as our securities are then listed on the NYSE, our initial Business Combination must occur 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 amount of deferred underwriting discounts held in trust and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial Business Combination; |
| If our stockholders approve an amendment to our amended and restated certificate of incorporation (A) that would modify the substance or timing of our obligation to provide holders of shares of our Class A common stock the right to have their shares redeemed in connection with our initial Business Combination or to redeem 100% of our public shares if we do not complete our initial Business Combination within 24 months from the closing of the Initial Public Offering or (B) with respect to any other provision relating the rights of holders of shares of our Class A common stock, we will provide our public stockholders with the opportunity to redeem all or a portion of their shares of our Class A common stock upon such approval at a per-stock price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes divided by the number of the then-outstanding public shares, subject to the limitations described herein; and |
| We will not effectuate our initial Business Combination solely with another blank check company or a similar company with nominal operations. |
In addition, our amended and restated certificate of incorporation provides that under no circumstances will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001.
Certain Anti-Takeover Provisions of Delaware Law and our Amended and Restated Certificate of Incorporation and Bylaws
We are subject to the provisions of Section 203 of the DGCL regulating corporate takeovers. This statute prevents certain Delaware corporations, under certain circumstances, from engaging in a Business Combination with:
| a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an interested stockholder); |
| an affiliate of an interested stockholder; or |
| an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder. |
A Business Combination includes a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 do not apply if:
| our Board approves the transaction that made the stockholder an interested stockholder, prior to the date of the transaction; |
| after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or |
| on or subsequent to the date of the transaction, the initial Business Combination is approved by our Board and authorized at a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder. |
Our amended and restated certificate of incorporation provides that our Board is classified into three classes of directors. As a result, in most circumstances, a person can gain control of our Board only by successfully engaging in a proxy contest at two or more annual meetings.
Our authorized but unissued common stock and preferred stock will be available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Exclusive forum for certain lawsuits
Our amended and restated certificate of incorporation requires, unless we consent in writing to the selection of an alternative forum, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or bylaws, or (iv) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware, except any claim (A) as to which the Court of Chancery of the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or (C) for which the Court of Chancery does not have subject matter jurisdiction, as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. If an
action is brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholders counsel. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
Notwithstanding the foregoing, our amended and restated certificate of incorporation provides that the exclusive forum provision will not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
Additionally, unless we consent in writing to the selection of an alternative forum, the federal courts shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act against us or any of our directors, officers, other employees or agents. Section 22 of the Securities Act, however, created concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies charter documents has been challenged in legal proceedings. While the Delaware courts have determined that such exclusive forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions, and there can be no assurance that such provisions will be enforced by a court in those other jurisdictions. Any person or entity purchasing or otherwise acquiring any interest in our securities shall be deemed to have notice of and consented to these provisions; however, we note that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Special meeting of stockholders
Our bylaws provide that special meetings of our stockholders may be called only by a majority vote of our Board, by our Chief Executive Officer or by our Chairman.
Advance notice requirements for stockholder proposals and director nominations
Our bylaws provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders, must provide timely notice of their intent in writing. To be timely, a stockholders notice will need to be received by the Company secretary at our principal executive offices not later than the close of business on the 90th day nor earlier than the opening of business on the 120th day prior to the anniversary date of the immediately preceding annual meeting of stockholders. Pursuant to Rule 14a-8 of the Exchange Act, proposals seeking inclusion in our annual proxy statement must comply with the notice periods contained therein. Our bylaws also specify certain requirements as to the form and content of a stockholders meeting. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders.
Action by written consent
Any action required or permitted to be taken by our common stockholders must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the stockholders other than with respect to our Class B common stock.
Classified board of directors
Our Board is divided into three classes, Class I, Class II and Class III, with members of each class serving staggered three-year terms. Our amended and restated certificate of incorporation provides that the authorized number of
directors may be changed only by resolution of the board of directors. Subject to the terms of any preferred stock, any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors, voting together as a single class. Any vacancy on our Board, including a vacancy resulting from an enlargement of our Board, may be filled only by vote of a majority of our directors then in office.
Class B Common Stock Consent Right
For so long as any shares of our Class B common stock remain outstanding, we may not, without the prior vote or written consent of the holders of a majority of the shares of our Class B common stock then outstanding, voting separately as a single class, amend, alter or repeal any provision of our amended and restated certificate of incorporation, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class B common stock. Any action required or permitted to be taken at any meeting of the holders of shares of our Class B common stock may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding Class B common stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of our Class B common stock were present and voted.
