The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
INTERPRIVATE III FINANCIAL PARTNERS INC.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’
EQUITY/ DEFICIT
THREE MONTHS ENDED MARCH 31, 2022
(unaudited)
| |
Class A | | |
Class B | | |
Additional | | |
| | |
Total | |
| |
Common Stock | | |
Common Stock | | |
Paid-in | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance – December 31, 2021 | |
| 200,000 | | |
$ | 20 | | |
| 6,468,750 | | |
$ | 647 | | |
$ | — | | |
$ | (109,659 | ) | |
$ | (108,992 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accretion of Class A common stock subject to possible redemption | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (3,615 | ) | |
| (3,615 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (653,537 | ) | |
| (653,537 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance – March 31, 2022 | |
| 200,000 | | |
$ | 20 | | |
| 6,468,750 | | |
$ | 647 | | |
$ | — | | |
$ | (766,811 | ) | |
$ | (766,144 | ) |
| |
Class A | | |
Class B | | |
Additional | | |
| | |
Total | |
| |
Common Stock | | |
Common Stock | | |
Paid-in | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance — January 1, 2021 | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of Class B common stock to Sponsor | |
| — | | |
| — | | |
| 6,468,750 | | |
| 647 | | |
| 24,353 | | |
| — | | |
| 25,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance Costs | |
| | | |
| | | |
| | | |
| | | |
| (6,843,989 | ) | |
| 1,141,407 | | |
| (5,702,582 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sale of 692,500 Private Placement Units | |
| | | |
| | | |
| — | | |
| — | | |
| 6,924,931 | | |
| | | |
| 6,924,931 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Initial classification of Private Warrants | |
| — | | |
| — | | |
| — | | |
| — | | |
| (105,295 | ) | |
| - | | |
| (105,295 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of representative shares | |
| 200,000 | | |
| 20 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 20 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accretion of Class A common stock subject to possible redemption | |
| | | |
| | | |
| — | | |
| — | | |
| — | | |
| (8,805 | ) | |
| (8,805 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (270,807 | ) | |
| (270,807 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance – March 31, 2021 | |
| 200,000 | | |
$ | 20 | | |
| 6,468,750 | | |
$ | 647 | | |
$ | 0 | | |
$ | 861,795 | | |
$ | 862,462 | |
The accompanying notes are an integral part of
the unaudited condensed financial statements.
INTERPRIVATE III FINANCIAL PARTNERS INC.
CONDENSED STATEMENT OF CASH FLOWS
(unaudited)
| |
Three Months Ended
March 31, 2022 | | |
Three Months Ended
March 31, 2021 | |
Cash Flows from Operating Activities: | |
| | | |
| | |
Net loss | |
$ | (653,537 | ) | |
$ | (270,807 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Change in fair value of warrant liabilities | |
| (79,686 | ) | |
| (9,000 | ) |
Transaction costs incurred in connection with the initial public offering | |
| - | | |
| 210 | |
Interest earned on marketable securities held in Trust Account | |
| (3,615 | ) | |
| (4,497 | ) |
Unrealized loss on marketable securities held in Trust Account | |
| - | | |
| (4,308 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| (7,340 | ) | |
| (498,317 | ) |
Income Tax Payable | |
| - | | |
| - | |
Related party payable | |
| (125,810 | ) | |
| - | |
Accounts payable and accrued expenses | |
| 223,865 | | |
| 247,017 | |
Net cash used in operating activities | |
$ | (646,123 | ) | |
$ | (539,702 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities: | |
| | | |
| | |
Investment of cash in Trust Account | |
| - | | |
| (258,750,000 | ) |
Net cash used in investing activities | |
| - | | |
| (258,750,000 | ) |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
Proceeds from sale of Units, net of underwriting discounts paid | |
| - | | |
| 253,680,505 | |
Proceeds from sale of Private Placement Units | |
| - | | |
| 6,819,495 | |
Proceeds from promissory note – related party | |
| - | | |
| 149,476 | |
Repayment of promissory note – related party | |
| - | | |
| (149,476 | ) |
Payment of offering costs | |
| - | | |
| (502,651 | ) |
Net cash provided by financing activities | |
| - | | |
| 259,997,349 | |
| |
| | | |
| | |
Net Change in Cash | |
| (646,123 | ) | |
| 707,647 | |
Cash – Beginning of period | |
| 1,501,391 | | |
| - | |
Cash – End of period | |
$ | 855,268 | | |
$ | 707,647 | |
| |
| - | | |
| | |
Non-Cash investing and financing activities: | |
| | | |
| | |
Initial value of common stock subject to possible redemption | |
$ | - | | |
$ | 254,890,855 | |
Issuance of Representative Shares | |
$ | - | | |
$ | 20 | |
Deferred offering costs paid directly by Sponsor in exchange for the issuance of Class B common stock | |
$ | - | | |
$ | 25,000 | |
Change in value of common stock subject to possible redemption | |
| - | | |
$ | (269,595 | ) |
The accompanying notes are an integral part
of the unaudited condensed financial statements.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
InterPrivate III Financial Partners Inc. (the
“Company”) is a blank check company incorporated in Delaware on September 10, 2020. It was originally incorporated under the
name “InterPrivate II Financial Holdings Corp.”, but the Company changed its name to “InterPrivate III Financial Partners
Inc.” on January 6, 2021. The Company was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or other similar business combination with one or more businesses (each, a “Business Combination”).
The Company is not limited to a particular industry
or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such,
the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of March 31, 2022, the Company had not commenced
any operations. All activity through March 31, 2022 relates to the Company’s formation, its initial public offering (the “Initial
Public Offering”), and subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company
will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company
will generate non-operating income on cash and cash equivalents in the form of interest income from the proceeds derived from the Initial
Public Offering. The Company has selected December 31 as its fiscal year end.
