ITEM
1. INTERIM FINANCIAL STATEMENTS
LIGHTJUMP
ACQUISITION CORPORATION
CONDENSED
BALANCE SHEETS
|
|
March 31,
2021
(unaudited)
|
|
|
December 31,
2020
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
522,190
|
|
|
$
|
6,139
|
|
Deferred offering costs
|
|
|
-
|
|
|
|
306,259
|
|
Prepaid expenses
|
|
|
360,586
|
|
|
|
-
|
|
Total current assets
|
|
|
882,776
|
|
|
|
312,398
|
|
Investment held in Trust Account
|
|
|
138,002,920
|
|
|
|
-
|
|
Total Assets
|
|
$
|
138,885,696
|
|
|
$
|
312,398
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
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|
|
|
|
|
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Current liabilities:
|
|
|
|
|
|
|
|
|
Accrued offering costs
|
|
$
|
94,465
|
|
|
$
|
5,000
|
|
Accrued operating expenses
|
|
|
146,859
|
|
|
|
-
|
|
Promissory note - related party
|
|
|
125,000
|
|
|
|
125,000
|
|
Due to related party
|
|
|
10,000
|
|
|
|
170,000
|
|
Total current liabilities
|
|
|
376,324
|
|
|
|
300,000
|
|
Warrant liability
|
|
|
2,559,885
|
|
|
|
-
|
|
Total Liabilities
|
|
|
2,936,209
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|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
Common stock subject to possible redemption, 13,094,948
shares and no shares at redemption value at March 31, 2021 and December 31, 2020, respectively
|
|
|
130,949,480
|
|
|
|
-
|
|
|
|
|
|
|
|
|
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|
Stockholders’ Equity:
|
|
|
|
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|
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Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
-
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-
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Common stock, $0.0001 par value; 99,000,000 shares authorized; 4,275,052 shares and 3,570,000 shares issued and outstanding (excluding 13,094,948 shares and no shares subject to possible redemption) at March 31, 2021 and December 31, 2020, respectively
|
|
|
428
|
|
|
|
357
|
|
Additional paid-in capital
|
|
|
3,959,402
|
|
|
|
25,843
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|
Retained earnings (Accumulated deficit)
|
|
|
1,040,177
|
|
|
|
(13,802
|
)
|
Total Stockholders’ Equity
|
|
|
5,000,007
|
|
|
|
12,398
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
138,885,696
|
|
|
$
|
312,398
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
LIGHTJUMP
ACQUISITION CORPORATION
CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH
31, 2021
(UNAUDITED)
Formation and operating costs
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|
$
|
250,793
|
|
Loss from operations
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|
|
(250,793
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)
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|
|
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|
|
Other income
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|
|
|
|
Change in fair value of warrant liability
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1,301,852
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|
Trust interest income
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|
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2,920
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|
Total other income
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|
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1,304,772
|
|
|
|
|
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|
Net income
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|
$
|
1,053,979
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, common stock subject to redemption
|
|
|
11,267,094
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|
Basic and diluted net income per share
|
|
$
|
0.00
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, common stock
|
|
|
5,663,329
|
|
Basic and diluted net income per share
|
|
$
|
0.19
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
LIGHTJUMP
ACQUISITION CORPORATION
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
THREE MONTHS ENDED MARCH
31, 2021
(UNAUDITED)
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|
Common Stock
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|
|
Additional
Paid-in
|
|
|
(Accumulated
Deficit)
Retained
|
|
|
Total Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
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|
|
Earnings
|
|
|
Equity
|
|
Balance as of December 31, 2020
|
|
|
3,570,000
|
|
|
$
|
357
|
|
|
$
|
25,843
|
|
|
$
|
(13,802
|
)
|
|
$
|
12,398
|
|
|
|
|
|
|
|
|
|
|
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|
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Sale of 13,800,000 Units on through public offering and over-allotment, net of offering costs
|
|
|
13,800,000
|
|
|
|
1,380
|
|
|
|
134,533,467
|
|
|
|
-
|
|
|
|
134,534,847
|
|
|
|
|
|
|
|
|
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|
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|
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Sale of 4,210,000 Private Placement Warrants, net of fair value of warrant liability
|
|
|
-
|
|
|
|
-
|
|
|
|
348,263
|
|
|
|
-
|
|
|
|
348,263
|
|
|
|
|
|
|
|
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|
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|
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Net income
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|
|
-
|
|
|
|
-
|
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-
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|
|
|
1,053,979
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1,053,979
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|
|
|
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|
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|
|
|
|
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Reclassification of common stock subject to possible redemption
|
|
|
(13,094,948
|
)
|
|
|
(1,309
|
)
|
|
|
(130,948,171
|
)
|
|
|
-
|
|
|
|
(130,949,480
|
)
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|
|
|
|
|
|
|
|
|
|
|
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Balance as of March 31, 2021
|
|
|
4,275,052
|
|
|
$
|
428
|
|
|
$
|
3,959,402
|
|
|
$
|
1,040,177
|
|
|
$
|
5,000,007
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
LIGHTJUMP
ACQUISITION CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH
31, 2021
(UNAUDITED)
Net income
|
|
$
|
1,053,979
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
Change in fair value of warrant liability
|
|
|
(1,301,852
|
)
|
Interest earned on cash and marketable securities held in Trust Account
|
|
|
(2,920
|
)
|
Changes in current assets and current liabilities:
|
|
|
|
|
Prepaid expenses
|
|
|
(360,586
|
)
|
Accrued operating expenses
|
|
|
146,859
|
|
Due to related party
|
|
|
(160,000
|
)
|
Net cash used in operating activities
|
|
|
(624,520
|
)
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
Purchase of investment held in Trust
|
|
|
(138,000,000
|
)
|
