NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Note 1—Description
of Organization and Business Operations
5:01 Acquisition Corp. (the “Company”)
is a blank check company incorporated in Delaware on August 31, 2020. The Company was formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses
(the “Business Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a
Business Combination. The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of
1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”)
and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of March 31, 2021, the Company had not commenced
any operations. During the three months ended March 31, 2021, our entire activity has been limited to the search for a prospective initial business
combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination,
at the earliest. The Company generates non-operating income in the form of interest income on investments held in trust from the proceeds
of its Initial Public Offering (the “Initial Public Offering”) and Private Placement (as defined below).
The Company’s sponsor is 5:01 Acquisition
LLC, an entity affiliated with two of the Company’s directors (the “Sponsor”). The registration statement for the Company’s
Initial Public Offering was declared effective October 13, 2020. On October 16, 2020, the Company consummated its Initial Public
Offering of 8,000,000 shares of Class A common stock (each, a “Public Share” and collectively, the “Public Shares”)
at $10.00 per share, generating gross proceeds of $80.0 million, and incurring offering costs of approximately $4.9 million, inclusive
of $2.8 million in deferred underwriting commissions (Note 5). The underwriter was granted a 45-day option from
the date of the final prospectus relating to the Initial Public Offering to purchase up to 1,200,000 additional shares to
cover over-allotments, if any, at $10.00 per share. The underwriters partially exercised the over-allotment option and on November
12, 2020 purchased an additional 256,273 shares of Class A common stock (the “Additional Shares”), generating gross proceeds
of approximately $2.6 million, and incurred additional offering costs of approximately $141,000 in underwriting fees (inclusive of approximately
$90,000 in deferred underwriting fees) (the “Over-Allotment”).
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the private placement (“Private Placement”) of 360,000 shares of Class A common
stock (each, a “Private Placement Share” and collectively, the “Private Placement Shares”), at a price of $10.00
per Private Placement Share to the Sponsor, generating proceeds of $3.6 million (Note 4). Simultaneously with the closing of
the Over-Allotment on November 12, 2020, the Company consummated the second closing of the Private Placement, resulting in the purchase
of an aggregate of an additional 5,126 Private Placement Shares by the Sponsor, generating gross proceeds to the Company of approximately
$51,000.
Upon the closing of the Initial Public Offering,
the Private Placement and the Over-Allotment, approximately $82.6 million ($10.00
per share) of the net proceeds of the sale of the Public Shares in the Initial Public Offering and of the Private Placement Shares in
the Private Placement and Over-Allotment were placed in a trust account (“Trust Account”) located in the
United States, and invested only in U.S. government treasury bills, notes and bonds with a maturity of 185 days or less or in money
market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act and which invest solely in U.S. Treasuries,
as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of
the Trust Account.
In addition, the Sponsor agreed to forfeit up
to 300,000 Class B common stock, par value $0.0001 (the “Founder Shares”) to the extent that the over-allotment option
was not exercised in full by the underwriters. The underwriters partially exercised their over-allotment option on November 12, 2020; thus,
on November 30, 2020, the Sponsor forfeited 235,932 shares of Class B common stock.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Shares,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial
Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (excluding the
amount of deferred underwriting discounts held in trust and taxes payable on the interest earned on the Trust Account) at the time of
the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction
company owns or acquires 50% or more of the voting securities of the target or otherwise acquires a controlling interest in the target
sufficient for it not to be required to register as an investment company under the Investment Company Act 1940, as amended (the “Investment
Company Act”). There is no assurance that the Company will be able to successfully effect a Business Combination.
5:01 ACQUISITION CORPORATION
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The Company will provide the holders of the Company’s
outstanding 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 held in the Trust Account (initially anticipated to be $10.00
per Public Share). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by
the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 5). These Public Shares have been
recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with
the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480
“Distinguishing Liabilities from Equity.”
The Company will proceed with a Business Combination
if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares in an
amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by law and the Company
does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated
Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules
of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a
Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder
approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the
proxy rules and not pursuant to the tender offer rules. Additionally, each Public Stockholder may elect to redeem their Public Shares
irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with
a Business Combination, the Initial Stockholders (as defined below) have agreed to vote their Founder Shares (as defined below in Note
4) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the Initial
Stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the
completion of a Business Combination.
The 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 Public Shares,
without the prior consent of the Company.
The Sponsor and the Company’s officers and
directors (the “Initial Stockholders”) have agreed not to propose an amendment to the Certificate of Incorporation to modify
the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business
Combination within the Combination Period (as defined below) or with respect to any other material provisions relating to stockholders’
rights or pre-initial Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem
their Public Shares in conjunction with any such amendment.