The registration statement for the Initial Public
Offering was declared effective on March 4, 2021. On March 9, 2021, the Company consummated the Initial Public Offering of 25,875,000
units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public
Shares”), which includes the full exercise by the underwriters of their over-allotment option in the amount of 3,375,000 Units,
at $10.00 per Unit, generating gross proceeds of $258,750,000, which is described in Note 3.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 692,500 units (each, a “Private Placement Unit” and, collectively, the
“Private Placement Units”) at a price of $10.00 per Private Placement Unit in a private placement to InterPrivate Acquisition
Management III, LLC (the “Sponsor”) and EarlyBirdCapital, Inc. (“EarlyBirdCapital”), generating gross proceeds
of $6,925,000, which is described in Note 4.
Transaction costs amounted to $5,702,582, consisting
of $5,175,000 of underwriting fees and $527,582 of other offering costs.
Following the closing of the Initial Public Offering
on March 9, 2021, an amount of $258,750,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering
and the sale of the Private Placement Units was placed in a trust account (the “Trust Account”), and was invested in U.S.
government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment
Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money
market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of:
(i) the consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account to the Company’s
stockholders, as described below.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Units,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The New
York Stock Exchange (“NYSE”) rules provide that the Business Combination must be with one or more target businesses that together
have a fair market value equal to at least 80% of the balance in the Trust Account (less any taxes payable on interest earned on the Trust
Account) at the time of the signing of a definitive agreement to enter into a Business Combination. The Company will only complete a Business
Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or
otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under
the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The Company will provide the holders of the 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 in the Trust Account ($10.00 per Public Share, plus any pro rata interest earned on the funds
held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon
the completion of a Business Combination with respect to the Company’s warrants.
If the Company seeks stockholder approval, the Company will proceed
with a Business Combination only if a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote
is not required by law and the Company does not decide to hold a stockholder vote for business or other 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 U.S. Securities and Exchange Commission (“SEC”) and file tender
offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required
by law, or the Company decides to obtain stockholder approval for business or other 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. The Company will not redeem
its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. If the Company seeks stockholder approval
in connection with a Business Combination, the Sponsor and EarlyBirdCapital have agreed to vote their Founder Shares (as defined in Note
5), Private Placement Shares (as defined in Note 4), Representative Shares (as defined in Note 7) and any Public Shares purchased during
or after the Initial Public Offering in favor of approving a Business Combination and not to convert any shares in connection with a stockholder
vote to approve a Business Combination or sell any shares to the Company in a tender offer in connection with a Business Combination.
Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed
transaction or do not vote at all.
Notwithstanding the above, if the Company seeks
stockholder approval of a Business Combination and it does not conduct redemptions 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 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 EarlyBirdCapital have agreed (a) to
waive their redemption rights with respect to their Founder Shares, Representative Shares and Public Shares held by them in connection
with the completion of a Business Combination, (b) waive their liquidation rights with respect to the Founder Shares, Private Placement
Shares and Representative Shares if the Company fails to complete a Business Combination and (c) not to propose an amendment to the
Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow
redemption in connection with the Company’s initial Business Combination or to redeem 100% of its Public Shares if the Company does
not complete a Business Combination or (ii) with respect to any other provision 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. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public
Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination.
The Company will have until March 9, 2023 or any
extended period of time that the Company may have to consummate a Business Combination as a result of an amendment to the Company’s
Amended and Restated Certificate of Incorporation to complete a Business Combination (the “Combination Period”). If the Company
is unable to complete a 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 the Public
Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned
on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations (less up to $100,000 of interest
to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public
stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the
Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law
to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions
with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within
the Combination Period.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
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 for services rendered or
products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement,
reduce the amount of funds in the Trust Account to below (1) $10.00 per Public Share or (2) the actual amount per Public Share
held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in
each case net of the interest which may be withdrawn to pay the Company’s taxes. This liability will not apply with respect to any
claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under
the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to
be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims.
The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by
endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective
target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title,
interest or claim of any kind in or to monies held in the Trust Account.
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s
financial position and/or search for a target company, the specific impact is not readily determinable as of the date of the financial
statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2. 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 (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the 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, the financial statements 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 Annual Report on Form 10-K for the year ended December 31, 2021, as
filed with the SEC on March 31, 2022 (the “Annual Report”). The interim results for the three months ended March 31, 2022
are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods.
Liquidity and Financial Condition
As of March 31, 2022 the Company had cash $1,501,391 and a working
capital deficit of $562,165. The Company will need to raise additional capital through loans or additional investments from its initial
stockholders, officers or directors. If the Company is unable to raise additional capital, the Company may be required to take additional
measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit
of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available
to the Company on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability
to continue as a going concern through one year and one day from the issuance of this report. The Company has a termination date of less
than one year from the issuance of this report.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Offering Costs Associated with the Initial
Public Offering
The Company complies with the requirements of
the Accounting Standards Codification (“ASC”) 340-10-S99-1 and SEC Staff Accounting Bulletin 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 Initial Public Offering and were charged to stockholders’ equity upon the completion of the Initial Public Offering.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting
firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation
in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use of Estimates
The preparation of the 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 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 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. The Company did not have any cash equivalents
as of March 31, 2022 and December 31, 2021.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Marketable Securities Held in Trust Account
At March 31, 2022, substantially all of the assets
held in the Trust Account were held in money market funds which are invested primarily in U.S. Treasury securities.
Warrant Liability
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing
Liabilities from Equity” (“ASC 480”) and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”).
The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability
pursuant to ASC 480, and 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 shares of 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 warrant issuance and as of each subsequent quarterly
period end date while the warrants are outstanding. As of March 31, 2022 and December 31, 2021, the Private Placement Warrants were accounted
for as liabilities, and the Public Warrants were accounted for as temporary equity (see Note 8).
For issued or modified warrants that meet all
of the criteria for equity classification, the 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, the warrants are required
to be recorded at their initial fair value on the date of issuance, and at each balance sheet date thereafter. The Company accounts for
the Private Placement Warrants issued in connection with the Initial Public Offering in accordance with the guidance contained in ASC
815-40-15-7D, under which the Private Placement Warrants do not meet the criteria for equity treatment and must be recorded as liabilities.