Net cash used in investing activities
|
|
|
(138,000,000
|
)
|
|
|
|
|
|
Cash flows from Financing Activities:
|
|
|
|
|
Proceeds from initial public offering, net of underwriting fees
|
|
|
135,240,000
|
|
Proceeds from Private Placement Warrants
|
|
|
4,210,000
|
|
Payment of offering costs
|
|
|
(309,429
|
)
|
Net cash provided by financing activities
|
|
|
139,140,571
|
|
|
|
|
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|
Net change in cash
|
|
|
516,051
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|
Cash, beginning of the period
|
|
|
6,139
|
|
Cash, end of the period
|
|
$
|
522,190
|
|
|
|
|
|
|
Supplemental disclosure of noncash investing and financing activities:
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|
|
|
|
Initial value of common stock subject to possible redemption
|
|
$
|
112,670,938
|
|
Change in value of common stock subject to possible redemption
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|
$
|
18,278,542
|
|
Initial classification of warrant liability
|
|
$
|
3,531,517
|
|
Offering costs included in accrued offering costs
|
|
$
|
94,465
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
LIGHTJUMP
ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(UNAUDITED)
Note 1 — Organization, Business Operations
and Liquidity
Organization
and General
LightJump Acquisition Corporation (the “Company”) is a
newly organized blank check company incorporated as a Delaware Company on July 28, 2020. The Company was formed for the purpose of acquiring,
merging with, engaging in capital stock exchange with, purchasing all or substantially all of the assets of, engaging in contractual arrangements,
or engaging in any other similar business combination with a single operating entity, or one or more related or unrelated operating entities
operating in any sector (“Business Combination”).
The
Company has selected December 31 as its fiscal year end.
As of March 31, 2021, the Company had not commenced any operations.
All activity for the three months ended March 31, 2021, relates to the Company’s formation and the initial public offering described
below. 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 cash and cash equivalents from the proceeds derived from
the Initial Public Offering (“IPO”) and will recognize changes in the fair value of its warrant liability as other income
(expense).
The
Company’s sponsor is LightJump One Founders, LLC, a Delaware limited liability company (the “Sponsor”).
Financing
The
registration statement for the Company’s IPO was declared effective on January 8, 2021 (the “Effective Date”). On
January 12, 2021, the Company consummated the IPO of 12,000,000 units (each, a “Unit” and collectively, the “Units”)
at $10.00 per Unit, generating gross proceeds of $120,000,000, which is discussed in Note 4.
Simultaneously
with the closing of the IPO, the Company consummated the sale of 3,850,000 warrants (the “Private Warrants”), at a price of $1.00
per Private Warrant (the “Private Placement”), which is discussed in Note 5.
On January 15, 2021, the underwriters exercised
the over-allotment option in full to purchase 1,800,000 Units (the “Over-allotment Units”), generating aggregate gross proceeds
of $18,000,000. Simultaneously with the closing of the sale of the Over-allotment Units, the Company consummated the sale of an additional
360,000 Private Warrants at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds
of $360,000.
Transaction
costs of the IPO including the exercise of over-allotment amounted to $3,465,153 consisting of $2,760,000 of underwriting fees and
$705,153 of other offering costs.
Trust
Account
Following
the closing of the IPO on January 12, 2021 and the exercise of over-allotment on January 15, 2021, $138,000,000 from the net
proceeds of the sale of the Units in the IPO and the sale of the Private Warrants was placed in a trust account (the “Trust
Account”) and invested in U.S. government securities, with a maturity of 180 days or less or in money market funds
meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government
treasury obligations. Except with respect to interest earned on the funds held in the trust account that may be released to the
Company to pay its tax obligations, the proceeds from this Initial Public Offering will not be released from the trust account until
the earlier of: (a) the completion of the Company’s initial business combination, (b) the redemption of the
Company’s public shares if the Company are unable to complete its initial business combination in the required time
period.
Initial
Business Combination
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO, 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 assets held in the Trust Account (as defined below) (excluding the taxes
payable on interest earned and less any interest earned thereon that is released for taxes) 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 outstanding voting securities of the target or otherwise acquires an 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”).
In
connection with any proposed initial Business Combination, the Company will either (1) seek stockholder approval of such initial Business
Combination at a meeting called for such purpose at which public stockholder may seek to convert their public shares, regardless of whether
they vote for or against the proposed business combination or don’t vote at all, into their pro rata share of the aggregate amount
then on deposit in the trust account (net of taxes payable), or (2) provide its public stockholder with the opportunity to sell their
public shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their
pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations
described herein.
If
the Company determines to engage in a tender offer, such tender offer will be structured so that each stockholder may tender all of his,
her or its shares rather than some pro rata portion of his, her or its shares. The decision as to whether the Company will seek stockholder
approval of a proposed business combination or will allow stockholder to sell their shares to the Company in a tender offer will be made
by the Company, solely in the Company’s discretion, and will be based on a variety of factors such as the timing of the transaction
and whether the terms of the transaction would otherwise require us to seek stockholder approval. If the Company determines to allow
stockholder to sell their shares to the Company in a tender offer, it will file tender offer documents with the SEC which will contain
substantially the same financial and other information about the initial business combination as is required under the SEC’s proxy
rules.
The
common stock subject to redemption is recorded at a redemption value and classified as temporary equity upon the completion of the IPO,
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, if the Company seeks stockholder approval, a majority of the issued and outstanding
shares voted are voted in favor of the Business Combination.
