Notes to Unaudited Condensed
Financial Statements
1. Description of Organization and Business
Operations
Organization and General
Orion Acquisition Corp. (the “Company”)
is a blank check company incorporated in Delaware on November 25, 2020, for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of September 30, 2021, the Company had not
commenced any operations. All activity for the period from November 25, 2020 (inception) through September 30, 2021 relates to the Company’s
formation, the preparation for the initial public offering (the “Initial Public Offering”) described below, and since the
closing of the Initial Public Offering, the search for a prospective initial Business Combination. The Company will not generate any operating
revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in
the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering. The Company has selected
December 31 as its fiscal year end.
The Company’s sponsor is Orion Healthcare
Acquisition Partners, LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s
Initial Public Offering was declared effective on March 1, 2021. On March 4, 2021, the Company consummated its Initial Public Offering
of 41,400,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public
Shares”), including 5,400,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per
Unit, generating gross proceeds of $414.0 million, and incurring offering costs of approximately $23.6 million, of which approximately
$816,000 was for financing costs - derivative warrant liabilities and approximately $14.5 million was for deferred underwriting commissions
(Note 6).
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the private placement (“Private Placement”) of 7,520,000 warrants (each, a “Private
Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant
to the Sponsor, generating proceeds of approximately $11.3 million (Note 5).
Upon the closing of the Initial Public Offering
and the Private Placement, $414.0 million ($10.00 per Share) of the net proceeds of the sale of the Public Shares in the Initial Public
Offering and of the Private Placement Warrants in the Private Placement were placed in a trust account (“Trust Account”) located
in the United States with Continental Stock Transfer & Trust Company acting as trustee, and will be invested only in U.S. government
treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions
under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as determined by the
Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described
below.
The Company’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 Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial
Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (net of amounts
disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting commissions)
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-business combination company owns or acquires 50% or more of the voting securities of the target or otherwise acquires a controlling
interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940,
as amended (the “Investment Company Act”).
Orion Acquisition Corp
Notes to Unaudited Condensed
Financial Statements
The Company will provide the holders of the Public
Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion
of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means
of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender
offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for
a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.00 per Public Share). The per-share amount
to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the
Company will pay to the underwriters (as discussed in Note 6). These Public Shares are recorded at a redemption value and classified as
temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s
(“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
The Company will proceed with a Business Combination
if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares in an
amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by law and the Company
does not decide to hold a stockholder vote for business or other 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 legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the
proxy rules and not pursuant to the tender offer rules. Additionally, each Public Stockholder may elect to redeem their Public Shares
irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with
a Business Combination, the Initial Stockholders (as defined below) agreed to vote their Founder Shares (as defined below in Note 5) and
any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the Initial Stockholders
agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a
Business Combination.
The 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 the Company’s officers and
directors (the “Initial Stockholders”) agreed not to propose an amendment to the Amended and Restated Certificate of Incorporation
to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete
a Business Combination within the Combination Period (as defined below) or with respect to any other material provisions relating to stockholders’
rights or pre-initial Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem
their Public Shares in conjunction with any such amendment.
If the Company is unable to complete a Business
Combination within 24 months from the closing of the Initial Public Offering, or March 4, 2023 (the “Combination Period”),
the Company will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than
ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay
its taxes (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), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to
the approval of the remaining stockholders and the 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.
Orion Acquisition Corp
Notes to Unaudited Condensed
Financial Statements
The Initial Stockholders agreed to waive their
rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business
Combination within the Combination Period. However, if the Initial Stockholders acquire Public Shares in or after the Initial Public Offering,
they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete
a Business Combination within the Combination Period. The underwriters agreed to waive their rights to the deferred underwriting commission
(see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period
and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption
of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available
for distribution (including Trust Account assets) will be only $10.00. In order to protect the amounts held in the Trust Account, the
Sponsor agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent
registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which
the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination agreement (a “Target”),
reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public
Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions
in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or Target
that executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) not will
it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). 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 (other than the Company’s independent registered public accounting firm), prospective target businesses or other
entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any
kind in or to monies held in the Trust Account.
Liquidity and Capital Resources
As of September 30, 2021, the Company had approximately
$0.8 million in its operating bank account and working capital of approximately $1.0 million, not taking into account tax obligations
of approximately $149,000 that may be paid from income from investments held in the Trust Account.