Accordingly, the Company classifies the Private Placement Warrants as liabilities at their fair value and adjusts the Private Placement
Warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised,
and any change in fair value is recognized in the Company’s statement of operations. The fair value of the Private Placement Warrants
initially was estimated using a Binomial Lattice Model (see Note 8).
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 480. Class A common stock subject to mandatory redemption 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 Class A common stock features certain redemption rights that are considered to be outside of the Company’s
control and subject to the occurrence of uncertain future events. Accordingly, at March 31, 2022, Class A common stock subject to possible
redemption is presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.
Income Taxes
The Company complies with the accounting and reporting
requirements of ASC Topic 740, “Income Taxes” (“ASC 740”), which requires an asset and liability approach to financial
accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial
statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws
and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and
a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax
return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were
no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2022 and December 31, 2021. The Company
is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is subject to income tax examinations by major taxing authorities since inception.
The Company
recorded a full valuation allowance for all periods presented. As such the provision for income taxes was zero for the three months ended
March 31, 2022 and the deferred tax asset was zero as of March 31, 2022 and December 31, 2021
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Net Income (Loss) Per Share of Common Stock
The Company
complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share” (“ASC Topic 260”).
Net income (loss) per common share is computed by dividing net income by the weighted average number of common shares outstanding for
the period. Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption
value approximates fair value.
The following table reflects the calculation of
basic and diluted net loss per common share (in dollars, except per share amounts):
| |
Three Months Ended | |
| |
March 31, | |
| |
2022 | | |
2021 | |
Class A common stock subject to possible redemption | |
| | |
| |
Numerator: | |
| | |
| |
Net loss allocable to Class A common stock subject to possible redemption | |
$ | (511,870 | ) | |
$ | (147,754 | ) |
Denominator: | |
| | | |
| | |
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption | |
| 25,875,000 | | |
| 6,325,000 | |
Basic and diluted net loss per share, Class A common stock subject to possible redemption | |
$ | (0.02 | ) | |
$ | (0.02 | ) |
| |
| | | |
| | |
Non-redeemable common stock | |
| | | |
| | |
Numerator: | |
| | | |
| | |
Net loss | |
$ | (653,537 | ) | |
$ | (270,807 | ) |
Less: Net loss allocable to Class A common stock subject to possible redemption | |
| 511,870 | | |
| 147,754 | |
Net loss allocable to non-redeemable common stock | |
$ | (141,667 | ) | |
$ | (123,053 | ) |
Denominator: | |
| | | |
| | |
Basic and diluted weighted average shares outstanding, non-redeemable common stock | |
| 7,161,270 | | |
| 5,267,602 | |
Basic and diluted net loss per share, non-redeemable common stock | |
$ | (0.02 | ) | |
$ | (0.02 | ) |
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
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. The Company has not experienced losses on these accounts.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement” (“ASC 820”),
approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Recent Accounting Standards
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed
financial statements.
NOTE 3. PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold 25,875,000 Units, which includes the full exercise by the underwriters of their over-allotment option in the amount of 3,375,000
Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of the Company’s Class A common stock and one-fifth
of one redeemable warrant (“Public Warrant”). Each Public Warrant entitles the holder to purchase one share of the Company’s
Class A common stock at an exercise price of $11.50 per whole share (see Note 7).
Transaction costs amounted to $5,702,582, consisting of $5,175,000
of underwriting fees and $527,582 of other offering costs. As of March 31, 2022, cash of $855,268 was held outside of the Trust Account
and was available for working capital purposes.
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Sponsor and EarlyBirdCapital purchased an aggregate of 692,500 Private Placement Units at a price of $10.00 per Private
Placement Unit, or $6,925,000 in the aggregate. Each Private Placement Unit consists of one share of Class A common stock (“Private
Placement Share”) and one-fifth of one redeemable warrant (“Private Placement Warrant”). Each Private Placement Warrant
is exercisable to purchase one share of Class A common stock at a price of $11.50 per share. The proceeds from the sale of the Private
Placement Units were added to the net proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete
a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Units will be used to fund the
redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Units and all underlying securities
will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On January 13, 2021, the Sponsor paid $25,000
to cover certain offering costs of the Company in consideration for 5,750,000 shares of Class B common stock (the “Founder
Shares”). On February 4, 2021, the Sponsor transferred an aggregate 120,000 Founder Shares to the Company’s independent directors,
resulting in the Sponsor holding 5,630,000 Founder Shares. On March 4, 2021, the Company effected a 1.125-for-1 stock split of its Class
B common stock, resulting in an aggregate of 6,468,750 Founder Shares issued and outstanding, 6,348,750 of which were held by the Sponsor.
The aggregate value of the 120,000 Founder Shares transferred to the independent directors will be recorded as compensation expense at
the time of a Business Combination. The initial grant at fair value was deemed de minimis. Such fair value was calculated pursuant to ASC 718 on the date of transfer using a valuation model that takes into account various assumptions
such as the probability of successfully completing the initial public offering, the probability of successfully completing a business
combination, marketability and various other factors.The Founder
Shares included an aggregate of up to 843,750 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment
option was not exercised in full or in part, so that the Sponsor would collectively own, on an as-converted basis, 20% of the Company’s
issued and outstanding shares after the Initial Public Offering (assuming the Sponsor did not purchase any Public Shares in the Initial
Public Offering and excluding the Private Placement Shares and Representative Shares). As a result of the underwriters’ election
to fully exercise their over-allotment option, no Founder Shares were subject to forfeiture.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The Sponsor has agreed, subject to certain limited
exceptions, not to transfer, assign or sell any of the Founder Shares until (i) with respect to 50% of such shares, for a period ending
on the earlier of the one-year anniversary of the date of the consummation of the initial Business Combination and the date on which the
closing price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations,
reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period following the consummation of
a Business Combination and (ii) with respect to the remaining 50% of such shares, for a period ending on the one-year anniversary of the
date of the consummation of a Business Combination, or, in either case, earlier if, subsequent to a Business Combination, the Company
consummates a liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders
having the right to exchange their shares of common stock for cash, securities or other property.