If the Company is unable to complete a Business
Combination within 24 months from the closing of the Initial Public Offering, or October 16, 2022 (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 100% of the outstanding Public Shares (including any Public Shares in the Initial Public
Offering or any Public Shares or shares that the initial stockholders or their affiliates purchased in the Initial Public Offering or
later acquired in the open market or in private transactions), which redemption will completely extinguish Public Stockholders’
rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably practicable following such redemption, subject to the approval of the remaining holders of common stock and the
board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject (in the case
of (ii) and (iii) above) to the Company’s obligations to provide for claims of creditors and the requirements of applicable
law.
5:01 ACQUISITION CORPORATION
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The Initial Stockholders have agreed to waive
their rights to liquidating distributions from the Trust Account with respect to the Founder Shares and Private Placement Shares if the
Company fails to complete a Business Combination within the Combination Period. However, if the Initial Stockholders acquire Public Shares
in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such
Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriter has agreed to waive
its rights to the deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a
Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the
Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that
the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00.
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any
claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products
sold to the Company, or a prospective target business with which the Company has entered into a letter of intent, confidentiality or other
similar agreement or business combination agreement (a “Target”), reduce the amount of funds in the Trust Account to below
the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date
of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in the value of the trust assets, less
taxes payable, provided that such liability will not apply to any claims by a third party or Target that executed a waiver of any and
all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the
Company’s indemnity of the underwriter of the Initial Public Offering against certain liabilities, including liabilities under the
Securities Act. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims
of creditors by endeavoring to have all vendors, service providers, 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.
Liquidity and Capital
Resources
As of March 31, 2021,
the Company had approximately $977,000 in cash and working capital of approximately $985,000.
The Company’s liquidity needs to date have
been satisfied through a capital contribution of $20,000 from the Sponsor to purchase the Founder Shares (as defined below), the loan
under the Note of $300,000 (see Note 4), and the net proceeds from the consummation of the Private Placement not held in the Trust Account.
The Company fully repaid the Note on October 16, 2020. In addition, in order to finance transaction costs in connection with a Business
Combination, the Company’s officers, directors and initial stockholders may, but are not obligated to, provide the Company Working
Capital Loans (see Note 4). As of March 31, 2021, there were no amounts outstanding under any Working Capital Loans.
Based on the foregoing, management believes that
the Company will have sufficient working capital and borrowing capacity from the Sponsor or an affiliate of the Sponsor, or certain of
the Company’s officers and directors to meet its needs through the earlier of the consummation of a Business Combination or one
year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying
and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying
for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business
Combination.
5:01 ACQUISITION CORPORATION
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Note 2—Basis
of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited
condensed financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles
(“GAAP”) for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation
have been included. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2021 or any future period.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed
with the SEC on March 17, 2021 which contains the audited financial statements and the notes thereto.
Emerging Growth Company
The Company is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by 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 an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means
that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison
of the Company’s unaudited condensed financial statements with another public company that is neither an emerging growth company
nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
Use of Estimates
The preparation of unaudited
condensed financial statements in conformity with GAAP requires the Company’s 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 unaudited
condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires
management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the unaudited condensed financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. 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. As of March 31, 2021 and December 31, 2020, the
Company held no cash equivalents outside the Trust Account.
5:01 ACQUISITION CORPORATION
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Investments Held in Trust Account
The Company’s portfolio of investments held
in trust is comprised solely of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company
Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities, or a combination
thereof. The Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented
on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these
investments are included in interest income 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.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $250,000, and investments held in Trust Account. As of March 31, 2021, the Company has not experienced
losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial
Instruments
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. U.S. 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:
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Level 1, defined as observable inputs such
as quoted prices for identical instruments in active markets;
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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
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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.
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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 March 31, 2021
and December 31, 2020, the carrying values of cash, prepaid expenses, accounts payable, accrued expenses, and franchise tax payable approximate
their fair values due to the short-term nature of the instruments.
Offering Costs Associated
with the Initial Public Offering
Offering costs consisted
of legal, accounting, underwriting commissions and other costs incurred through the balance sheet date that were directly related to the
Initial Public Offering and that were charged to stockholders’ equity upon the completion of the Initial Public Offering on October
16, 2020.
5:01 ACQUISITION CORPORATION
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Class A Common
Stock Subject to Possible Redemption
The Company accounts
for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) is classified as liability instruments
and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features
redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not
solely within the Company’s control) are classified as temporary equity. At all other times, Class A common stock is classified
as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that are considered to
be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at March 31, 2021 and
December 31, 2020, 7,566,328 and 7,593,256 shares, respectively, of Class A common stock subject to possible redemption is presented
at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s unaudited condensed
balance sheets.