If
a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons,
the Company will, pursuant to its Amended and Restated Certificate of Incorporation (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, 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 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.
Notwithstanding
the foregoing redemption rights, if the Company seeks stockholder approval of its initial business combination and the Company does not
conduct redemptions in connection with its initial business combination pursuant to the tender offer rules, the Amended and Restated
Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person
with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be
restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in our initial public offering,
without the Company’s prior consent.
The
Company’s sponsor, officers and directors (the “initial stockholder”) have agreed not to propose any amendment to Amended
and Restated Certificate of Incorporation that would affect the Company’s public stockholder’s ability to convert or sell
their shares to the Company in connection with a business combination as described herein or affect the substance or timing of our obligation
to redeem 100% of its public shares if the Company does not complete a business combination within 18 months from the closing of the
IPO (the “Combination Period”) unless the Company provides its public stockholder with the opportunity to convert their shares
of common stock upon the approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the trust account, including interest not previously released to the Company but net of franchise and income taxes payable,
divided by the number of then outstanding public shares.
If
the Company is unable to complete its initial Business Combination within 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, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust
account, including any interest not previously released to the Company (net of taxes payable), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to
receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the Company’s remaining stockholder and its board of directors, dissolve and liquidate,
subject (in the case of (ii) and (iii) above) to the Company’s obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. The Company cannot assure you that it will have funds sufficient to pay or provide for
all creditors’ claims.
The
Company’s initial stockholder agreed to waive their rights to liquidating distributions from the Trust Account with respect to
any founder shares held by them if the Company fails to complete its initial business combination within the Combination Period. However,
if the initial stockholder acquires public shares in or after the IPO, 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 during the Combination Period.
Liquidity
and Capital Resources
As
of March 31, 2021, the Company had approximately $0.5 million in its operating bank account and working capital of approximately $0.5
million.
Prior
to the completion of the IPO, the Company’s liquidity needs had been satisfied through a payment from the Sponsor of $25,000
(see Note 6) in exchange for the Founder Shares to cover
certain offering costs, and a loan under an unsecured promissory note from the Sponsor of $125,000 (see Note 6). Subsequent to the
consummation of the IPO and Private Placement, the Company’s liquidity needs have been satisfied through the proceeds from the
consummation of the Private Placement not held in the Trust Account.
In addition, in order to finance transaction costs
in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s
officers and directors may, but are not obligated to, provide the Company Working Capital Loans (see Note 6). To date, there were no amounts
outstanding under any Working Capital Loans.
The Company believes that it
could incur additional fees associated with transaction expenses and it may be required to request additional funding from the Sponsor, which is not obligated to do so.
The company believes that the Sponsor is adequately capitalized to provide the associated funds in the form of a loan to the company at
any time the company requests the funds. Since the Sponsor is not obligated to provide the source of funds that may be needed, the Company may not be able to obtain the additional financing required. These conditions raise substantial doubt about the Company's ability to continue as a going concern through the next 12 months, if a business combination is not consummated. These financial statements do not include any adjustments relating to the recovery of the recorded assets of the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Risks and Uncertainties
Management is currently evaluating 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 these financial statements. The financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
Note
2 — Revision of Previously Issued Financial Statements as
of January 12, 2021
On April 12, 2021,
the staff of the Securities and Exchange Commission (the “SEC Staff”) issued a public statement entitled “Staff Statement
on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)” (the
“SEC Staff Statement”). In the SEC Staff Statement, the SEC Staff expressed its view that certain terms and conditions common
to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to equity. Since
issuance on January 12, 2021, the Company’s warrants were accounted for as equity within the Company’s previously reported
balance sheets, and after discussion and evaluation, management concluded that the Private Warrants should be presented as liabilities
with subsequent fair value remeasurement.
The views expressed
in the SEC Staff Statement were not consistent with the Company’s historical interpretation of the specific provisions within its
warrant agreement and the Company’s application of ASC 815-40 to the warrant agreement. The Company reassessed its accounting for
all the warrants issued on January 12, 2021, in light of the SEC Staff’s published views. Based on this reassessment, management
determined that the Private Warrants should be classified as liabilities measured at fair value upon issuance, with subsequent changes
in fair value reported in the Company’s Statement of Operations each reporting
period.
The following tables summarize the effect of the revision on each
balance sheet line item as of the date:
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
Balance Sheet at January 12, 2021
|
|
|
|
|
|
|
|
|
|
Warrant liability
|
|
|
-
|
|
|
|
3,531,517
|
|
|
|
3,531,517
|
|
Total liabilities
|
|
$
|
651,290
|
|
|
$
|
3,531,517
|
|
|
$
|
4,182,807
|
|
Common stock subject to possible redemption
|
|
|
116,202,455
|
|
|
|
(3,531,517
|
)
|
|
|
112,670,938
|
|
Common stock
|
|
|
395
|
|
|
|
35
|
|
|
|
430
|
|
Additional paid-in capital
|
|
|
5,012,713
|
|
|
|
(35
|
)
|
|
|
5,012,678
|
|
Accumulated deficit
|
|
|
(13,106
|
)
|
|
|
-
|
|
|
|
(13,106
|
)
|
Total stockholders’ equity
|
|
$
|
5,000,002
|
|
|
$
|
-
|
|
|
$
|
5,000,002
|
|
Note
3 — Summary of Significant Accounting
Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“US GAAP”) for interim financial information and in accordance with the instructions to
Form 10-Q and Article 8 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Certain information or
footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant
to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes
necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the
accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary
for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s prospectus for its Initial
Public Offering as filed with the SEC on January 12, 2021, as well as the Company’s Current Reports on Form 8-K. The interim results
for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31,
2021 or for any future interim periods.