Administrative Services Agreement
The Company entered into an agreement, commencing on March 4, 2021,
pursuant to which the Company will pay the Sponsor a total of $10,000 per month for office space, administrative and support services.
Upon completion of the Business Combination or the Company’s liquidation, the agreement will terminate, and the Company will cease
paying these monthly fees. For the three months ended March 31, 2022 and March 31, 2021, the Company recorded $30,000 and $10,000, respectively,
in fees for these services.
Related Party 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 directors and officers 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 out of the proceeds of the Trust Account released to the Company.
Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination
does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. 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 $1,500,000 of such
Working Capital Loans may be convertible into units of the post-Business Combination entity at a price of $10.00 per unit. The units would
be identical to the Private Placement Units.
In addition, as the Company incurs operating expenses,
these fees are paid by InterPrivate LLC, and InterPrivate LLC is subsequently reimbursed by the Company for the full amount paid. As of
March 31, 2022 and December 31, 2021, the Company had $54,463 and $180,273 in related party payables outstanding, respectively.
Services Agreement
The Company entered into an agreement, pursuant
to which the Company will pay its Vice President a total of $10,000 per month for assisting the Company in negotiating and consummating
an initial business combination. Upon completion of the Business Combination or the Company’s liquidation, the agreement will terminate,
and the Company will cease paying these monthly fees. For the three months ended March 31, 2022 and the three months ended March 31, 2021,
the Company incurred $30,000 and $10,000 in fees, respectively, for these services.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant to a registration rights agreement entered
into on March 4, 2021, the holders of the Founder Shares, Representative Shares, Private Placement Units and any units that may be issued
upon conversion of the Working Capital Loans (and all underlying securities) have registration rights requiring the Company to register
a sale of any of the securities held by them prior to the consummation of a Business Combination. The holders of these securities will
be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition,
the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the
completion of a Business Combination. The registration rights agreement does not contain liquidated damages or other cash settlement provisions
resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the
filing of any such registration statements.
Business Combination Marketing Agreement
The Company has engaged Morgan Stanley and EarlyBirdCapital
as advisors in connection with the Business Combination to assist the Company in holding meetings with its stockholders to discuss the
potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested
in purchasing the Company’s securities in connection with the Business Combination, assist the Company in obtaining stockholder
approval for the Business Combination, and assist the Company with its press releases and public filings in connection with the Business
Combination. The Company will pay Morgan Stanley and EarlyBirdCapital a cash fee for such services upon the consummation of a Business
Combination in an amount equal to 3.5% of the gross proceeds of the Initial Public Offering, or $9,056,250 (exclusive of any applicable
finders’ fees which might become payable).
Merger Agreement
On August 18, 2021, the Company entered into an
Agreement and Plan of Merger (the “Merger Agreement”) with InterPrivate III Merger Sub Inc., a wholly owned subsidiary of
the Company (“Merger Sub”), InterPrivate III Merger Sub II LLC, a wholly owned subsidiary of the Company (“Merger Sub
II”), and Aspiration Partners Inc. (“Aspiration”). Pursuant to the Merger Agreement, Merger Sub will merge with and
into Aspiration, with Aspiration surviving the merger as a wholly owned subsidiary of the Company (the “First Merger”) and,
immediately following the First Merger and as part of the same overall transaction as the First Merger, the surviving corporation will
merge with and into Merger Sub II, with Merger Sub II surviving the merger (the “Second Merger”). The transactions contemplated
by the Merger Agreement are referred to as the “Business Combination.” In addition, in connection with the consummation of
the Business Combination, the Company will be renamed and is referred to herein as “New Aspiration” as of the time following
such change of name.
In connection with the closing of the Business
Combination (the “Closing”), at the effective time of the Business Combination (the “Effective Time”) and by virtue
of the Business Combination, (i) all shares of Aspiration common stock issued and outstanding immediately prior to the Effective Time
will be canceled and converted into the right to receive shares of New Aspiration Class A common stock, (ii) all outstanding Aspiration
options will be converted into options to purchase New Aspiration Class A common stock, (iii) each Aspiration stockholder and each holder
of a vested Aspiration option shall also receive a contingent right to receive a pro rata portion of up to 100,000,000 shares of New Aspiration
Class A common stock, (iv) all outstanding Aspiration warrants will be exercised or terminated in accordance with its terms and (v) each
convertible note of Aspiration will be converted into Aspiration capital stock, paid off in accordance with the terms thereof or remain
outstanding as indebtedness of New Aspiration without the right to convert into capital stock of New Aspiration. The aggregate number
of shares of common stock to be issued in the Business Combination will be equal to $1.75 billion plus the exercise price of all outstanding
Aspiration options, divided by $10.00.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The parties to the Merger Agreement have made
customary representations and warranties and have agreed to certain customary covenants for a transaction of this type. The Closing is
subject to certain conditions, including but not limited to the approval of the Company’s stockholders and Aspiration’s stockholders
of the Business Combination Agreement. The Merger Agreement may also be terminated by either party under certain circumstances, including
if the Business Combination has not occurred by July 19, 2022 (or such later date as the parties may mutually agree).
Subscription Agreements
On August 18, 2021, the Company entered into subscription
agreements (the “Subscription Agreements”) with certain accredited investors, pursuant to which, among other things, the Company
agreed to issue and sell, in private placements to close concurrently with the Closing, an aggregate of 20,000,000 shares of the Company’s
Class A common stock at a purchase price of $10.00 per share (the “PIPE Investment”).
Aspiration Support Agreement
In connection with and following the execution
of the Merger Agreement, the Company will enter into support agreements with certain Aspiration stockholders (the “Aspiration Support
Agreements”), pursuant to which such Aspiration stockholders will agree, among other things, to vote in favor of the adoption and
approval of the Business Combination and any of the documents and transactions contemplated by the Merger Agreement. Additionally, such
Aspiration stockholders agreed to not transfer any securities of Aspiration held by such stockholder from the date of execution of the
Aspiration Support Agreement until the earlier of the Effective Time and the termination of the Merger Agreement in accordance with its
terms, subject to certain exceptions, and to not solicit any Company Business Combination (as defined in the Merger Agreement), in each
case, subject to the terms and conditions of the Aspiration Support Agreements.