The Company’s liquidity needs to date have
been satisfied through a contribution of $25,000 from Sponsor to cover for certain expenses and offering costs in exchange for the issuance
of the Founder Shares (as defined in Note 5), the loan of approximately $136,000 from the Sponsor pursuant to the Note (as defined in
Note 5), and the proceeds from the consummation of the Private Placement not held in the Trust Account. The Company fully repaid the Note
on March 8, 2021. In addition, 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, provide the Company Working Capital
Loans (as defined in Note 5). As of September 30, 2021, there were no amounts outstanding under any Working Capital Loan.
Based on the foregoing, management believes that
the Company will have sufficient working capital and borrowing capacity from the Sponsor or an affiliate of the Sponsor, or certain of
the Company’s officers and directors to meet its needs through the earlier of the consummation of a Business Combination or one
year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying
and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying
for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business
Combination.
2. Restatement
of Previously Reported Financial Statements
In preparation of the Company’s unaudited
condensed financial statements for the quarterly period ended September 30, 2021, the Company concluded it should restate its previously
issued financial statements to classify all Class A common stock subject to possible redemption in temporary equity. In accordance with
the SEC and its staff’s guidance on redeemable equity instruments in ASC 480-10-S99, redemption provisions not solely within the
control of the Company, require Class A common stock subject to redemption to be classified outside of permanent equity. The Company had
previously classified a portion of its Class A common stock in permanent equity. Although the Company did not specify a maximum redemption
threshold, its charter currently provides that 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. Previously, the Company did not consider redeemable shares classified as temporary equity as part of
net tangible assets. Effective with these condensed financial statements, the Company revised this interpretation to include temporary
equity in net tangible assets.
In connection with the change in presentation
for the Class A common stock subject to possible redemption, the Company has restated its earnings per share calculation to allocate income
and losses shared pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely
outcome, in which case, both classes of shares participate pro rata in the income and losses of the Company.
Orion Acquisition Corp
Notes to Unaudited Condensed
Financial Statements
In accordance with SEC Staff Accounting Bulletin
No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the corrections and has determined
that the related impact was material to the previously filed financial statements that contained the error, reported in the Company’s
Form 10-Qs for the quarterly periods ended March 31, 2021, and June 30, 2021 (the “Affected Quarterly Periods”). Therefore,
the Company, in consultation with its Audit Committee, concluded that the Affected Quarterly Periods should
be restated to present all Class A common stock subject to possible redemption as temporary equity and to recognize accretion from the
initial book value to redemption value at the time of its Initial Public Offering, and restate earnings per share. As such, the Company
is reporting the restatement to the Affected Quarterly Periods in this quarterly report. The previously presented Affected Quarterly
Periods should no longer be relied upon.
The impact of the restatement on the financial
statements for the Affected Quarterly Periods is presented below.
The table below presents the effect of the financial
statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited condensed balance
sheet as of March 31, 2021:
As of March 31, 2021 (unaudited) | |
As Reported | | |
Adjustment | | |
As Restated | |
Total assets | |
$ | 416,220,588 | | |
| - | | |
$ | 416,220,588 | |
Total liabilities | |
$ | 36,493,393 | | |
| - | | |
$ | 36,493,393 | |
Class A common stock subject to redemption | |
| 374,727,190 | | |
| 39,272,810 | | |
$ | 414,000,000 | |
Preferred stock | |
| - | | |
| - | | |
| - | |
Class A common stock | |
| 393 | | |
| (393 | ) | |
| - | |
Class B common stock | |
| 1,035 | | |
| - | | |
| 1,035 | |
Additional paid-in capital | |
| 2,850,236 | | |
| (2,850,236 | ) | |
| - | |
Retained earnings (accumulated deficit) | |
| 2,148,341 | | |
| (36,422,181 | ) | |
| (34,273,840 | ) |
Total stockholders’ equity (deficit) | |
$ | 5,000,005 | | |
$ | (39,272,810 | ) | |
$ | (34,272,805 | ) |
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders' Equity (Deficit) | |
$ | 416,220,588 | | |
$ | - | | |
$ | 416,220,588 | |
Shares of Class A common stock subject to redemption | |
| 37,472,719 | | |
| 3,927,281 | | |
| 41,400,000 | |
Shares of Class A common stock | |
| 3,927,281 | | |
| (3,927,281 | ) | |
| - | |
The table below presents the effect of the financial
statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited condensed statement
of cash flows for the three months ended March 31, 2021:
Three Months Ended March 31, 2021 (unaudited) | |
As Reported | | |
Adjustment | | |
As Restated | |
Supplemental Disclosure of Noncash Financing Activities: | |
| | |
| | |
| |
Initial value of Class A common stock subject to possible redemption | |
$ | 371,668,010 | | |
$ | (371,668,010 | ) | |
$ | - | |
Change in value of Class A common stock subject to possible redemption | |
$ | 3,059,180 | | |
$ | (3,059,180 | ) | |
$ | - | |
The table below presents the effect of the financial
statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited condensed balance
sheet as of June 30, 2021:
As of June 30, 2021 (unaudited) | |
As Reported | | |
Adjustment | | |
As Restated | |
Total assets | |
$ | 415,970,768 | | |
| - | | |
$ | 415,970,768 | |
Total liabilities | |
$ | 31,695,470 | | |
| - | | |
$ | 31,695,470 | |
Class A common stock subject to redemption | |
| 379,275,290 | | |
| 34,724,710 | | |
$ | 414,000,000 | |
Preferred stock | |
| - | | |
| - | | |
| - | |
Class A common stock | |
| 347 | | |
| (347 | ) | |
| - | |
Class B common stock | |
| 1,035 | | |
| - | | |
| 1,035 | |
Additional paid-in capital | |
| - | | |
| - | | |
| - | |
Retained earnings (accumulated deficit) | |
| 4,998,626 | | |
| (34,724,363 | ) | |
| (29,725,737 | ) |
Total stockholders’ equity (deficit) | |
$ | 5,000,008 | | |
$ | (34,724,710 | ) | |
$ | (29,724,702 | ) |
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders' Equity (Deficit) | |
$ | 415,970,768 | | |
$ | - | | |
$ | 415,970,768 | |
Shares of Class A common stock subject to redemption | |
| 37,927,529 | | |
| 3,472,471 | | |
| 41,400,000 | |
Shares of Class A common stock | |
| 3,472,471 | | |
| (3,472,471 | ) | |
| - | |
Orion Acquisition Corp
Notes to Unaudited
Condensed Financial Statements
The table below presents the effect of the financial
statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited condensed statement
of cash flows for the six months ended June 30, 2021:
Six Months Ended June 30, 2021 (unaudited) | |
As Reported | | |
Adjustment | | |
As Restated | |
Supplemental Disclosure of Noncash Financing Activities: | |
| | |
| | |
| |
Initial value of Class A common stock subject to possible redemption | |
$ | 371,668,010 | | |
$ | (371,668,010 | ) | |
$ | - | |
Change in value of Class A common stock subject to possible redemption | |
$ | 7,607,280 | | |
$ | (7,607,280 | ) | |
$ | - | |
The impact to the reported amounts of weighted
average shares outstanding and basic and diluted earnings per common share is presented below for the Affected Quarterly Periods:
| |
Earnings Per Share | |
| |
As Reported | | |
Adjustment | | |
As Adjusted | |
Three months ended March 31, 2021 (unaudited) | |
| | |
| | |
| |
Net income | |
$ | 2,159,259 | | |
$ | - | | |
$ | 2,159,259 | |
Weighted average shares outstanding - Class A common stock | |
| 41,400,000 | | |
| (28,520,000 | ) | |
| 12,880,000 | |
Basic earnings per share - Class A common stock | |
$ | - | | |
$ | 0.10 | | |
$ | 0.10 | |
Diluted earnings per share - Class A common stock | |
$ | - | | |
$ | 0.09 | | |
$ | 0.09 | |
Weighted average shares outstanding, basic - Class B common stock | |
| 9,420,000 | | |
| - | | |
| 9,420,000 | |
Weighted average shares outstanding, diluted- Class B common stock | |
| 9,420,000 | | |
| 930,000 | | |
| 10,350,000 | |
Basic earnings per share - Class B common stock | |
$ | 0.23 | | |
$ | (0.13 | ) | |
$ | 0.10 | |
Diluted earnings per share - Class B common stock | |
$ | 0.23 | | |
$ | (0.14 | ) | |
$ | 0.09 | |
Three months ended June 30, 2021 (unaudited) | |
| | | |
| | | |
| | |
Net income | |
$ | 4,548,103 | | |
$ | - | | |
$ | 4,548,103 | |
Weighted average shares outstanding - Class A common stock | |
| 41,400,000 | | |
| - | | |
| 41,400,000 | |
Basic and diluted earnings per share - Class A common stock | |
$ | - | | |
$ | 0.09 | | |
$ | 0.09 | |
Weighted average shares outstanding - Class B common stock | |
| 10,350,000 | | |
| - | | |
| 10,350,000 | |
Basic and diluted earnings per share - Class B common stock | |
$ | 0.44 | | |
$ | (0.35 | ) | |
$ | 0.09 | |
Six months ended June 30, 2021 (unaudited) | |
| | | |
| | | |
| | |
Net income | |
$ | 6,707,362 | | |
$ | - | | |
$ | 6,707,362 | |
Weighted average shares outstanding - Class A common stock | |
| 41,400,000 | | |
| (14,181,215 | ) | |
| 27,218,785 | |
Basic and diluted earnings per share - Class A common stock | |
$ | - | | |
$ | 0.18 | | |
$ | 0.18 | |
Weighted average shares outstanding, basic - Class B common stock | |
| 9,887,569 | | |
| - | | |
| 9,887,569 | |
Weighted average shares outstanding, diluted- Class B common stock | |
| 9,887,569 | | |
| 462,431 | | |
| 10,350,000 | |
Basic and diluted earnings per share - Class B common stock | |
$ | 0.68 | | |
$ | (0.50 | ) | |
$ | 0.18 | |
3. Basis of Presentation and Summary of Significant
Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial
statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”)
for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation
have been included. Operating results for the period from three and nine months ended September 30, 2021 are not necessarily indicative
of the results that may be expected for the period ending December 31, 2021 or any future period.
The accompanying unaudited condensed financial
statements should be read in conjunction with the audited financial statements and notes thereto included in the final prospectus filed