Income Taxes
The Company’s taxable
income primarily consists of interest income on the Trust Account. The Company’s general and administrative expenses are generally
considered start-up costs and are not currently deductible. For the three months ended March 31, 2021, income tax expense for the period
was deemed to be immaterial.
The Company follows the
asset and liability method of accounting for income taxes under FASB ASC Topic 740, “Income Taxes” (“ASC 740”).
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the unaudited
condensed financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to
the amount expected to be realized. As of March 31, 2021 and December 31, 2020, the Company had deferred tax assets of approximately $57,000
and $44,000, respectively, which are presented net of a full valuation allowance.
FASB ASC Topic 740 prescribes
a recognition threshold and a measurement attribute for the unaudited condensed financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than
not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31, 2021. The Company
recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. The Company’s currently taxable
income primarily consists of interest and dividends earned and unrealized gains on investments held in the Trust Account. No amounts were
accrued for the payment of interest and penalties as of March 31, 2021. The Company is currently not aware of any issues under review
that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations
by major taxing authorities since inception.
Net Income (Loss) Per Share of Common Stock
The Company’s unaudited condensed statement
of operations includes a presentation of loss per common stock subject to redemption in a manner similar to the two-class method of income
per share. Net income per share for the three months ended March 31, 2021, basic and diluted for Class A redeemable common stock, was
calculated by dividing the interest income earned on investments held in the Trust Account of approximately $5,000 by 8,256,273, the weighted
average number of Class A redeemable common stock outstanding for the period. Net loss per share basic and diluted for Class B non-redeemable
common stock, was calculated by dividing the net loss (approximately $269,000 less income attributable to Class A redeemable common stock
in the amount of $0, resulting in a loss of approximately $269,000), by 2,429,194, the weighted average number of Class B non-redeemable
common stock outstanding for the period.
At March 31, 2021, the Company did not have any
dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings.
As a result, diluted loss per common stock is the same as basic loss per share common stock for the period presented.
5:01 ACQUISITION CORPORATION
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Recent Accounting
Pronouncements
In August 2020, the FASB
issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU
2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP.
The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception,
and it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU 2020-06 on January 1, 2021.
Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
Note 3—Initial
Public Offering
On October 16, 2020, the Company consummated its Initial
Public Offering of 8,000,000 Public Shares at $10.00 per share, generating gross proceeds of $80.0 million, and incurring offering
costs of approximately $4.9 million, inclusive of $2.8 million in deferred underwriting commissions. The Company granted the underwriter
a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 1,200,000 additional shares
to cover over-allotments, if any, at the Initial Public Offering price, less underwriting discounts and commissions. The Underwriters
partially exercised the Over-Allotment option and on November 12, 2020 purchased an additional 256,273 shares of Class A common stock
(the “Additional Shares”), generating gross proceeds of approximately $2.6 million, and incurred additional offering costs
of approximately $141,000 in underwriting fees (inclusive of approximately $90,000 in deferred underwriting fees).
Note 4—Related
Party Transactions
Founder Shares
On September 2, 2020, the Sponsor purchased
2,300,000 shares of the Company’s initial common stock, par value $0.0001 per share, for an aggregate price of $20,000. On October 7,
2020, the Company filed its Amended and Restated Certificate of Incorporation with the State of Delaware and reclassified the 2,300,000
shares of initial common stock into 2,300,000 shares of Class B common stock, par value $0.0001 (the “Founder Shares”).
The Sponsor agreed to forfeit up to 300,000 Founder Shares to the extent that the Over-Allotment option is not exercised in full
by the underwriters. The underwriters partially exercised their Over-Allotment option on November 12, 2020. On November 30, 2020, the
remaining 235,932 Founder Shares subject to forfeiture were forfeited. In October and November 2020, the Sponsor transferred an aggregate
of 120,000 Founder Shares to the four independent directors when they joined the board of directors and in December, amended the terms
of such transfer to clarify that such shares remain subject to forfeiture through completion of the Business Combination and expiration
of any related lock-up period, subject to acceleration of vesting in certain circumstances.
Private Placement Shares
Concurrently with the closing of the Initial Public
Offering, the Company consummated the Private Placement of 360,000 Private Placement Shares, at a price of $10.00 per Private Placement
Share to the Sponsor, generating proceeds of $3.6 million. A portion of the proceeds from the Private Placement Shares was
added to the proceeds from the Initial Public Offering held in the Trust Account. Simultaneously with the closing of the Over-Allotment
on November 12, 2020, the Company consummated the second closing of the Private Placement, resulting in the purchase of an aggregate of
an additional 5,126 Private Placement Shares by the Sponsor, generating gross proceeds to the Company of approximately $51,000.