Listing of Securities
Our units trade on NYSE under the symbol HUGSU. Our Class A common stock and warrants trade on NYSE under the symbols HUGS and HUGSW, respectively.
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Adam D. Sokoloff, certify that:
1. | I have reviewed this Annual Report on Form 10-K of USHG Acquisition Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | [Omitted]; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting. |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: March 14, 2022
/s/ Adam D. Sokoloff |
Adam D. Sokoloff Chief Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Tiffany F. Daniele, certify that:
1. | I have reviewed this Annual Report on Form 10-K of USHG Acquisition Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | [Omitted]; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting. |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: March 14, 2022
/s/ Tiffany F. Daniele |
Tiffany F. Daniele |
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of USHG Acquisition Corp. (the Company) on Form 10-K for the period ending December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I certify, in the capacity and on the date indicated below, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: March 14, 2022
/s/ Adam D. Sokoloff |
Adam D. Sokoloff Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of USHG Acquisition Corp. (the Company) on Form 10-K for the period ending December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I certify, in the capacity and on the date indicated below, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: March 14, 2022
/s/ Tiffany F. Daniele |
Tiffany F. Daniele |
Chief Financial Officer |
Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Temporary Equity, Shares Outstanding | 28,750,000 | 0 |
Temporary Equity, Redemption Price Per Share | $ 10.00 | $ 0 |
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred Stock, Shares issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Class A [Member] | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
Common Class B [Member] | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 6,934,500 | 6,934,500 |
Common stock, shares outstanding | 6,934,500 | 6,934,500 |
Shares Subject to Possible Redemption [Member] | Common Class A [Member] | ||
Temporary Equity, Shares Outstanding | 28,750,000 | 0 |
Statements of Operations - USD ($) |
1 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2021 |
|
Formation and operating costs | $ 10,000 | $ 1,636,359 |
Franchise tax expense | 200,000 | |
Loss from operations | (10,000) | (1,836,359) |
Other Income (Expense): | ||
Change in fair value of warrant liabilities | (4,392,077) | |
Offering costs allocated to derivative warrant liabilities | (757,984) | |
Interest on marketable securities | 16,155 | |
Net loss | (10,000) | (6,970,265) |
Class A Common Stock [Member] | ||
Other Income (Expense): | ||
Net loss | $ 0 | $ (5,412,932) |
Weighted average shares outstanding, basic and diluted | 0 | 24,102,740 |
Basic and diluted net income per share | $ 0.00 | $ (0.22) |
Class B Common Stock [Member] | ||
Other Income (Expense): | ||
Net loss | $ (10,000) | $ (1,557,333) |
Weighted average shares outstanding, basic and diluted | 6,934,500 | 6,934,500 |
Basic and diluted net income per share | $ 0.00 | $ (0.22) |
Statements of Changes in Stockholders' Equity (Deficit) - USD ($) |
Total |
Additional Paid-in Capital [Member] |
Accumulated Deficit [Member] |
Common Class B [Member] |
Common Class B [Member]
Common Stock [Member]
|
---|---|---|---|---|---|
Beginning balance at Dec. 03, 2020 | $ 0 | $ 0 | $ 0 | $ 0 | |
Beginning balance, in Shares at Dec. 03, 2020 | 0 | ||||
Issuance of common stock to Sponsor | 24,120 | 23,427 | $ 693 | ||
Issuance of common stock to Sponsor, Shares | 6,934,500 | ||||
Net loss | (10,000) | (10,000) | $ (10,000) | ||
Ending balance at Dec. 31, 2020 | 14,120 | 23,427 | (10,000) | $ 693 | |
Ending balance, Shares at Dec. 31, 2020 | 6,934,500 | ||||
Excess cash received over fair value of Private Placement Warrants | 146,667 | 146,667 | |||
Accretion of Class A Common Stock to redemption value | (29,016,998) | (170,094) | (28,846,905) | ||
Net loss | (6,970,265) | (6,970,265) | $ (1,557,333) | ||
Ending balance at Dec. 31, 2021 | $ (35,826,476) | $ 0 | $ (35,827,169) | $ 693 | |
Ending balance, Shares at Dec. 31, 2021 | 6,934,500 |
Description of Organization and Business Operations |
12 Months Ended |
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Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Organization and Business Operations | Note 1—Description of Organization and Business Operations USHG Acquisition Corp. (the “Company”) is a blank check company formed as a Delaware corporation on December 4, 2020. The Company was incorporated for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses or entities that the Company has not yet identified (“Business Combination”). As of December 31, 2021, the Company had not yet commenced operations. All activity through December 31, 2021 relates to the Company’s formation and its Initial Public Offering (the “Initial Public Offering”), which is described below. The Company has selected December 31 as its fiscal year end. On March 1, 2021, the Company consummated the Initial Public Offering of 28,750,000 units (the “Units” and with respect to the Class A common stock included in the Units being offered, the “Public Shares”), including 3,750,000 Units sold pursuant to the full exercise of the underwriters’ option to purchase additional Units to cover over-allotments. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $287,500,000, which is described in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company completed the private sale of 1,333,333 warrants (the “Private Placement Warrants”) at a purchase price of $1.50 per Private Placement Warrant (the “Private Placement”), to USHG Investments, LLC (the “Sponsor”), generating gross proceeds to the Company of $2,000,000, which is described in Note 3. Offering costs consist of legal, accounting, and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering and were charged to the carrying value of the Class A common stock upon completion of the Initial Public Offering and during the current year ended December 31, 2021. Following the closing of the Initial Public Offering on March 1, 2021, an amount of $287,500,000 ($10 per Unit) of the proceeds from the Initial Public Offering, including $15,812,500 of the underwriters’ deferred discount was placed in a trust account located in the United States at J.P. Morgan Chase Bank, N.A. maintained by American Stock Transfer & Trust Company, LLC, acting as trustee (the “Trust Account”). Except with respect to interest earned on the funds in the Trust Account that may be released to the Company to pay its franchise and income taxes and expenses relating to the administration of the Trust Account, the proceeds from the Initial Public Offering held in the Trust Account will not be released until the earliest of (a) the completion of the Company’s initial Business Combination, (b) the redemption of any Public Shares of the Company properly tendered in connection with a stockholder vote to amend the Company’s Second Amended and Restated Certificate of Incorporation, which was adopted upon the consummation of the Initial Public Offering (the “Amended and Restated Certificate of Incorporation”) (i) to modify the substance or timing of its obligation to redeem 100% of the Public Shares if the Company does not complete its initial Business Combination within 24 months from the closing of the Initial Public Offering or (ii) with respect to any other provisions relating to stockholders’ rights or pre-initial Business Combination activity, and (c) the redemption of all of the Public Shares if it is unable to complete its Business Combination within 24 months from the closing of the Initial Public Offering, subject to applicable law. On November 8, 2021, the Company entered into an Investment Agreement and Plan of Merger (the “Investment Agreement”) with Panera Brands, Inc., a Delaware corporation (“Panera”), and Rye Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Panera (“Merger Sub”), pursuant to which Merger Sub will merge with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of Panera (the “Merger”). Upon the terms and subject to the conditions set forth in the Investment Agreement, at the effective time of the Merger (the “Effective Time”), each issued and outstanding share of the Company’s Class A common stock and each issued and outstanding share of the Company’s Class B common stock will be converted into the right to receive a number of shares of Panera’s common stock, par value $0.01 per share (“Panera Common Stock”) at an exchange ratio of $10.00 divided by the public offering price per share in the Panera IPO (as defined below). In addition, at the Effective Time, each issued and outstanding warrant of the Company will be assumed by Panera and will relate to Panera Common Stock (each, a “Warrant”) (with the number of shares of Panera Common Stock underlying each Warrant adjusted in accordance with the terms of the Investment Agreement). The consummation of the proposed Transactions (as defined in the Investment Agreement) is subject to the receipt of the requisite approval of the stockholders of the Company (such approval, the “HUGS stockholder approval”) and the fulfillment of certain other conditions, including the consummation of Panera’s initial public offering of Panera Common Stock (the “Panera IPO”). Refer to the Form 8-K, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on November 9, 2021 for additional information. The Company’s management has broad discretion with respect to the specific application of the net proceeds of its Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company’s initial Business Combination must be with one or more operating businesses or assets that together have an aggregate fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account) at the time the Company signs a definitive agreement in connection with the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise is not required to register as an investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”). Upon the closing of the Initial Public Offering, management has agreed that an amount equal to at least $10.00 per Unit sold in the Initial Public Offering are held in the Trust Account with American Stock Transfer & Trust Company, LLC acting as trustee and invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below. The Company will provide its holders of the Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per 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 Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). These Public Shares were recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and a majority of the 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 the Amended and Restated Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC, and file tender offer documents with the SEC prior to completing a Business Combination. If, however, a stockholder approval of the transactions is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem Public Shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the transaction. If the Company seeks stockholder approval in connection with a Business Combination, the holders of the Founder Shares (as defined in Note 6) prior to the Initial Public Offering (the “Initial Stockholders”) have agreed to vote their Founder Shares and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the Initial Stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination. Notwithstanding the foregoing, 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Class A common stock sold in the Initial Public Offering, without the prior consent of the Company. The Sponsor, executive officers and directors will have agreed not to propose an amendment to the Amended and Restated Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to provide for the redemption of its Public Shares in connection with a Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the Public Stockholders with the opportunity to redeem their Class A common stock in conjunction with any such amendment. If the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then-outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, liquidate and dissolve, 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. In connection with the redemption of 100% of the Company’s outstanding Public Shares for a portion of the funds held in the Trust Account, each holder will receive a full pro rata portion of the amount then in the Trust Account, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay the Company’s taxes (less up to $100,000 of interest to pay dissolution expenses). The Initial Stockholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Initial Stockholders should acquire Public Shares after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period, and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00 per share initially held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have vendors, service providers (other than the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Going Concern Consideration The Company has $386,462 in cash as of December 31, 2021, and has incurred and expects to incur additional significant costs in pursuit of its financing and acquisition plans, including the proposed Business Combination. Additionally, the Company has until March 1, 2023 to consummate a Business Combination. In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements– Going Concern,” Management has determined that the liquidity condition and 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. The Company intends to complete the proposed Business Combination with Panera. No adjustments have been made to the carrying amounts of assets or liabilities. Risks and Uncertainties Management continues to evaluate the impact of the
COVID-19 pandemic 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 the financial statement. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Note 2—Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, 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 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 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 liability. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had $386,462 in cash and no cash equivalents, outside of the funds held in the Trust Account, as of December 31, 2021. Warrant Liability The Company accounts for the Warrants in accordance with the guidance contained in ASC 815-40-15-7D re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. See Note 6 for further discussion of the pertinent terms of the Warrants and Note 8 for further discussion of the methodology used to determine the value of the Warrants. Cash Held in Trust Account At December 31, 2021, the assets held in the Trust Account were invested in money-market funds. Common Stock Subject to Possible Redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Shares of common stock subject to mandatory redemption, if any, is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, as of December 31, 2021, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit. The Class A common stock subject to possible redemption reflected on the balance sheet as December 31, 2021 are reconciled in the following table:
Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. At December 31, 2021 and December 31, 2020, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. Fair Value Measurements ASC 820, Fair Value Measurement, defines fair value and requires disclosures about 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 include:
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. As of December 31, 2021 and December 31, 2020 the carrying values of cash, accounts payable, franchise tax payable, and accrued expenses approximate their fair values due to the short-term nature of the instruments. The Company’s portfolio of marketable securities held in the Trust Account is comprised of investments in a money market fund that is primarily invested in U.S. Treasury securities. The fair value for trading securities is determined using quoted market prices in active markets. Offering Costs Offering costs consist of legal, accounting, underwriting and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering. Upon the completion of the Initial Public Offering in March 2021, the offering costs were allocated using the relative fair values of the Company common stock and its public and private warrants. The costs allocated to warrants were recognized in other expenses and those related to the Company’s common stock were charged against temporary equity. Net Income Per Common Stock The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net per share of common stock is computed by dividing net income by the weighted average number of shares outstanding for the period. The Company has not considered the effect of the warrants sold in the Initial Public Offering in the calculation of diluted income per share, because the exercise of the warrants is contingent upon the occurrence of future events. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value. The Class B shares will automatically convert into Class A shares at the time of the Business Combination subject to adjustment. 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 per share, basic and diluted for Class A common stock is calculated by dividing the pro rata allocation of net loss to Class A shares of $5,412,932 for the year ended December 31, 2021, by the weighted average number of Class A common stock outstanding for the period. Net income per share basic and diluted for Class B common stock is calculated by dividing the pro rata allocation of net loss to shares of Class B common stock of $1,557,333 for the year ended December 31, 2021, respectively, by the weighted average number of Class B common stock outstanding for the period.
Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company’s management determined that the United States is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. The income tax provision consists of the following:
The Company’s net deferred tax assets are as follows:
As of December 31, 2021, the Company had $265,962 of U.S. federal and state net operating loss carryovers available to offset future taxable income. In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of deferred tax assets and therefore established a full valuation allowance of $265,962 as of December 31, 2021. A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows :
The Company files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions and is subject to examination by the various taxing authorities. Recent Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. Management is currently evaluating the new guidance but does not expect the adoption of this guidance to have a material impact on the Company’s financial statements. 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 Company’s financial statements.