Emerging
Growth Company Status
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 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 non-binding advisory vote on executive compensation and stockholder approval
of any golden parachute payments not previously approved.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In
other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would
otherwise apply to private companies. The Company intends to take advantage of the benefits of this extended transition period.
Use
of Estimates
The preparation of condensed financial statement in conformity with
US 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 statement 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. Actual results could differ 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 and cash equivalents. The Company did not have any cash equivalents
at March 31, 2021.
Investment
in Trust Account
The proceeds held in the Trust Account will be invested in U.S. government
securities, with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment
Company Act, which invest only in direct U.S. government treasury obligations. Except with respect to interest earned on the funds held
in the Trust Account that may be released to the Company to pay its tax obligations, the proceeds from our initial public offering will
not be released from the Trust Account until the earlier of: (a) the completion of the Company’s initial business combination, (b)
the redemption of the Company’s public shares if the Company is unable to complete its initial business combination within 18 months
from the closing of our initial public offering.
At March 31, 2021, the assets held in the Trust Account consisted
of mutual funds in the amount of $138,002,920 and the Company had not withdrawn any of the interest income from the Trust Account to pay
its tax obligations for the three months ended on March 31, 2021. The mutual funds held in the Trust Account were available for sale and
reported at fair value.
The carrying value and fair value of mutual funds
held in Trust Account on March 31, 2021 are as follows:
|
|
Carrying
Value as of March 31, 2021
|
|
|
Fair
Value
as of
March 31,
2021
|
|
U.S. Money Market
|
|
$
|
138,002,920
|
|
|
$
|
138,002,920
|
|
|
|
$
|
138,002,920
|
|
|
$
|
138,002,920
|
|
Fair
Value Measurements
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value
Measurement,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term
nature. 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:
|
●
|
Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
|
●
|
Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices
for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
|
●
|
Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
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. At 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.
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.” 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 are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the
Company’s control) is classified as temporary equity. At all other times, 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 the occurrence of uncertain future events. Accordingly, 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.
Net
Income Per Common Share
Net income per common share is computed by dividing net income by the
weighted average number of common stock outstanding for each period. The calculation of diluted income per common share does not
consider the effect of the warrants issued in connection with the (i) IPO, (ii) exercise of overallotment and (iii) Private Placement
since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.
The warrants are exercisable to purchase 10,210,000 shares of common stock in the aggregate.
The Company’s statement of operations includes
a presentation of income per share for common stock subject to possible redemption in a manner similar to the two-class method of loss
per common share. Net income per common share, basic and diluted, for redeemable common stock is calculated by dividing the interest income
earned on the Trust Account, by the weighted average number of redeemable common stock outstanding since original issuance. Net income
per common share, basic and diluted, for non-redeemable common stock is calculated by dividing the net income, adjusted for income attributable
to redeemable common stock, by the weighted average number of non-redeemable common stock outstanding for the periods. Non-redeemable
common stock includes the Founder shares as these shares do not have any redemption features and do not participate in the income
earned on the Trust Account.
|
|
For the
Three
Months
Ended
March 31,
2021
|
|
Common stock subject to possible redemption
|
|
|
|
Numerator: net income allocable to common stock subject to possible redemption
|
|
|
|
Interest income earned on marketable securities held in trust
|
|
$
|
2,920
|
|
Less: income attributable to non-redeemable shares
|
|
|
(2,920
|
)
|
Net income allocable to common stock subject to possible redemption
|
|
$
|
-
|
|
Denominator: Weighted average redeemable common stock
|
|
|
|
|
Redeemable common stock, basic and diluted
|
|
|
11,267,094
|
|
Basic and diluted net income per share, redeemable common stock
|
|
$
|
0.00
|
|
|
|
|
|
|
Non-redeemable common stock
|
|
|
|
|
Numerator: net income minus redeemable net earnings
|
|
|
|
|
Net income
|
|
$
|
1,053,979
|
|
Redeemable net earnings
|
|
|
-
|
|
Non-redeemable net income
|
|
$
|
1,053,979
|
|
Denominator: Weighted average non-redeemable basic and diluted weighted average shares outstanding, common stock
|
|
|
5,663,329
|
|
Basic and diluted net income per share, common stock
|
|
$
|
0.19
|
|
Offering
Costs associated with the Initial Public Offering
The Company complies with the requirements of
ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - “Expenses of Offering”. Offering costs consist
principally of professional and registration fees incurred through the balance sheet date that are related to the IPO and were charged
to stockholders’ equity upon the completion of the IPO. The Company determined the Public Warrants qualified for equity treatment,
and accordingly, as of March 31, 2021, offering costs in the aggregate of $3,465,153 have been charged to stockholders’ equity (consisting
of $2,760,000 of underwriting fees and $705,153 of other offering costs).
Warrant
Liability
The Company accounts for the Public Warrants and Private Warrants (as
defined in Note 1, 4 and 5) collectively (“Warrants”), as either equity or liability-classified instruments based on an assessment
of the specific terms of the Warrants and the applicable authoritative guidance in Financial Accounting Standards Board (“FASB”)
ASC 815, “Derivatives and Hedging”. The assessment considers whether the Warrants meet all of the requirements for equity
classification under ASC 815, including whether the Warrants are indexed to the Company’s own common stock and whether the warrant
holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other
conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance
of the Warrants and as of each subsequent quarterly period end date while the Warrants are outstanding.