Sponsor Support Agreement
In connection with the execution of the Merger
Agreement, InterPrivate Acquisition Management III, LLC, a Delaware limited liability company (the “Sponsor”), entered into
a support agreement (the “Sponsor Support Agreement”) with the Company and Aspiration, pursuant to which the Sponsor agreed,
among other things, to vote to adopt and approve the Merger Agreement and all other documents and transactions contemplated thereby, to
vote against any Business Combination proposal other than the Business Combination or other proposals that would impede or frustrate the
Business Combination, to comply with the Merger Agreement’s prohibition on soliciting any alternative Business Combination and to
not transfer the equity interests in the Company that it owns, in each case, subject to the terms and conditions of the Sponsor Support
Agreement.
Amended and Restated Registration Rights
Agreement
At the Closing, New Aspiration, the Sponsor and
certain stockholders of New Aspiration will enter into an Amended and Restated Registration Rights Agreement, pursuant to which, among
other things, the parties thereto will be granted certain customary registration rights with respect to shares of common stock of New
Aspiration.
Stockholders’ Agreement
At the Closing, New Aspiration, Andrei Cherny,
Joseph Sanberg and certain of their respective controlled affiliates will enter into a Stockholders’ Agreement (the “Stockholders’
Agreement”) to provide for certain governance rights and address certain governance matters relating to New Aspiration. The Stockholders’
Agreement will provide each of Mr. Cherny and Mr. Sanberg the right to nominate one individual to the New Aspiration board of directors,
subject to certain qualifications, requirements and exceptions as set forth therein.
Transfer Restrictions
The Sponsor and its directors and executive officers
are subject to certain restrictions on transfer with respect to their shares of New Aspiration common stock pursuant to that certain Letter
Agreement, dated as of March 4, 2021, by and among the Company, the Sponsor, and the other parties signatory thereto. Such restrictions
end on the date that is one year following the Closing, or are subject to an early price-based release with respect to 50% of such shares
if the price per share of New Aspiration Class A common stock equals or exceeds $12.00 per share for any 20 trading days within any 30-day
trading period following the Closing.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Series
X Preferred Stock Purchase Agreement
Concurrently
with the execution of the Merger Agreement, the Company and Aspiration entered into a Series X Preferred Stock Purchase Agreement (the
“Purchase Agreement”) with OCM Aspiration Holdings, LLC (“Oaktree”). Pursuant to the Purchase Agreement, Aspiration
has agreed to issue and sell to Oaktree an aggregate of 27,777,777 shares of a newly designated series of preferred stock designated
as Series X Preferred Stock of Aspiration, par value $0.000003 per share (the “Aspiration Series X Preferred Stock”),
for an aggregate purchase price of $250,000,000, which is net of the original issue discount of 10% (the “Series X Financing”),
with shares of Aspiration Series X Preferred Stock having the powers, designations, preferences and other rights set forth in the Aspiration
Certificate of Designations (as defined below). The closing of the issuance and sale of Aspiration Series X Preferred Stock occurred concurrently
with the execution of the Merger Agreement. The Purchase Agreement also provides that New Aspiration will grant Oaktree registration rights
pursuant to the Registration Rights Agreement (as defined below).
Certificate
of Designations
The shares
of New Aspiration Series X Preferred Stock to be issued in exchange for shares of Aspiration Series X Preferred Stock pursuant to the
Merger Agreement, upon their issuance, will have the powers, designations, preferences, and other rights as set forth in a Certificate
of Designations of the New Aspiration Series X Preferred Stock that the Company will file with the Secretary of State of the State of
Delaware on or prior to the Closing Date (the “New Aspiration Certificate of Designations”). The New Aspiration Series X Preferred
Stock will have, mutatis mutandis, substantially similar powers, designations, preferences, and other rights as set forth
in the Certificate of Designations of the Aspiration Series X Preferred Stock that was filed with the Secretary of State of the State
of Delaware upon the consummation of the transactions contemplated by the Purchase Agreement (the “Aspiration Certificate of Designations”).
Voting
and Consent Rights
The New
Aspiration Series X Preferred Stock will not have any voting rights or rights to convert such preferred shares into shares of New Aspiration
Class A common stock. Holders of a majority of the outstanding shares of New Aspiration Series X Preferred Stock will be entitled to elect
(i) one director to the board of directors of New Aspiration after the ninth anniversary of the Closing Date and upon a Medium Event (as
defined below) and (ii) two directors to the board of directors of New Aspiration upon a Major Event (as defined below). New Aspiration
will need to obtain the prior written consent of holders of a majority of the outstanding shares of New Aspiration Series X Preferred
Stock for, among other things: (i) effecting any change of control, liquidation event or merger or consolidation of New Aspiration unless
the entirety of the applicable Series X Redemption Price (as defined below) is paid with respect to all then issued and outstanding shares
of Series X Preferred Stock, (ii) amending Aspiration’s organizational documents to the extent such amendment has an adverse effect
on the holders of Series X Preferred Stock, (iii) increasing or decreasing the number of authorized shares of New Aspiration Series X
Preferred Stock, (iv) creating any class or series of New Aspiration capital stock that is pari passu or senior to the New Aspiration
Series X Preferred Stock, (v) incurring indebtedness, except for indebtedness incurred under Aspiration’s existing secured debt
facilities, debt incurred that allows New Aspiration to satisfy a total net leverage ratio of 3.0x and debt incurred for the redemption
of the New Aspiration Series X Preferred Stock (subject to limited exceptions), (vi) declaring, paying or making certain dividends and
undertaking certain stock repurchases (subject to limited exceptions) and (vii) certain other specified actions.