by the Company with the SEC on March 3, 2021.
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.
Orion Acquisition Corp
Notes to Unaudited
Condensed Financial Statements
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging
growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth
companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period,
which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company,
as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company’s unaudited condensed financial statements with another public company that is neither an
emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible
because of the potential differences in accounting standards used.
Use of Estimates
The preparation of unaudited condensed financial
statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial
statements.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could
change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those
estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company has no cash equivalents held outside
the Trust Account as of September 30, 2021 and December 31, 2020.
Investments Held in Trust Account
The Company’s portfolio of investments is
comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity
of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable
fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government
securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised
of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented
on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these
securities is included in gain on investments held in the Trust Account in the accompanying unaudited condensed statements of operations.
The estimated fair values of investments held in the Trust Account are determined using available market information.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal
Depository Insurance Corporation coverage limit of $250,000 and investments held in Trust Account. As of September 30, 2021, the Company
has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements,” equal or approximate
the carrying amounts represented in the condensed balance sheets.
Fair Value Measurements
Fair value is defined as the price that would
be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement
date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
Orion Acquisition Corp
Notes to Unaudited
Condensed Financial Statements
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 consist of:
| ● | Level 1, defined as observable
inputs such as quoted prices for identical instruments in active markets; |
| ● | Level 2, defined as inputs
other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments
in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3, defined as unobservable
inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived
from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
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.
Derivative Warrant Liabilities
The Company does not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its 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 FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative
instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting
period.
The warrants issued in connection with the Initial
Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance
with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjust the instruments to fair
value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change
in fair value is recognized in the Company’s unaudited condensed statements of operations. The fair value of warrants issued by
the Company in connection with the Initial Public Offering and Private Placement have initially been estimated using Monte-Carlo simulations
at each measurement date. The Private Placement warrants continue to be estimated using Monte Carlo simulations. As of September 30, 2021,
the fair value of the Public Warrants was estimated at their listed public trading price. The determination of the fair value of the warrant
liabilities may be subject to change as more current information becomes available and accordingly the actual results could differ significantly.
Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the
use of current assets or require the creation of current liabilities.
Offering Costs Associated with the Initial
Public Offering
Offering costs consisted of legal, accounting,
underwriting fees and other costs incurred that were directly related to the Initial Public Offering. Offering costs are allocated to
the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds
received. Offering costs associated with warrant liabilities are expensed as incurred and presented as non-operating expenses in the unaudited
condensed statements of operations. Offering costs associated with the Public Shares were charged against the carrying value of the Class
A common stock subject to possible redemption upon the completion of the Initial Public Offering. Of the total offering costs of the Initial
Public Offering, approximately $816,000 is included in financing costs - derivative warrant liabilities in the unaudited condensed statements
of operations and approximately $22.7 million is included in stockholders’ equity.