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Initial Public Offering and Private Placement |
12 Months Ended |
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Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Initial Public Offering and Private Placement | Note 3—Initial Public Offering and Private Placement Pursuant to the Initial Public Offering, the Company sold 28,750,000 Units at a purchase price of $10.00 per Unit, including 3,750,000 Units sold pursuant to the full exercise of the underwriters’ option to purchase additional Units to cover over-allotments. Each Unit consists of one share of Class A common stock and one-third of one redeemable 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 per share, subject to adjustment (see Note 6). Simultaneously with the closing of the Initial Public Offering, the Company completed a sale of 1,333,333 Private Placement Warrants at a purchase price of $1.50 per Private Placement Warrant (the “Private Placements”), to the Sponsor, generating gross proceeds to the Company of $2,000,000. The Private Placement Warrants are identical to the warrants sold as part of the Units in the Initial Public Offering, except that the Sponsor has agreed not to transfer, assign, or sell any of the Private Placement Warrants (except to certain permitted transferees) until 30 days after the completion of the Company’s initial Business Combination. So long as the Private Placement Warrants are held by the Sponsor, the Private Placement Warrants will not be redeemable for cash by the Company and will be exercisable on a cashless basis.
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Related Party Transactions |
12 Months Ended |
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Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 4—Related Party Transactions Founder Shares On December 29, 2020, the Sponsor paid an aggregate of $24,120 in exchange for the issuance of 6,934,500 shares of Class B common stock (the “Founder Shares”). In January 2021, the Sponsor made a charitable contribution of 115,000 of the Founder Shares to Share Our Strength, a 501(c)(3) nonprofit organization. On March 1, 2021, the underwriters exercised the over-allotment option in full to purchase 904,500 founder shares. The Initial Stockholders have agreed not to transfer, assign or sell any of the Founder Shares until the earlier to occur of (1) one year after the completion of the initial Business Combination and (2) subsequent to the Business Combination, (x) if the closing price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends and similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination (provided that the 30-trading day period must be completed prior to any such transfer, assignment or sale), or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s Public Stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property. Related Party Loans In order to finance transaction costs in connection with a Business Combination, the Sponsor, members of the Company’s founding team or any of their affiliates may, but are not obligated to, loan the Company funds that are categorized as Working Capital Loans. If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $2.0 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. 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 December 31, 2021, the Company had no borrowings under the Working Capital Loans. Administrative Services Agreement The Company has entered into an Administrative Services Agreement pursuant to which the Company will pay an affiliate of the Sponsor a total of $10,000 per month, until the earlier of the completion of the initial Business Combination and the liquidation of the trust assets, for office space, secretarial and administrative services. Upon completion of the initial Business Combination or liquidation, the Company will cease paying these monthly fees. For the year ended December 31, 2021, the Company has paid $110,789 for the services provided through the Administrative Services Agreement.
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Commitments and Contingencies |
12 Months Ended |
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Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 5—Commitments and Contingencies Registration and Stockholder Rights The holders of the Founder Shares, Private Placement Warrants, and warrants that may be issued upon conversion of Working Capital Loans (and any Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) are entitled to registration rights pursuant to a registration rights agreement entered into prior to the closing of the Initial Public Offering. The holders of these securities may at any time, and from time to time, request in writing that the Company register the resale of any or all of these securities on Form S-3 or any similar short form registration statement that may be available at such time; provided, however, that the Company shall not be obligated to fulfill such request through an underwritten offering. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements. Underwriting Agreement The Company granted the underwriters an option to cover over-allotments and for market stabilization purposes. The over-allotment option entitled the underwriters to purchase on a pro rata basis up to 3,750,000 additional units at the Initial Public Offering price, less the underwriting discounts and commissions. The underwriters exercised the over-allotment option in full and purchased an additional 3,750,000 units at closing of the Initial Public Offering. As of December 31, 2021, the Company has incurred $15,812,500 in deferred underwriting costs, all of which was recorded as a reduction to temporary equity. Deferred legal fees The Company obtained legal advisory services in connection with the Initial Public Offering and agreed to pay their fees upon the consummation of the initial Business Combination. As of December 31, 2021, the Company recorded approximately $1,311,703 in deferred legal fees in connection with such agreements in the accompanying balance sheet, all of which will be paid upon the consummation of the Business Combination. Approximately $613,708 of these fees relate to deferred fees incurred after the Company’s Initial Public Offering, and the $697,955 of fees relate to the Merger. Independent Financial Advisory Services Piper Sandler & Co. is acting as the Company’s independent financial advisor as defined under Financial Industry Regulatory Authority Rule 5110(j)(9), to provide independent financial consulting services, consisting of a review of deal structure and terms and related structuring advice in connection with the proposed initial Business Combination with Panera. The Company will pay Piper Sandler & Co. a financial advisory fee of $3,000,000 if the Company consummates their initial Business Combination with Panera by May 5, 2022 or one year following the termination of the agreement with Piper Sandler & Co.