For
issued or modified warrants that meet all of the criteria for equity classification, such warrants are required to be recorded as a component
of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification,
such warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.
Changes in the estimated fair value of liability-classified warrants are recognized as a non-cash gain or loss on the statements of operations.
The
Company accounts for the Private Warrants in accordance with ASC 815-40 under which the Private Warrants do not meet the criteria for
equity classification and must be recorded as liabilities. The fair value of the Private Warrants has been estimated using the Monte
Carlo simulation model. See Note 7 for further discussion of the pertinent terms of the Warrants used to determine the value of the Private
Warrants.
The
Company evaluated the Public Warrants in accordance with ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s
Own Equity” and concluded that they met the criteria for equity classification and are required to be recorded as part a component
of additional paid-in capital at the time of issuance.
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes”. Deferred
tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period
that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.
ASC
740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be
sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31, 2021 and December 31, 2020.
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 as income tax expense. No amounts were accrued for the
payment of interest and penalties as of March 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. These examinations may include questioning
the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws.
The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next
twelve months.
The
provision for income taxes was deemed to be immaterial for the three months ended March
31, 2021.
Recent
Accounting Standards
Management
does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect
on the Company’s financial statement.
Note
4 — Initial Public Offering
Pursuant
to the Initial Public Offering, the Company sold 12,000,000 Units at a price of $10.00 per Unit. Each Unit consists of one share of Common
Stock, par value $0.0001 per share and one-half of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant
entitles the holder to purchase one share of Common Stock at a price of $11.50 per share. Each whole warrant will become exercisable
30 days after the completion of the initial Business Combination and will expire five years after the completion of the initial
Business Combination, or earlier upon redemption or liquidation.
On January 15, 2021, the Underwriters exercised the over-allotment
option in full to purchase 1,800,000 Units. The proceeds of $18,000,000 from the over-allotment was deposited in the Trust Account after
deducting the underwriting fees.
The underwriters were paid a cash underwriting
fee of 2.0% of the gross proceeds of the IPO and over-allotment, or $2,760,000 in the aggregate.
Public
Warrants
The
Public Warrants will become exercisable 30 days after the completion of a Business Combination. However, no warrants will be exercisable
for cash unless the Company has an effective and current registration statement covering the shares of common stock issuable upon exercise
of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement
covering the shares of common stock issuable upon exercise of the public warrants is not effective within a specified period following
the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration statement
and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis
pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption,
or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. In the event of such
cashless exercise, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal
to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the
difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market
value. The “fair market value” for this purpose will mean the average reported last sale price of the shares of common stock
for the 5 trading days ending on the trading day prior to the date of exercise. The warrants will expire on the fifth anniversary of
our completion of an initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. The warrants
will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The
Company may call the Public Warrants for redemption:
|
●
|
in
whole and not in part;
|
|
●
|
at
a price of $0.01 per warrant;
|
|
●
|
upon
not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder;
and
|
|
●
|
if,
and only if, the reported last sale price of the shares of common stock equals or exceeds $18.00 per share (as adjusted for stock splits,
stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing at any time
after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and
|
|
●
|
if,
and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants.
|
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the
Public Warrants to do so on a “cashless basis”, as described in the warrant agreement. In such event, each holder would pay
the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing
(x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price
of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value”
for this purpose shall mean the average reported last sale price of the shares of common stock for the 5 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
addition, if (x) the Company issues additional shares of 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 common
stock (with such issue price or effective issue price to be determined in good faith by our board of directors, and in the case of any
such issuance to our sponsor, initial stockholders or their affiliates, without taking into account any founders’ shares held by
them prior to such issuance), (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 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 greater of (i) the Market Value or (ii) the price at which the Company issues the additional
shares of common stock or equity-linked securities.
Note
5 — Private Placement
Simultaneously
with the closing of the IPO, the Company’s Sponsor purchased an aggregate of 3,850,000 warrants at a price of $1.00 per warrant,
for an aggregate purchase price of $3,850,000, in a private placement. The proceeds from the private placement of the Private Warrants
were added to the proceeds of this Initial Public Offering and placed in a U.S.-based trust account maintained by Continental Stock Transfer
& Trust Company, as trustee. If we do not complete an initial business combination within 18 months from the closing of this Initial
Public Offering, the proceeds from the sale of the Private Warrants will be included in the liquidating distribution to our public stockholders
and the Private Warrants will be worthless.
On
January 15, 2021, the Underwriters exercised the over-allotment option in full to purchase 1,800,000 Units. Simultaneously with the closing
of the exercise of the overallotment option, the Company completed the private sale of an aggregate of 360,000 Private Warrants
to the Sponsor at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds of $360,000.
The
Private Warrants are identical to the Public Warrants underlying the Units being sold in the Initial Public Offering, except that the
Private Warrants, so long as they are held by the Sponsor or their permitted transferees, (i) will not be redeemable by the Company,
(ii) may be exercised for cash or on a cashless basis, as described in the Initial Public Offering, in each case so long as they are
held by the initial purchasers or any of their permitted transferees. If the Private Warrants are held by holders other than the initial
purchasers or any of their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by the holders
on the same basis as the warrants included in the units being sold in this offering.
Note
6 — Related Party Transactions
Founder
Shares
On September 11, 2020, the Sponsor paid $25,000,
or approximately $0.009 per share, to cover certain offering costs in consideration for 2,875,000 shares of common stock, par value $0.0001
(the “Founder Shares”). On January 11, 2021, the Company effected a stock dividend of 0.2 shares for each share outstanding
(the “Dividend”), resulting in there being an aggregate of 3,450,000 Founder Shares outstanding. All shares and associated
amounts have been retroactively restated to reflect the stock dividend. Up to 450,000 Founder Shares are subject to forfeiture to the
extent that the over-allotment option is not exercised in full by the underwriters. On January 15, 2021, the overallotment was exercised
in full and all of the 450,000 shares are no longer subject to forfeiture.