Orion Acquisition Corp
Notes to Unaudited
Condensed Financial Statements
Class A Common Stock Subject to Possible Redemption
Class A common stock subject to mandatory redemption
are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including shares
of Class A 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) are classified as temporary equity. At all other times,
Class A common stock are classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption
rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly,
as of September 30, 2021, and December 31, 2020, 41,400,000 and 0 shares of Class A common stock subject to possible redemption at the
redemption amount were presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s
condensed balance sheets, respectively.
The Company recognizes changes in redemption
value immediately as they occur and adjusts the carrying value of the Class A common stock subject to possible redemption to equal
the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also
the redemption date for the security. Effective with the closing of the Initial Public Offering, the Company recognized the
accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent
available) and accumulated deficit.
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 statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of September 30, 2021, the Company
had deferred tax assets of approximately $165,000 with a full valuation allowance recorded against it. Deferred tax assets were deemed
immaterial as of December 31, 2020.
FASB 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 September 30, 2021 or December 31, 2020. 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 September 30, 2021 or 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.
Net Income (Loss) Per Share of Common
Stock
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as
Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income (loss)
per common share is calculated by dividing the net income (loss) by the weighted average shares of common stock outstanding for the respective
period.
The calculation of diluted net income (loss) per
common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering and the Private Placement
to purchase an aggregate of 17,870,000 shares of common stock in the calculation of diluted income (loss) per share, because their exercise
is contingent upon future events. As a result, diluted
net income (loss) per share is the same as basic net income (loss) per share for the three and nine months ended September 30, 2021. Accretion
associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
Orion Acquisition Corp
Notes to Unaudited
Condensed Financial Statements
The following table reflects presents a reconciliation
of the numerator and denominator used to compute basic and diluted net income (loss) per share for each class of common stock:
| |
For
the Three Months Ended September 30, 2021 | | |
For
the Nine Months Ended September 30, 2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income per share of common stock: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income - basic | |
$ | 3,753,930 | | |
$ | 938,482 | | |
$ | 8,676,433 | | |
$ | 2,723,341 | |
Allocation of net income - diluted | |
$ | 3,753,930 | | |
$ | 938,482 | | |
$ | 8,613,616 | | |
$ | 2,786,158 | |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic weighted average common shares outstanding | |
| 41,400,000 | | |
| 10,350,000 | | |
| 31,997,802 | | |
| 10,043,407 | |
Diluted weighted average common shares outstanding | |
| 41,400,000 | | |
| 10,350,000 | | |
| 31,997,802 | | |
| 10,350,000 | |
| |
| | | |
| | | |
| | | |
| | |
Basic net income per share of common stock | |
$ | 0.09 | | |
$ | 0.09 | | |
$ | 0.27 | | |
$ | 0.27 | |
Diluted net income per share of common stock | |
$ | 0.09 | | |
$ | 0.09 | | |
$ | 0.27 | | |
$ | 0.27 | |
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2020-06, Debt-Debt with Conversion and Other Options
(Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation
models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for
the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. The Company adopted
ASU 2020-06 on January 1, 2021, with no material impact upon adoption.
The Company does not believe that any recently
issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the accompanying unaudited
condensed financial statements.
4. Initial Public Offering
On March 4, 2021, the Company consummated its
Initial Public Offering of 41,400,000 Units, including 5,400,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of
$414.0 million, and incurring offering costs of approximately $23.5 million, of which approximately $14.5 million was for deferred underwriting
commissions.
Each Unit consists of one share of Class A common
stock and one-quarter of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder
to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7).
5. Related Party Transactions
Founder Shares
On December 9, 2020, the Sponsor paid an aggregate
of $25,000 to cover certain expenses and offering costs on behalf of the Company in exchange for issuance of 8,625,000 shares of the Company’s
Class B common stock, par value $0.0001 per share (the “Founder Shares”). On March 1, 2021, the Company effected a share capitalization
of 1,725,000 shares of Class B common stock, resulting in an aggregate of 10,350,000 shares of Class B common stock issued and outstanding.