Dividends
The dividend
rate with respect to the New Aspiration Series X Preferred Stock will be either 8.0% per year in cash or, if not paid in cash, will be
paid “in-kind” by accruing at a rate of 8.0%, 11.0% or 12.0% per year for any dividend period ending on or prior to the second
anniversary of the Closing Date, between the second and third anniversaries of the Closing Date or between the third and fourth anniversaries
of the Closing Date, respectively. New Aspiration may elect either form of dividend payment until the fourth anniversary of the Closing
Date, and dividends must be paid in cash thereafter.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Each of
the dividend rates set forth above will increase by (i) 5.0% per annum (a) if New Aspiration fails to pay any dividend that is required
to be paid in cash if surplus cash is available, (b) if New Aspiration defaults on payment with respect to a Liquidation (as defined below)
or redemption, (c) if New Aspiration is in material breach of certain covenants under the New Aspiration Certificate of Designations,
subject to certain cure periods, (d) if New Aspiration experiences a bankruptcy or insolvency event, whether voluntary or involuntary,
(e) if New Aspiration fails to deliver New Aspiration Class A common stock to a holder of New Aspiration Series X Preferred Stock upon
the valid exercise of the Warrant (the foregoing clauses (a) through (e), a “Major Event”), (f) if New Aspiration fails to
pay any dividend that is required to be paid in cash if surplus cash is unavailable, (g) if New Aspiration is in material breach of certain
other covenants under the New Aspiration Certificate of Designations, subject to certain cure periods, (h) if New Aspiration defaults
on outstanding indebtedness or if outstanding indebtedness is accelerated, in each case, in excess of $50,000,000 or (i) if New Aspiration
fails to pay an applicable final judgment in excess of $25,000,000 (the foregoing clauses (f) through (i), a “Medium Event,”
and together with a Major Event, an “Event of Noncompliance”), or (ii) 3.0% per annum if New Aspiration is in material breach
of certain other covenants under the New Aspiration Certificate of Designations that is not a Major Event or Medium Event, subject to
certain cure periods (the dividend rate as increased in each of the foregoing cases, the “Noncompliance Incremental Rate”).
In addition, if the Company does not have at least $200,000,000 of cash at the Closing (excluding proceeds from the issuance of New Aspiration
Series X Preferred Stock), the dividend rates set forth above will increase by 5.0% per annum (exclusive of any Noncompliance Incremental
Rate then in effect) and will remain in effect until, after the Closing Date, New Aspiration has $200,000,000 of cash (the dividend rate
as increased by this sentence, the “de-SPAC Incremental Rate”). New Aspiration may elect to pay both the Noncompliance Incremental
Rate and the de-SPAC Incremental Rate in cash or “in-kind.”
Springing
Rights
Upon the
occurrence of a Major Event that has continued for 90 days (and upon the occurrence of certain Major Events, and in certain circumstances,
180 days) or upon the occurrence of a Medium Event that has continued for 180 days, subject to certain time extensions, for so long as
such Event of Noncompliance is continuing (the period following termination of the foregoing cure periods, the “Liquidity Period”),
the holders of a majority of the outstanding shares of New Aspiration Series X Preferred Stock shall have the right to cause New Aspiration
to pursue an issuance of securities, a Liquidation (as defined below), merger, sale of assets or similar transaction or series of transactions,
a leveraged recapitalization or any other transaction or series of transactions (each, a “Liquidity Transaction”) generating
sufficient proceeds available for distribution to holders of New Aspiration Series X Preferred Stock to pay the entirety of the Series
X Redemption Price (as defined below). During the Liquidity Period, New Aspiration shall direct an independent financial advisor, approved
by the holders of a majority of the outstanding shares of New Aspiration Series X Preferred Stock then outstanding, to establish procedures
to effect a Liquidity Transaction in an orderly manner with the objective of achieving the highest available value for New Aspiration
within a reasonable period of time and the payment of the entire Series X Redemption Price payable in respect of all outstanding shares
of New Aspiration Series X Preferred Stock. However, if a Liquidity Period has commenced and the Event of Noncompliance is cured, New
Aspiration may discontinue and will not be required to pursue a Liquidity Transaction.
Immediately
following the commencement of a Liquidity Transaction, holders of a majority of the outstanding shares of New Aspiration Series X Preferred
Stock may take control of and direct the process of a Liquidity Transaction and cause New Aspiration to consummate, subject to any requisite
stockholder approvals, any Liquidity Transaction in order to redeem the New Aspiration Series X Preferred Stock at the Series X Redemption
Price.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Furthermore,
during a Liquidity Period, unless New Aspiration is able to redeem outstanding New Aspiration Series X Preferred Stock at the then applicable
Series X Redemption Price as a result, New Aspiration will need to obtain the prior written consent of holders of a majority of the outstanding
shares of New Aspiration Series X Preferred Stock to acquire any business, incur any indebtedness, repurchase capital stock or make distributions
(subject to certain exceptions) or fail to redeem outstanding New Aspiration Series X Preferred Stock with surplus cash (subject to applicable
law and the terms of any indebtedness of New Aspiration).
Ranking
and Liquidation Preference
The New
Aspiration Series X Preferred Stock will rank senior to New Aspiration’s common stock with respect to dividend rights and rights
upon the voluntary or involuntary liquidation, dissolution or winding up of the affairs of New Aspiration (a “Liquidation”).
Upon a Liquidation, each share of New Aspiration Series X Preferred Stock would be entitled to the applicable Series X Redemption Price.
The liquidation preference of the New Aspiration Series X Preferred Stock will be equal to $10 per share (the “Series X Liquidation
Preference”).
Redemption
Rights and Series X Redemption Price
New Aspiration
will have the right to redeem all or any portion of the New Aspiration Series X Preferred Stock at any time by paying the applicable Series
X Redemption Price; provided, however, that no optional redemption will be permitted that would result in less than 33% of the shares
of New Aspiration Series X Preferred Stock that are issued on the Closing Date to remain outstanding following such redemption unless
all remaining shares of New Aspiration Series X Preferred Stock are redeemed.