Promissory
Note — Related Party
An affiliate of the Company’s chief executive officer has agreed
to loan the Company an aggregate of up to $150,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note
(the “Note”). This loan is non-interest bearing and payable on the earlier of July 31, 2021 or the completion of the Initial
Public Offering. As of March 31, 2021 and December 31, 2020, the Company had drawn down $125,000 under the promissory note to pay
for offering expenses.
Due
to Related Party
The Due to Related Party balance of $170,000 at December 31, 2020 was
repaid in January 2021. As of March 31, 2021, the Due to Related Party balance of $10,000 represents the Administrative Support Expense
(defined below) for March 2021. For the three months ended March, 31, 2021 the Company has incurred an aggregate of $30,000 for
administrative services for the three months ended March 31, 2021.
Working
Capital Loans
In
order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain
of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans. In the event
that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working
Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
Except for the foregoing, the terms of such Working
Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans
would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1.5
million of such Working Capital Loans may be convertible into Private Warrants at a price of $1.00 per warrant. As of March 31, 2021 and
December 31, 2020, the Company had no borrowings under the Working Capital Loans.
Administrative
Support Agreement
Commencing
on the date of the final prospectus, the Company has agreed to pay the Sponsor a total of $10,000 per month for office space,
secretarial and administrative services (“Administrative Support Expense”). Upon completion of the initial Business
Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the three months ended March,
31, 2021 the Company has incurred an aggregate of $30,000 for administrative services as of March 31, 2021.
Note
7 — Fair Value Measurements
The
following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring
basis as of March 31, 2021, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such
fair value.
|
|
March 31,
|
|
|
Quoted
Prices In
Active
Markets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Other
Unobservable
Inputs
|
|
|
|
2021
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Money Market held in Trust Account
|
|
$
|
138,002,920
|
|
|
$
|
138,002,920
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Warrant Liability
|
|
$
|
2,559,885
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,559,885
|
|
The
Private Warrants were valued using a Monte Carlo simulation model, which is considered to be a Level 3 fair value measurement. Inherent
in an options pricing model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend
yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life
of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar
to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual
term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
There
were no transfers between Levels 1, 2 or 3 during the three months ended March 31, 2021.
The
following table provides quantitative information regarding Level 3 fair value measurements for Private Warrants as of January 12, 2021,
and March 31, 2021.
|
|
March 31, 2021
|
|
|
January 12, 2021
|
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Stock price
|
|
$
|
9.70
|
|
|
$
|
9.58
|
|
Expected volatility
|
|
|
11.7
|
%
|
|
|
16.0
|
%
|
Expected term (years)
|
|
|
5.50
|
|
|
|
5.71
|
|
Risk-free rate
|
|
|
1.04
|
%
|
|
|
0.62
|
%
|
Dividend yield
|
|
|
-
|
%
|
|
|
-
|
%
|
The
following table presents a summary of the changes in the fair value of the Private Warrants, a Level
3 liability, measured on a recurring basis.
|
|
Warrant
Liability
|
|
Fair
value, January 1, 2021
|
|
$
|
-
|
|
Initial
measurement on January 12, 2021, including over-allotment
|
|
|
3,861,737
|
|
Change
in fair value
|
|
|
(1,301,852
|
)
|
Fair
value, March 31, 2021
|
|
$
|
2,559,885
|
|
Note
8 — Commitments and Contingencies
Registration
Rights
The
holders of the founders’ shares and representative shares issued and outstanding on the date of the Initial Public Offering, as
well as the holders of the Private Warrants (and the underlying shares) and any warrants the Company’s sponsor, officers, directors
or their affiliates may be issued in payment of working capital loans made to the Company (and all underlying securities), are entitled
to registration rights pursuant to an agreement signed prior to or on the effective date of this Initial Public Offering. The holders
of a majority of these securities are entitled to make up to two demands that the Company registers such securities. The holders of the
majority of the founders’ shares, as well as the holders of the Private Warrants (and the underlying shares) can elect to exercise
these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released
from escrow. The holders of a majority of the representative shares, and warrants issued to our sponsor, officers, directors or their
affiliates in payment of working capital loans made to the Company (or underlying securities) can elect to exercise these registration
rights at any time after the Company consummates a business combination. Notwithstanding anything to the contrary, EarlyBirdCapital Inc.
(“EarlyBirdCapital”) may only make a demand on one occasion and only during the five-year period beginning on the effective
date of the registration statement of which this prospectus forms a part. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the consummation of a business combination; provided,
however, that EarlyBirdCapital may participate in a “piggy-back” registration only during the seven-year period beginning
on the effective date of the registration statement of which this prospectus forms a part. The Company will bear the expenses incurred
in connection with the filing of any such registration statements.
Business
Combination Marketing Agreement
The
Company has engaged EarlyBirdCapital as an advisor in connection with our business combination to assist us in holding meetings with
our stockholders to discuss the potential business combination and the target business’ attributes, introduce us to potential investors
that are interested in purchasing our securities in connection with our initial business combination, assist us in obtaining stockholder
approval for the business combination and assist us with our press releases and public filings in connection with the business combination.