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Warrant Liability |
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Warrants and Rights Note Disclosure [Abstract] | |||||||||||||||||||||||||||||
Warrant Liability | Note 6—Warrant Liability Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or the Company permit holders to exercise their warrants on a cashless basis under certain circumstances). The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of the initial Business Combination, the Company will use commercially reasonable efforts to file with the SEC and have an effective registration statement covering 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. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60 th day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. The warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. 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 the initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial 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 consummates its initial 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 described under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described under the caption “Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price. 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 shares of Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable, or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchaser or such purchaser’s permitted transferees. If the Private Placement Warrants are held by someone other than the Initial Stockholders or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00:
The Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period. Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00:
The “fair market value” shall mean the volume-weighted average price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. In no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
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Stockholders' Deficit |
12 Months Ended |
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Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Deficit | Note 7—Stockholders’ Deficit Preferred Stock Class A Common Stock no Class B Common Stoc Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Except as described below, holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of the stockholders except as required by law. The shares of Class B common stock will automatically convert into
shares of Class A common stock at a ratio such that the number of shares of Class A common stock issuable upon conversion of all Founder Shares, including the Discretionary Allocation Shares, will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of all shares of common stock that were issued and outstanding upon completion of the Initial Public Offering, plus (ii) the Discretionary Allocation Shares and plus (iii) the total number of shares of Class A common stock issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the Business Combination, excluding any shares of Class A common stock or equity-linked securities issued, deemed issued, or to be issued, to any seller in the initial Business Combination and any Private Placement Warrants issued to the Sponsor, its affiliates or any member of the Company’s management team upon conversion of working capital loans. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Note 8—Fair Value Measurements The following tables present information about the Company’s assets that are measured at fair value on a recurring basis as of December 31, 2021 and December 31, 2020, indicate the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The Company’s investments held in the Trust Account is investments in money market funds that invest in U.S. government securities. Gains and losses resulting from the change in fair value of these securities is included in net gain from investments held in Trust Account in the accompanying statement of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. The following table presents the estimated fair values of investments held in the Trust Account as of December 31, 2021:
The Warrants are accounted for as liabilities pursuant to ASC 815-40 and are measured at fair value as of each reporting period. Changes in the fair value of the Warrants are recorded in the statement of operations each period. The following table presents the fair value hierarchy for liabilities measured at fair value on a recurring basis as of December 31, 2021:
The Private Placement Warrants were valued using a Monte Carlo simulation model, which is considered to be a Level 3 fair value measurement. The primary unobservable input utilized in determining the fair value of the Private Placement Warrants is the volatility rate. The volatility applied was 19.50% based on implied volatilities from selected publicly traded warrants. Beginning on April 19, 2021, the Public Warrants began trading under the ticker HUGSW. After this date, Public Warrant values per share were based on the observed trading prices of the Public Warrants. Accordingly, as of June 30, 2021, the observable input qualifies the liability for treatment as a Level 1 liability. There were no transfers between levels during the year ended December 31, 2021. The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement dates:
The following table presents a summary of the changes in the fair value of the Warrants:
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Subsequent Events |
12 Months Ended |
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Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 9—Subsequent Events In accordance with ASC Topic 855, “Subsequent Events,” which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the date the financial statements are issued. The Company evaluated subsequent events that occurred after the balance sheet date up to the date the financial statements were issued and the Company has concluded that all such events that would require adjustment or disclosure have been recognized or disclosed.
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC.
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Emerging Growth Company | 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, 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 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. |
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Use of Estimates | Use of Estimates The preparation of 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 liability. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.
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Cash and Cash Equivalents | 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 $386,462 in cash and no cash equivalents, outside of the funds held in the Trust Account, as of December 31, 2021.