Each holder
of New Aspiration Series X Preferred Stock will have the option to require New Aspiration to redeem any portion of the New Aspiration
Series X Preferred Stock at the Series X Redemption Price: (i) at any time after the ninth anniversary of the Closing Date or (ii) upon
the occurrence of a Major Event (following the expiration of the applicable cure period) at the election of the holders of a majority
of the outstanding shares of New Aspiration Series X Preferred Stock. New Aspiration will be required to redeem all of the outstanding
shares of New Aspiration Series X Preferred Stock at the Series X Redemption Price automatically upon the occurrence of a change of control,
a Liquidation or an insolvency event.
The following
table sets forth the “Series X Redemption Price”:
Timing of
Redemption |
|
Series X
Redemption Price |
Until 30 months after the Closing Date (the “First Optional Call Date”) |
|
Make-Whole Amount (as defined below) |
From the First Optional Call Date until the first anniversary of the First Optional Call Date |
|
106% of the sum of the Series X Liquidation Preference and accrued but unpaid dividends |
From the first anniversary of the First Optional Call Date until 66 months following the First Optional Call Date |
|
103% of the sum of the Series X Liquidation Preference and accrued but unpaid dividends |
From and after the date 66 months after the First Optional Call Date |
|
100% of the sum of the Series X Liquidation Preference and accrued but unpaid dividends |
The “Make-Whole
Amount” with respect to any redemption of any share of New Aspiration Series X Preferred Stock prior to the First Optional Call
Date is defined in the New Aspiration Certificate of Designations as an amount equal to the sum of (A) the remaining dividends that would
accrue on such shares being redeemed from the day immediately following the redemption date to the First Optional Call Date at 8.0%
as may be increased by the de-SPAC Incremental Rate or the Noncompliance Incremental Rate, if applicable, plus (B) the Series X Liquidation
Preference of such shares being redeemed plus (C) the then current amount of accrued in-kind dividends on such shares being redeemed,
assuming that, for purposes of calculating the foregoing, the shares of New Aspiration Series X Preferred Stock being redeemed were to
remain outstanding through the First Optional Call Date.
INTERPRIVATE III FINANCIAL
PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Series
X Minimum Cash Balance
Pursuant
to the New Aspiration Certificate of Designations, New Aspiration will also be required to maintain a minimum cash balance of $50,000,000
at all times so long as the New Aspiration Series X Preferred Stock remains outstanding. However, if Aspiration and its subsidiaries have
less than $10,000,000 in outstanding indebtedness, the required minimum cash balance is reduced to $30,000,000.
Investor
Rights Agreement
The Company
entered into an Investor Rights Agreement with Oaktree to be effective upon the Closing Date (the “New Aspiration Investor Rights
Agreement”) on substantially similar terms and conditions (while taking into account the consummation of the Business Combination),
as those contained in the Investor Rights Agreement (as defined below) set forth below, such that New Aspiration, upon the Closing, shall
be subject to the New Aspiration Investor Right Agreement.
As a condition
to the closing of the Purchase Agreement, Aspiration and Oaktree entered into an Investor Rights Agreement (the “Investor Rights
Agreement”) pursuant to which, among other things, Aspiration granted Oaktree certain customary registration rights with respect
to the shares of Aspiration common stock underlying the Warrant and certain other securities that may be issued to Oaktree in respect
of the Warrant.
In addition,
pursuant to the Investor Rights Agreement, for so long as shares of the Aspiration Series X Preferred Stock issued on the Series X Closing
Date remain outstanding, Oaktree will have (i) a participation right, subject to certain exceptions, pursuant to which Oaktree may maintain
its ownership percentage of Aspiration common stock in connection with future offerings or sales of Aspiration equity securities and (ii)
a right of first offer with respect to the provision of any future debt or preferred equity financing to Aspiration or its subsidiaries.
The Investor Rights Agreement also provides that, so long as 33% of the Aspiration Series X Preferred Stock issued on the Series
X Closing Date remains outstanding, Oaktree will be entitled to appoint one non-voting observer to the board of directors of Aspiration.
The Investor Rights Agreement further contains a number of other customary covenants and agreements, including certain standstill provisions,
preemptive rights, rights of first refusal with respect to future debt financing transactions and information rights.
The Investor
Rights Agreement provides that Oaktree will be restricted from transferring the Aspiration Series X Preferred Stock to parties unaffiliated
with Oaktree without the prior written consent of Aspiration for one year following the closing of the issuance of Aspiration Series X
Preferred Stock. From and after such date, Oaktree will be restricted from transferring the Aspiration Series X Preferred Stock to parties
unaffiliated with Oaktree without the prior written consent of Aspiration, which consent may not be unreasonably withheld by Aspiration
(other than in the event of a transfer to certain restricted transferees).
Warrant
Pursuant
to the Purchase Agreement, at the Closing Date, New Aspiration will issue to Oaktree a warrant (the “Warrant”) to purchase
a number of shares of New Aspiration common stock equal to 6.0% of the total number of shares of New Aspiration capital stock outstanding
on a fully diluted basis (excluding the shares of New Aspiration Series X Preferred Stock and the Warrant) as of immediately following
the consummation of the Business Combination.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 7. WARRANTS
The Public Warrants may only be exercised for
a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable
30 days after the consummation of a Business Combination. The Public Warrants will expire five years from the consummation of a Business
Combination, or earlier upon redemption or liquidation. The Public Warrants are accounted for as a component of temporary equity.
The Company will not be obligated to deliver any
Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration
statement under the Securities Act with respect to the Class A common stock underlying the warrants is then effective and a prospectus
relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable,
and the Company will not be obligated to issue a share of Class A common stock upon exercise of a warrant, unless the share of Class A
common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the
state of residence of the registered holder of the warrants.