Pursuant to the letter agreement, the Initial
Stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares or Private Placement Shares
until the earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) subsequent to the
initial Business Combination, the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or
other similar transaction that results in all of the stockholders having the right to exchange their common stock for cash, securities
or other property. Notwithstanding the foregoing, if the closing price of the Public Shares equals or exceeds $12.00 per share (as adjusted
for stock splits, stock capitalizations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within
any 30-trading day period commencing at least 150 days after the initial Business Combination, the Founder Shares and Private Placement
Shares will be released from the lock-up.
5:01 ACQUISITION CORPORATION
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Related Party Loans
On September 17, 2020, the Sponsor agreed to loan
the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the
“Note”). This promissory note did not bear interest and was payable upon the consummation of the Initial Public Offering.
The Company fully borrowed the $300,000 Note and fully repaid the Note on October 16, 2020.
Working Capital Loans
In order to finance transaction costs in connection
with searching for a target business or consummating an intended initial Business Combination, the Sponsor, officers, directors or their
affiliates may, but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”). In the
event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust
Account to repay such loaned amounts, but no proceeds from the Trust Account would be used for such repayment. Such loans would be evidenced
by promissory notes. The promissory notes would be paid upon consummation of the initial Business Combination, without interest. The terms
of each promissory note may also provide that a portion of the principal amount of such loan may be repaid by conversion into shares of
the Company’s Class A common stock upon completion of the initial Business Combination. Except for the foregoing, the terms
of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of March
31, 2021 and December 31, 2020, the Company had no borrowings under the Working Capital Loans.
Note 5—Commitments
and Contingencies
Registration Rights
The holders of Founder Shares and Private Placement
Shares are entitled to registration rights pursuant to a registration and stockholder rights agreement. The holders of these securities
are entitled to make up to three demands that the Company registers such securities, subject to specified conditions. In addition, the
holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation
of the Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
However, the registration and stockholder rights agreement will provide that the Company will not be required to effect or permit any
registration or cause any registration statement to become effective until termination of the applicable lock-up period.
Underwriting Agreement
The underwriter was entitled to an underwriting
discount of $0.20 per share, or $1.7 million in the aggregate, paid upon the closing of the Initial Public Offering and partial exercise
of the over-allotment option. In addition, $0.35 per share, or $2.9 million in the aggregate will be payable to the underwriter for
deferred underwriting commissions. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account
solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Risks and Uncertainties
Management continues
to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible
that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target
company, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements. The unaudited
condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
5:01
ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 6—Stockholders’
Equity
Preferred
Stock – The Company is authorized to issue 10,000,000 shares of preferred stock with such designations, voting and
other rights and preferences as may be determined from time to time by the Company's board of directors. As of March 31,
2021 and December 31, 2020, there were no preferred shares outstanding.
Class A Common Stock —
The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of March
31, 2021, there were 8,621,399 shares of Class A common stock outstanding, including 7,566,328 shares of Class A common stock subject
to possible redemption that were classified as temporary equity in the accompanying balance sheet. As of December 31, 2020, there were
8,621,399 shares of Class A common stock outstanding, including 7,593,256 shares of Class A common stock subject to possible redemption
that were classified as temporary equity in the accompanying balance sheet.
Class B Common Stock —
The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per share. Due to the underwriters
partially exercising their Over-Allotment option on November 12, 2020, 235,932 Founder Shares subject to forfeiture were forfeited. As
a result of this forfeiture, as of March 31, 2021 and December 31, 2020, the Company had 2,064,068 shares of Class B common stock issued
and outstanding.
Note 7—Fair Value Measurements
The following tables presents information about
the Company’s financial assets that are measured at fair value on a recurring basis by level within the fair value hierarchy:
March 31, 2021
Description
|
|
Quoted
Prices
in Active
Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|
Investments held in Trust Account
|
|
$
|
82,567,959
|
|
|
$
|
-
|
|
|
$
|
-
|
|
December 31, 2021
Description
|
|
Quoted
Prices
in Active
Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|
Investments held in Trust Account
|
|
$
|
82,563,213
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Transfers to/from Levels 1, 2 and 3 are recognized
at the end of the reporting period. There were no transfers between levels for the three months ended March 31, 2021.
Note 8—Subsequent
Events
The Company evaluated subsequent events and transactions
that occurred up to May 7, 2021, the date unaudited condensed financial statements were available to be issued. The Company did not identify
any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.