The Initial Stockholders agreed, subject to limited
exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion
of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the closing price of the Class A common
stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like)
for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the
date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results
in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Orion Acquisition Corp
Notes to Unaudited
Condensed Financial Statements
Private Placement Warrants
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the Private Placement of 7,520,000 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant to the Sponsor, generating proceeds of approximately $11.3 million.
Each whole Private Placement Warrant is exercisable
for one whole share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement
Warrants to the Sponsor was added to the 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 Private Placement Warrants will expire worthless. The Private Placement
Warrants will be non-redeemable for cash and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted
transferees.
The Sponsor and the Company’s officers and
directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days
after the completion of the initial Business Combination.
Related Party Loans
On December 8, 2020, the Sponsor agreed to loan
the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the
“Note”). This loan was non-interest bearing and payable upon the completion of the Initial Public Offering. As of March 4,
2021, the Company had borrowed approximately $136,000 under the Note. On March 8, 2021, the Company repaid the Note in full which resulted
in the Note no longer being available.
In addition, 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 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 or, at the lenders’ discretion, up to $2.25 million
of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant.
The warrants would be identical to the Private Placement Warrants. As of September 30, 2021 and December 31, 2020, there were no borrowings
under the Working Capital Loans.
Administrative Services Agreement
Commencing on the effective date of the prospectus
through the earlier of consummation of the initial Business Combination and the Company’s liquidation, the Company agreed to pay
the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support. The Company incurred
approximately $30,000 and approximately $70,000 in expenses in connection with such services in the three and nine months ended September
30, 2021, respectively as reflected in the accompanying unaudited condensed statements of operations. As of September 30, 2021, approximately
$70,000 of such expenses are included as accrued expenses on the condensed balance sheet.
The Company’s officers or directors will
be reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying
potential target businesses and performing due diligence on suitable Business Combinations. The Company’s audit committee will review
on a quarterly basis all payments that were made to the Sponsor, officers or directors, or the Company’s or their affiliates. Any
such payments prior to an initial Business Combination will be made using funds held outside the Trust Account. Other than quarterly audit
committee review of such payments, the Company does not expect to have any additional controls in place governing the reimbursement payments
to the Company’s directors and officers for their out-of-pocket expenses incurred in connection with identifying and consummating
an initial Business Combination.
Orion Acquisition Corp
Notes to Unaudited
Condensed Financial Statements
6. Commitments and Contingencies
Registration Rights
The Initial Stockholders and holders of the Private
Placement Warrants were entitled to registration rights pursuant to a registration rights agreement. The Initial Stockholders and holders
of the Private Placement Warrants will be entitled to make up to three demands, excluding short form registration demands, that the Company
register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration
rights to include their securities in other registration statements filed by the Company. The Company will bear the expenses incurred
in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters were entitled to an underwriting
discount of $0.20 per Unit, or approximately $8.3 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition,
the underwriters will be entitled to a deferred fee of $0.35 per Unit, or approximately $14.5 million in the aggregate. The deferred fee
will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business
Combination, subject to the terms of the underwriting agreement.
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect
on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily
determinable as of the date of these unaudited condensed financial statements. The unaudited condensed financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
7. Derivative Warrant Liabilities
There were no warrants outstanding as of December
31, 2020. As of September 30, 2021, there were 10,350,000 Public Warrants and 7,520,000 Private Placement Warrants outstanding.
Public Warrants may only be exercised for a whole
number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade.
The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months
from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under
the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus
relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless
exercise is exempt from registration under the Securities Act). The Company agreed that as soon as practicable, but in no event later
than 20 business days after the closing of the initial Business Combination, it will use its commercially reasonable efforts to file with
the SEC and have an effective registration statement covering the shares of the Class A common stock issuable upon exercise of the warrants
and to maintain a current prospectus relating to those shares of the Class A common stock until the warrants expire or are redeemed. If
a registration statement covering the shares of the Class A common stock issuable upon exercise of the warrants is not effective by the
60th business day after the closing of the initial Business Combination, warrant holders may, until such time as there is an
effective registration statement and during any period when the Company will have failed to maintain an effective registration statement,
exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption.