We will pay EarlyBirdCapital a cash fee for such services upon the consummation of our initial business combination in an amount equal
to 3.5% of the gross proceeds of this Initial Public Offering. Additionally, we will pay EarlyBirdCapital a cash fee equal to 1.0% of
the total consideration payable in the proposed business combination if EarlyBirdCapital introduces us to the target business with which
we complete a business combination; provided that the foregoing fee will not be paid prior to the date that is 90 days from the effective
date of the registration statement.
Representative
Shares
On October 1, 2020, the Company issued to designees
of EarlyBirdCapital Inc. the 120,000 representative shares for nominal consideration. The Company estimated the fair value of the stock
to be $1,200 based upon the price of the founder shares issued to the Sponsor and were treated as underwriters’ compensation and
charged directly to stockholders’ equity. The holders of the representative shares have agreed not to transfer, assign or sell any
such shares without the Company’s prior consent until the completion of its initial business combination. In addition, the holders
of the representative shares have agreed (i) to waive their conversion rights (or right to participate in any tender offer) with
respect to such shares in connection with the completion of our initial business combination and (ii) to waive their rights to liquidating
distributions from the trust account with respect to such shares if the Company fails to complete an initial business combination within
18 months from the closing of this Initial Public Offering.
The
representative shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately
following the date of the effectiveness of the registration statement of which this prospectus forms a part pursuant to Rule 5110(g)(1)
of the FINRA Manual. Pursuant to FINRA Rule 5110(g)(1), these securities were not sold during the Initial Public Offering, or sold, transferred,
assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result
in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the
registration statement of which this prospectus forms a part or commencement of sales of the public offering, except to any underwriter
and selected dealer participating in the Initial Public Offering and their bona fide officers or partners, provided that all securities
so transferred remain subject to the lockup restriction above for the remainder of the time period.
Note
9 — Stockholders’ Equity
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001
and 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 stock issued or outstanding.
Common Stock —
The Company is authorized to issue 99,000,000 shares of common stock with a par value of $0.0001 per share. Holders are entitled to one
vote for each share of common stock. On January 11, 2021, the Company effected a stock dividend of 0.2 shares for each share outstanding,
resulting in there being an aggregate of 3,450,000 Founder Shares outstanding. All shares and associated amounts have been retroactively
restated to reflect the stock dividend. At March 31, 2021 and December 31, 2020, there were 4,275,052 and 3,570,000, shares of common
stock issued and outstanding, respectively, excluding 13,094,948 shares subject to possible redemption at March 31, 2021.
Note
10 — Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the 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.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References
in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to LightJump
Acquisition Corporation. References to our “management” or our “management team” refer to our officers and directors,
and references to the “Sponsor” refer to LightJump One Founders, LLC. The following discussion and analysis of the Company’s
financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained
elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Special
Note Regarding Forward-Looking Statements
This
Quarterly Report includes “forward-looking statements” that are not historical facts and involve risks and uncertainties
that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical
fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans
and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,”
“anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance,
but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events,
performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For
information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking
statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering filed with
the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR
section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We
are a newly organized blank check company incorporated on July 28, 2020 as a Delaware corporation formed for the purpose of effecting
a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or
more businesses, which we refer to throughout this prospectus as our initial business combination and the private placement of the placement
units (“Placement Units”), the proceeds of the sale of our shares in connection with our initial Business Combination (pursuant
to backstop agreements we may enter into), shares issued to the owners of the target, debt issued to banks or other lenders or the owners
of the target, or a combination of the foregoing.
The
issuance of additional shares in connection with an initial Business Combination to the owners of the target or other investors:
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may significantly dilute the equity interest of investors in our Initial Public Offering, which dilution would increase if the anti-dilution provisions in the common stock resulted in the issuance of common stock on a greater than one-to-one basis upon conversion of the common stock;
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may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock;
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could cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;
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may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and
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may adversely affect prevailing market prices for our common stock and/or warrants.
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Similarly,
if we issue debt securities or otherwise incur significant debt to banks or other lenders or the owners of a target, it could result
in:
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default and
foreclosure on our assets if our operating revenues after an initial Business Combination are insufficient to repay our debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants
that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of
all principal and accrued interest, if any, if the debt security is payable on demand;
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our inability to obtain
necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the
debt security is outstanding;
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our inability to pay dividends
on our common stock;
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using a substantial portion
of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock
if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;
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limitations on our flexibility
in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability
to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
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limitations on our ability
to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy;
and
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other purposes and other
disadvantages compared to our competitors who have less debt.
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We
expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete
our initial Business Combination will be successful.
Results
of Operations
Our
entire activity since inception up to March 31, 2021 relates to our formation, the Initial Public Offering and, since the closing of
the Initial Public Offering, a search for a Business Combination candidate. We will not be generating any operating revenues until the
closing and completion of our initial Business Combination, at the earliest.
For
the three months ended March 31, 2021, we had net income of $1,053,979, which consisted of $2,920 in interest earned from cash in
the Trust Account, and $1,301,852 in an unrealized gain on change in fair value of warrants, offset by $250,793 in formation and
operating costs.
Liquidity
and Capital Resources
As of March 31, 2021, we had approximately $0.5
million in our operating bank account, and working capital of approximately $0.5 million. Except with respect to interest earned on the
funds held in the Trust Account that may be released to the Company to pay its tax obligations, all remaining cash held in the Trust Account
is generally unavailable for the Company’s use and to pay taxes, prior to an initial business combination, and is restricted for
use either in a Business Combination or to redeem common stock. As of March 31, 2021, none of the amount in the Trust Account was withdrawn
as described.
