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Related Party Transactions
12 Months Ended
Dec. 31, 2021
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 6. RELATED PARTY TRANSACTIONS

 

Founder Shares

 

On January 14, 2021, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 4,461,250 shares of Class B common stock (the “Founder Shares”). On March 2, 2021, the Sponsor contributed back to the Company, for no consideration, 11,250 Founder Shares and, as a result, held 4,450,000 Founder Shares. The Founder Shares included an aggregate of up to 562,500 Founder Shares subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the number of Founder Shares will equal 20% of the Company’s issued and outstanding shares of common stock after the Initial Public Offering. Upon the expiration of the underwriters’ over-allotment option on September 6, 2021, the Sponsor forfeited 562,500 Founder Shares.

 

The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, 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 Public Stockholders having the right to exchange their shares of common stock for cash, securities or other property. Additionally, upon consummation of the Business Combination, the Sponsor will sell Founder Shares to anchor investors that expressed an interest in purchasing up to 9.9% of the units sold in the Initial Public Offering, or up to 1,485,000 units, As a result the underwriters allocate 1,320,000 units to each anchor investor. There can be no assurance as to the amount of such units the anchor investors will retain, if any, prior to or upon the consummation of our initial Business Combination. In addition, none of the anchor investors has any obligation to vote any of their Public Shares in favor of the Company’s initial Business Combination.

 

The sale or allocation of the Founder Shares to the anchor investors, as described above, is within the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC Topic 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The fair value of the 720,000 shares allocated to the anchor investors in July 2021 was $5,234,400 or $7.27 per share. Stock-based compensation expense would be recognized at the date a Business Combination is considered probable in an amount equal to the number of Founder Shares times the grant date fair value per share (unless subsequently modified) less the amount initially received for the purchase of the Founder Shares. As of December 31, 2021, the Company determined that a Business Combination is not considered probable, and, therefore, no stock-based compensation expense has been recognized.

 

Administrative Support Agreement

 

The Company agreed, commencing on July 23, 2021, through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay an affiliate of the Sponsor or its designee a total of up to $10,000 per month for office space, administrative and shared personnel support. For the period from January 1, 2021 (commencement of operations) through December 31, 2021, the Company incurred and paid $60,000 in fees related to these services.

 

Promissory Notes — Related Party

 

On January 11, 2021, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate principal amount of $300,000. This Promissory Note was subsequently amended on June 16, 2021 to extend the maturity date. The Promissory Note was non-interest bearing and payable on the earlier of (i) September 30, 2021 and (ii) the consummation of the Initial Public Offering. The outstanding balance under the Promissory Note of $76,718 was repaid at the closing of the Initial Public Offering on July 27, 2021, and the Promissory Note was terminated.

 

Related Party Loans

 

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company may repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans may 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 the 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 $1,500,000 of such Working Capital Loans may be convertible into units upon consummation of the Business Combination at a price of $10.00 per unit. The units would be identical to the Private Placement Units. 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, there were no amounts outstanding under the Working Capital Loans.