The Company has agreed that as soon as practicable,
but in no event later than twenty (20) business days after the closing of a Business Combination, the Company will use its best efforts
to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable
upon exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness
of such registration statement, and a current prospectus relating thereto, until the expiration or redemption of the warrants in accordance
with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon
exercise of the warrants is not effective by the sixtieth (60th) business day after the closing of a Business Combination, warrant holders
may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain
an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the
Securities Act or another exemption. Notwithstanding the above, if the Class A common stock are at the time of any exercise of a
warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1)
of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless
basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not
be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, the Company will use
its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Once the warrants become exercisable, the Company
may redeem the outstanding warrants:
| ● | in
whole and not in part; |
| ● | at
a price of $0.01 per warrant; |
| ● | upon
a minimum of 30 days’ prior written notice of redemption to each warrant holder; and |
| ● | if,
and only if, the closing price of the Class A common stock for any 20 trading days within a 30-trading day period ending three trading
days before the Company sends the notice of redemption to the warrant holders equals or exceeds $18.00 per share (as adjusted). |
If and when the warrants become redeemable by
the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale
under all applicable state securities laws.
The exercise price and number of Class A
common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share
dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the
Public Warrants will not be adjusted for issuances of Class A common stock at a price below its exercise price. Additionally, in
no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination
within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive
any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside
of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
In addition, if (x) the Company issues additional
shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of its Business
Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price
or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance
to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable,
prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more
than 60% of the total equity proceeds, and interest thereon, available for the funding of the Company’s initial Business Combination
on the date of the consummation of such initial Business Combination (net of redemptions), and (z) the volume weighted average trading
price of the Company’s common stock during the 20 trading day period starting on the trading day prior to the day on which the Company
consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price
of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price
and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 80% of the higher
of the Market Value and the Newly Issued Price.
The Private Placement Warrants underlying the
Private Placement Units are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the
Private Placement Warrants and the shares of common stock issuable upon the exercise of the Private Placement Warrants will not be transferable,
assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally,
the Private Placement Warrants will be exercisable on a cashless basis and will be non-redeemable so long as they are held by the initial
purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or
their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same
basis as the Public Warrants.
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Representative Shares
The Company issued to EarlyBirdCapital and its
designees 200,000 shares of Class A common stock (the “Representative Shares”). The Company accounted for the Representative
Shares as an offering cost of the Initial Public Offering, with a corresponding credit to stockholders’ equity. The Company estimated
the fair value of Representative Shares to be $2,000,000 based upon the price of the Units issued in the Initial Public Offering. The
holders of the Representative Shares have agreed not to transfer, assign or sell any such shares until the completion of a Business Combination.
In addition, the holders have agreed (i) to vote such shares in favor of any proposed business combination, (ii) to waive their
redemption rights with respect to such shares in connection with the completion of the Company’s initial business combination and
(iii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails
to complete its business combination within the Combination Period.
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 effective date of the registration
statement related to the Initial Public Offering pursuant to FINRA Rule 5110(g)(1). Pursuant to FINRA Rule 5110(g)(1), these
securities will not 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 statements
related to the Initial Public Offering, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days
immediately following the effective date of the registration statements related to the Initial Public Offering except to any underwriter
and selected dealer participating in the Initial Public Offering and their bona fide officers or partners.
NOTE 8. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820 for
its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets
and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1: |
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
|
|
|
|
Level 2: |
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
|
|
|
|
Level 3: |
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
The following tables present information about
the Company’s assets that are measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021, respectively,
and indicate the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | |
Level | | |
March 31,
2022 | |
Assets: | |
| | |
| |
Marketable securities held in Trust Account | |
| 1 | | |
$ | 258,806,443 | |
Liabilities: | |
| | | |
| | |
Warrant Liability – Private Placement Warrants | |
| 3 | | |
| 134,375 | |
Warrant Liability – Underwriter Warrants | |
| 3 | | |
| 19,604 | |
INTERPRIVATE III FINANCIAL PARTNERS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Description | |
Level | | |
December 31, 2021 | |
Assets: | |
| | |
| |
Marketable securities held in Trust Account | |
| 1 | | |
$ | 258,802,828 | |
Liabilities: | |
| | | |
| | |
Warrant Liability – Private Placement Warrants | |
| 3 | | |
| 202,563 | |
Warrant Liability – Underwriter Warrants | |
| 3 | | |
| 31,102 | |
The Private Placement Warrants were initially
valued using a Binomial Lattice Model, which is considered to be a Level 3 fair value measurement. The Binomial Lattice Model’s
primary unobservable input utilized in determining the fair value of the Private Placement Warrants is the expected volatility of the
common stock. The expected volatility as of the IPO date was derived from observable public warrant pricing on comparable ‘blank-check’
companies without an identified target. The expected volatility as of subsequent valuation dates was implied from the Company’s
own public warrant pricing. A Binomial Lattice Model was used in estimating the fair value of the Private Placement Warrants for periods
where no observable traded price was available.
The key inputs into the Binomial Lattice Model
for the initial measurement of the Private Placement Warrants, and the subsequent measurement of the Private Placement Warrants, are as
follows:
Term | |
March 31, 2022 | | |
December 31, 2021 | |
Risk-free interest rate | |
| 2.43 | % | |
| 1.23 | % |
Market price of public stock | |
$ | 9.88 | | |
$ | 9.91 | |
Dividend Yield | |
| — | % | |
| — | % |
Implied volatility | |
| 9.1 | % | |
| 21.80 | % |
Exercise price | |
$ | 11.50 | | |
$ | 11.50 | |
The above assumptions are based on an expected
close of a de-SPAC transaction on September 30, 2022.
On March 31, 2022 and December 31, 2021 the Private
Placement Warrants were determined to be valued at $1.16 and $1.75 per warrant, respectively. On March 31, 2022 and December 31, 2021,
the Underwriter Warrants were valued at $0.85 and $1.35, respectively.
The following table presents the changes in the
fair value of warrant liabilities:
| |
Private
Placement | | |
Underwriters
Warrants | |
Fair value as of December 31, 2021 | |
$ | 202,563 | | |
$ | 31,102 | |
Change in valuation inputs or other assumptions | |
| (68,188 | ) | |
| (11,498 | ) |
Fair value as of March 31, 2022 | |
$ | 134,375 | | |
$ | 19,604 | |
During the three-month period ended March 31,
2022, there were no transfers out of Level 3.
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the condensed financial statements were issued. The Company did not identify
any subsequent events that would have required adjustment or disclosure in the condensed financial statements.