On January 12, 2021, the Company consummated
the IPO of 12,000,000 units at $10.00 per Unit, generating gross proceeds of $120,000,000. Simultaneously with the closing of the
IPO, the Company consummated the sale of 3,850,000 Private Warrants, at a price of $1.00 per warrant.
On January 15, 2021, the underwriters exercised
the over-allotment option in full to purchase 1,800,000 Units, generating aggregate gross proceeds of $18,000,000. Simultaneously with
the closing of the sale of the Over-allotment Units, the Company consummated the sale of an additional 360,000 Private Warrants at a price
of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $360,000.
Following the close of our IPO, $138,000,000
from the net proceeds of the sale of the units, the exercise of the over-allotment option and the sale of the private placement warrants
was placed in a trust account established for the benefit of our public stockholders and maintained by Continental Stock Transfer &
Trust Company, as trustee. The proceeds held in the trust account may be invested by the trustee only in U.S. government securities with
a maturity of 185 days or less or in money market funds investing solely in U.S. government treasury obligations and meeting certain
conditions under Rule 2a-7 under the Investment Company Act.
Prior
to the completion of the Initial Public Offering, our liquidity needs had been satisfied through a payment from the Sponsor of $25,000
for the founder shares to cover certain offering costs, and the loan under an unsecured promissory note from the Sponsor of $125,000.
Subsequent to the consummation of the Initial Public Offering and Private Placement, our liquidity needs have been satisfied through
the proceeds from the consummation of the Private Placement not held in the Trust Account.
The
Company believes that it could incur additional fees associated with transaction expenses and it may be required to request additional
funding from the Sponsor, which is not obligated to do so. The company believes that the Sponsor is adequately capitalized to provide
the associated funds in the form of a loan to the company at any time the company requests the funds. Since the Sponsor is not obligated
to provide the source of funds that may be needed, the Company may not be able to obtain the additional financing required. These conditions
raise substantial doubt about the Company’s ability to continue as a going concern through the next 12 months, if a business combination
is not consummated. These financial statements do not include any adjustments relating to the recovery of the recorded assets of the
classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Critical
Accounting Policies and Estimates
The
preparation of the unaudited condensed financial statements in conformity with US 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 unaudited
condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those
estimates. We have identified the following as our critical accounting policies:
Warrant Liabilities
We
do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial
instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives, pursuant to ASC 480 and ASC 815-15.
We
account for the Public Warrants and Private Warrants collectively (“Warrants”), as either equity or liability-classified
instruments based on an assessment of the specific terms of the Warrants and the applicable authoritative guidance in Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”).
The assessment considers whether the Warrants meet all of the requirements for equity classification under ASC 815, including whether
the Warrants are indexed to our own ordinary shares and whether the warrant holders could potentially require “net cash settlement”
in a circumstance outside of our control, among other conditions for equity classification. This assessment, which requires the use of
professional judgment, is conducted at the time of issuance of the Warrants and as of each subsequent quarterly period end date while
the Warrants are outstanding.
For
issued or modified warrants that meet all of the criteria for equity classification, such warrants are required to be recorded as a component
of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification,
such warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.
Changes in the estimated fair value of liability-classified warrants are recognized as a non-cash gain or loss on the statements of operations.
We
account for the Private Warrants in accordance with ASC 815-40 under which the Warrants do not meet the criteria for equity classification
and must be recorded as liabilities. The fair value of the Private Warrants has been estimated using the Monte Carlo simulation model.
We
evaluated the Public Warrants and Rights in accordance with ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s
Own Equity,” and concluded that they met the criteria for equity classification and are required to be recorded as part a component
of additional paid-in capital at the time of issuance.
Net Income Per Common Share
Net
income per common share is computed by dividing net income by the weighted average number of common stock outstanding for each period.
The calculation of diluted income per common share does not consider the effect of the warrants issued in connection with the (i) IPO,
(ii) exercise of overallotment and (iii) Private Placement since the exercise of the warrants are contingent upon the occurrence of future
events and the inclusion of such warrants would be anti-dilutive. The warrants are exercisable to purchase 10,210,000 shares of common
stock in the aggregate.
Common
Stock Subject to Possible Redemption
We
account for our common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.” 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 feature redemption
rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within
the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’
equity. Our common stock feature certain redemption rights that is considered to be outside of our control and subject to the occurrence
of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity,
outside of the stockholders’ equity section of our balance sheet.
Off-Balance
Sheet Financing Arrangements
We
have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2021. We do not
participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable
interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered
into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other
entities, or purchased any non-financial assets.
Contractual
Obligations
We
do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an
agreement to pay an affiliate of our Sponsor a monthly fee of $10,000 for office space, utilities and administrative support
provided to the Company. Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying
these monthly fees.
Business
Combination Marketing Agreement
The
Company has engaged EarlyBirdCapital as an advisor in connection with our business combination to assist us in holding meetings with
our shareholders to discuss the potential business combination and the target business’ attributes, introduce us to potential investors
that are interested in purchasing our securities in connection with our initial Business Combination, assist us in obtaining shareholder
approval for the Business Combination and assist us with our press releases and public filings in connection with the Business Combination.
We will pay EarlyBirdCapital a cash fee for such services upon the consummation of our initial Business Combination in an amount equal
to 3.5% of the gross proceeds of this Initial Public Offering. Additionally, we will pay EarlyBirdCapital a cash fee equal to 1.0% of
the total consideration payable in the proposed business combination if EarlyBirdCapital introduces us to the target business with which
we complete a business combination; provided that the foregoing fee will not be paid prior to the date that is 90 days from the effective
date of the registration statement.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
effect on our condensed financial statements.