Orion Acquisition Corp
Notes to Unaudited
Condensed Financial Statements
The warrants have an exercise price of $11.50
per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption
or liquidation. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital
raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less
than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the board
of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held
by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross
proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of
the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the
volume weighted average trading price of the shares of Class A common stock during the 20 trading day period starting on the trading day
prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below
$9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market
Value and the Newly Issued Price, the $18.00 per share redemption trigger price described under “Redemption of warrants when the
price per share of Class A common stock equals or exceeds $18.00” and “Redemption of warrants when the price per shares of
Class A common stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market
Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described under “Redemption of warrants when
the price per share of Class A common stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the
higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants are identical to
the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private
Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject
to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the Sponsor
or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees,
the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
Redemption of warrants when the price per share
of Class A common stock equals or exceeds $18.00:
Once the warrants become exercisable, the Company
may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):
| ● | in whole and not in part; |
| ● | at a price of $0.01 per warrant; |
| ● | upon a minimum of 30 days’
prior written notice of redemption; and |
| ● | if, and only if, the last reported
sales price of the Class A common stock equals or exceeds $18.00 per share (as adjusted) for any 20 trading days within the 30-trading
day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. |
The Company will not redeem the warrants as described
above unless an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise
of the warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day
redemption period. Any such exercise would not be on a “cashless” basis and would require the exercising holder to pay the
exercise price for each warrant being exercised.
Redemption of warrants when the price per share
of Class A common stock equals or exceeds $10.00:
Commencing ninety days after the warrants become
exercisable, the Company may redeem the outstanding warrants:
|
● |
in whole and not in part; |
|
● |
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption, provided that holders will be able to exercise their warrants, but only on a cashless basis, prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A common stock; |
Orion Acquisition Corp
Notes to Unaudited
Condensed Financial Statements
|
● |
if, and only if, the closing price of Class A common stock equals or exceeds $10.00 per share (as adjusted) for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and |
| ● | if the closing price of the
Class A common stock for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which
the Company sends the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted), the Private Placement
Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above. |
The “fair market value” of Class A
common stock for the above purpose shall mean the volume-weighted average price of Class A common stock during the 10 trading days ending
on the third trading day immediately following the date on which the notice of redemption is sent to the holders of warrants. In no event
will the warrants be exercisable in connection with this redemption feature for more than 0.361 shares of Class A common stock per warrant
(subject to adjustment).
If the Company is unable to complete a Business
Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not
receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held
outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
8. Class A Common Stock Subject to Possible
Redemption
The Company’s Class A common stock feature
certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events.
The Company is authorized to issue 500,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s
Class A common stock are entitled to one vote for each share. As of September 30, 2021, there were 41,400,000 shares of Class A common
stock outstanding, which were all subject to possible redemption and are classified outside of permanent equity in the condensed balance
sheet.
The Class A common stock subject to possible redemption
reflected on the condensed balance sheet is reconciled on the following table:
Gross proceeds | |
$ | 414,000,000 | |
Less: | |
| | |
Amount allocated to Public Warrants | |
| (13,980,000 | ) |
Class A common stock issuance costs | |
| (22,739,396 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 36,719,396 | |
Class A common stock subject to possible redemption | |
$ | 414,000,000 | |
9. Stockholders’ Deficit
Preferred stock - The Company is
authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, 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 September 30, 2021 and December
31, 2020, there were no shares of preferred stock issued or outstanding.
Class A Common Stock - The Company
is authorized to issue 500,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of December 31, 2020, there
were no shares of Class A common stock issued or outstanding. As of September 30, 2021, there were 41,400,000 shares of Class A common
stock outstanding, all of which were subject to possible redemption and are classified as temporary equity in the accompanying condensed
balance sheets (see Note 8).
Orion Acquisition Corp
Notes to Unaudited
Condensed Financial Statements
Class B Common Stock - The Company
is authorized to issue 50,000,000 shares of Class B common stock with a par value of $0.0001 per share. As of September 30, 2021 and December
31, 2020, there were 10,350,000 shares of Class B common stock issued and outstanding.
Only holders of the Class B common stock will
have the right to vote on the election of directors prior to the Business Combination. Holders of Class A common stock and holders of
Class B common stock will vote together as a single class on all other matters submitted to a vote of the stockholders except as required
by law.
The Class B common stock will automatically convert
into Class A common stock at the time of the initial Business Combination on a one-for-one basis, subject to adjustment for stock splits,
stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that
additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in
the Initial Public Offering and related to the closing of the initial Business Combination, the ratio at which shares of Class B common
stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of
Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares
of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted
basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering
plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination
(excluding any shares or equity-linked securities issued, or to be issued, to any seller in the business Combination). Holders of Class
B common stock may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock,
subject to adjustment as provided above, at any time.