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Warrant Liability | Warrant Liability The Company accounts for the Warrants in accordance with the guidance contained in ASC
815-40-15-7D re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. See Note 6 for further discussion of the pertinent terms of the Warrants and Note 8 for further discussion of the methodology used to determine the value of the Warrants. |
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Cash Held in Trust Account | Cash Held in Trust Account At December 31, 2021, the assets held in the Trust Account were invested in money-market funds. |
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Common Stock Subject to Possible Redemption | Common Stock Subject to Possible Redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Shares of common stock subject to mandatory redemption, if any, is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, as of December 31, 2021, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit. The Class A common stock subject to possible redemption reflected on the balance sheet as December 31, 2021 are reconciled in the following table:
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Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. At December 31, 2021 and December 31, 2020, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
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Fair Value Measurements | Fair Value Measurements ASC 820, Fair Value Measurement, defines fair value and requires disclosures about 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 include:
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. As of December 31, 2021 and December 31, 2020 the carrying values of cash, accounts payable, franchise tax payable, and accrued expenses approximate their fair values due to the short-term nature of the instruments. The Company’s portfolio of marketable securities held in the Trust Account is comprised of investments in a money market fund that is primarily invested in U.S. Treasury securities. The fair value for trading securities is determined using quoted market prices in active markets.
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Offering Costs | Offering Costs Offering costs consist of legal, accounting, underwriting and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering. Upon the completion of the Initial Public Offering in March 2021, the offering costs were allocated using the relative fair values of the Company common stock and its public and private warrants. The costs allocated to warrants were recognized in other expenses and those related to the Company’s common stock were charged against temporary equity.
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Net Income Per Common Stock | Net Income Per Common Stock The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net per share of common stock is computed by dividing net income by the weighted average number of shares outstanding for the period. The Company has not considered the effect of the warrants sold in the Initial Public Offering in the calculation of diluted income per share, because the exercise of the warrants is contingent upon the occurrence of future events. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value. The Class B shares will automatically convert into Class A shares at the time of the Business Combination subject to adjustment. 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 per share, basic and diluted for Class A common stock is calculated by dividing the pro rata allocation of net loss to Class A shares of $5,412,932 for the year ended December 31, 2021, by the weighted average number of Class A common stock outstanding for the period. Net income per share basic and diluted for Class B common stock is calculated by dividing the pro rata allocation of net loss to shares of Class B common stock of $1,557,333 for the year ended December 31, 2021, respectively, by the weighted average number of Class B common stock outstanding for the period.
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Income Taxes | Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company’s management determined that the United States is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. The income tax provision consists of the following:
The Company’s net deferred tax assets are as follows:
As of December 31, 2021, the Company had $265,962 of U.S. federal and state net operating loss carryovers available to offset future taxable income. In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of deferred tax assets and therefore established a full valuation allowance of $265,962 as of December 31, 2021. A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows :
The Company files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions and is subject to examination by the various taxing authorities.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. Management is currently evaluating the new guidance but does not expect the adoption of this guidance to have a material impact on the Company’s financial statements. 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 Company’s financial statements.
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Summary of Significant Accounting Policies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Class A common stock subject to possible redemption | The Class A common stock subject to possible redemption reflected on the balance sheet as December 31, 2021 are reconciled in the following table:
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Schedule of Earnings Per Share, Basic and Diluted |
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Summary of Provision for Income Taxes | The income tax provision consists of the following:
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Summary of Net Deferred Tax Assets | The Company’s net deferred tax assets are as follows:
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Schedule of Reconciliation of U.S. Federal Statutory Income Tax Rate and Effective Income Tax Rate | A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows :
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Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis | The following table presents the estimated fair values of investments held in the Trust Account as of December 31, 2021:
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Fair Value, Liabilities Measured on Recurring Basis | The following table presents the fair value hierarchy for liabilities measured at fair value on a recurring basis as of December 31, 2021:
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Fair Value Measurement Inputs and Valuation Techniques | The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement dates:
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Schedule Of Changes In The Fair Value Of Warrant Liabilities | The following table presents a summary of the changes in the fair value of the Warrants:
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Summary of Significant Accounting Policies - Summary of Class A common stock subject to possible redemption (Detail) - USD ($) |
1 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2021 |
|
Temporary Equity [Line Items] | ||
Gross proceeds | $ 24,120 | |
Deferred underwriting fees and other offering costs | (15,887,831) | |
Class A common stock subject to possible redemption | 287,500,000 | |
Common Class A [Member] | ||
Temporary Equity [Line Items] | ||
Gross proceeds | 287,500,000 | |
Proceeds allocated to public warrants | (13,129,167) | |
Total accretion of carrying value to redemption value | 29,016,998 | |
Class A common stock subject to possible redemption | $ 287,500,000 |
Summary of Significant Accounting Policies - Schedule of Earnings Per Share, Basic and Diluted (Detail) - USD ($) |
1 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2021 |
|
Net Income (Loss) Attributable to Parent [Abstract] | ||
Net Inocme (Loss) | $ (10,000) | $ (6,970,265) |
Common Class A [Member] | ||
Net Income (Loss) Attributable to Parent [Abstract] | ||
Net Inocme (Loss) | $ 0 | $ (5,412,932) |
Weighted average shares outstanding, basic and diluted | 0 | 24,102,740 |
Basic and diluted net income per share | $ 0.00 | $ (0.22) |
Common Class B [Member] | ||
Net Income (Loss) Attributable to Parent [Abstract] | ||
Net Inocme (Loss) | $ (10,000) | $ (1,557,333) |
Weighted average shares outstanding, basic and diluted | 6,934,500 | 6,934,500 |
Basic and diluted net income per share | $ 0.00 | $ (0.22) |
Summary of Significant Accounting Policies - Summary of Provision for Income Taxes (Detail) - USD ($) |
1 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2021 |
|
Federal | ||
Current | $ 0 | $ 0 |
Deferred | (2,100) | (265,962) |
State and Local | ||
Current | 0 | 0 |
Deferred | 0 | 0 |
Change in valuation allowance | 2,100 | 265,962 |
Income tax provision | $ 0 | $ 0 |
Summary of Significant Accounting Policies - Summary of Net Deferred Tax Assets (Detail) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Deferred Tax Assets, Net [Abstract] | ||
Net Operating Loss Carryforward | $ 265,962 | $ 2,100 |
Total deferred tax assets | 265,962 | 2,100 |
Valuation allowance | (265,962) | (2,100) |
Deferred tax asset, net of allowance | $ 0 | $ 0 |
Summary of Significant Accounting Policies - Schedule of Reconciliation of U.S. Federal Statutory Income Tax Rate and Effective Income Tax Rate (Detail) |
1 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2021 |
|
Income Tax Disclosure [Abstract] | ||
Statutory federal income tax rate | 21.00% | 21.00% |
State taxes, net of federal tax benefit | 0.00% | 0.00% |
Change in fair value of derivative liabilities | 0.00% | (13.23%) |
Transaction costs allocated to warrant issuance | 0.00% | (3.95%) |
Change in valuation allowance | (21.00%) | (3.82%) |
Income tax provision | 0.00% | 0.00% |
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) |
1 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2021 |
|
FDIC Insured Amount | $ 250,000 | |
Cash | $ 24,120 | 386,462 |
Cash Equivalents | 0 | |
Net income (loss) | (10,000) | (6,970,265) |
Operating Loss Carryforwards | 265,962 | |
Valuation allowance | (2,100) | (265,962) |
Common Class A [Member] | ||
Net income (loss) | 0 | (5,412,932) |
Common Class B [Member] | ||
Net income (loss) | $ (10,000) | $ (1,557,333) |
Commitments and Contingencies - Additional Information (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2021
USD ($)
shares
| |
Subsidiary, Sale of Stock [Line Items] | |
Deferred legal fees | $ 1,311,703 |
Deferred legal fees relating to initial public offering | 613,708 |
Deferred legal fees relating to merger | 697,955 |
Piper Sandlerand Co [Member] | |
Subsidiary, Sale of Stock [Line Items] | |
Commitment to pay financial advisory fee | 3,000,000 |
Other Expense [Member] | |
Subsidiary, Sale of Stock [Line Items] | |
Deferred underwriting costs | $ 15,812,500 |
IPO [Member] | |
Subsidiary, Sale of Stock [Line Items] | |
Stock Repurchased During Period, Shares | shares | 3,750,000 |
Deferred legal fees | $ 1,311,703 |
Over-Allotment Option [Member] | |
Subsidiary, Sale of Stock [Line Items] | |
Stock Issued During Period Shares | shares | 3,750,000 |
Fair Value Measurements - Summary of Financial Asset Measured at Fair Value on Recurring Basis (Detail) |
Dec. 31, 2021
USD ($)
|
---|---|
Level 1 [Member] | U.S. Treasury Securities [Member] | Fair Value, Recurring [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Investments, Fair Value Disclosure | $ 287,516,155 |
Fair Value Measurements - Additional Information (Detail) |
Dec. 31, 2021 |
---|---|
Private Placement Warrants [Member] | Volatility [Member] | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Warrants and Rights Outstanding, Measurement Input | 19.50 |
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