10. Fair Value Measurements
The following table presents information about
the Company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2021 and indicates
the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
| |
Quoted
Prices in | | |
Significant
Other | | |
Significant
Other | |
| |
Active
Markets | | |
Observable
Inputs | | |
Unobservable
Inputs | |
Description | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
Assets | |
| | |
| | |
| |
Assets held in Trust Account: | |
| | |
| | |
| |
U.S. Treasury securities | |
$ | 413,978,905 | | |
$ | - | | |
$ | - | |
Cash and cash equivalents - mutual funds | |
| 35,011 | | |
| - | | |
| - | |
| |
$ | 414,013,916 | | |
$ | - | | |
$ | - | |
Liabilities | |
| | | |
| | | |
| | |
Derivative warrant liabilities - Public Warrants | |
$ | 6,624,000 | | |
$ | - | | |
$ | - | |
Derivative warrant liabilities - Private Warrants | |
$ | - | | |
$ | - | | |
$ | 4,812,800 | |
As of December 31, 2020, there were no assets
or liabilities that were measured at fair value on a recurring basis.
Transfers to/from Levels 1, 2, and 3 are recognized
at the end of the reporting period. The estimated fair value of Public Warrants was transferred from a Level 3 measurement to a Level
1 measurement as the Public Warrants were separately traded beginning in April 2021. There were no other transfers to/from Levels 1, 2,
and 3 during the three and nine months ended September 30, 2021.
Level 1 assets include investments in money market
funds and U.S. Treasury securities. The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers
or brokers, and other similar sources to determine the fair value of its investments. Level 3 instruments are comprised of derivative
warrant liabilities measured at fair value using a Monte Carlo simulation model.
Orion Acquisition Corp
Notes to Unaudited
Condensed Financial Statements (As Restated)
The fair value of warrants issued by the Company
in connection with the Initial Public Offering and Private Placement have initially been estimated using Monte-Carlo simulations at each
measurement date. The Private Placement Warrants continue to be estimated using Monte Carlo simulations. As of September 30, 2021, the
fair value of the Public Warrants was estimated at their listed public trading price. For the three and nine months ended September 30,
2021, the Company recognized a gain in the unaudited condensed statements of operations resulting from a decrease in the fair value of
derivative warrant liabilities of $5.5 million and $13.5 million, respectively, presented as change in fair value of derivative warrant
liabilities on the accompanying unaudited condensed statements of operations.
The estimated fair value of the Public and Private
Placement Warrants, prior to the Public Warrants being traded in an active market, was determined using Level 3 inputs. Inherent in a
Monte Carlo simulation 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 warrants based on implied volatility from the Company’s traded warrants
and from historical volatility of select peer company’s common stock 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 remaining at zero.
The following table provides quantitative information
regarding Level 3 fair value measurements inputs as their measurement dates:
| |
As of September 30, 2021 | |
Volatility | |
| 11.0 | % |
Stock price | |
$ | 9.70 | |
Expected life of the options to convert | |
| 6.00 | |
Risk-free rate | |
| 1.14 | % |
Dividend yield | |
| 0.00 | % |
The change in the fair value of the derivative
warrant liabilities measured with Level 3 inputs for the three and nine months ended September 30, 2021 is summarized as follows:
Derivative warrant liabilities at January 1, 2021 | |
$ | - | |
Issuance of Public and Private Warrants - Level 3 | |
| 24,986,750 | |
Change in fair value of derivative warrant liabilities - Level 3 | |
| (3,141,420 | ) |
Derivative warrant liabilities at March 31, 2021 - Level 3 | |
$ | 21,845,330 | |
Transfer of Public Warrants to Level 1 | |
$ | (12,198,670 | ) |
Change in fair value of derivative warrant liabilities - Level 3 | |
| (2,502,660 | ) |
Derivative warrant liabilities at June 30, 2021 - Level 3 | |
$ | 7,144,000 | |
Change in fair value of derivative warrant liabilities - Level 3 | |
| (2,331,200 | ) |
Derivative warrant liabilities at September 30, 2021 - Level 3 | |
$ | 4,812,800 | |
11. Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the unaudited condensed balance sheet date up to the date that the unaudited condensed financial statements were issued.
Based upon this review, other than the restatement in Note 2, the Company did not identify any subsequent events that would have required
adjustment or disclosure in the unaudited condensed financial statements.