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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM
10-Q/A
(Amendment No. 1)
 
 
 
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
 
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
                    
to
                    
 
 
PERIPHAS CAPITAL PARTNERING CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
001-39784
 
85-3046972
(State or other jurisdiction of

incorporation or organization)

 
(Commission
File 
Number)
 
(I.R.S. Employer
Identification 
Number)
 
667 Madison Avenue, 15th Floor

New York,
 New York

 

10065
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (646)
876-6351
Not Applicable
(Former name or former address, if changed since last report)
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class:
 
Trading
Symbol:
 
Name of Each Exchange
on Which Registered:
CAPS
TM
, each consisting of one share of Class A common stock and
one-fourth
of one redeemable warrant
 
PCPC.U
 
The New York Stock Exchange
Class A common stock, par value $0.0001 per share
 
PCPC
 
The New York Stock Exchange
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $28.75 per share
 
PCPC WS
 
The New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒
Indicate by check mark if the registration is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.     Yes  ☒    No  ☐
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    
Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files).    
Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
Large accelerated filer   ☐    Accelerated filer   ☐
       
Non-accelerated
filer 		  ☒    Smaller reporting company   ☒
       
         Emerging growth company   ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act.  
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange
Act).     
Yes  ☒    No  ☐
As of December 28, 2021,
16,805,600 shares of Class
 
A Common Stock, par value $0.0001, 120,000 shares of Class
 
B Common Stock, par value $0.0001 and 828,000 shares of Class
 
F Common Stock, par value $0.0001, issued and outstanding.
 
 
 
EXPLANATORY NOTE
References throughout this Amendment No. 1 to the Quarterly Report on Form
10-Q
to “we,” “us,” the “Company” or “our company” are to Periphas Capital Partnering Corporation, unless the context otherwise indicates.
This Amendment No. 1 (“Amendment No. 1”) to the Quarterly Report on Form
10-Q/A
amends the Quarterly Report on Form
10-Q
of Periphas Capital Partnering Corporation (the “Company”) as of and for the period ended September 30, 2021, as filed with the Securities and Exchange Commission (“SEC”) on November 12, 2021.
On November 12, 2021, the Company filed its Form
10-Q
for the quarterly period ending September 30, 2021 (the “Q3 Form
10-Q”),
which included a section within Note 1, Revision of Previously Issued Financial Statements, (“Note 1”) that describes a revision to the Company’s classification of its Class A common stock subject to possible redemption (the “Public Shares”) issued as part of the units sold in the Company’s initial public offering (“IPO”) on December 14, 2020. As described in Note 1, historically, a portion of the Public Shares were classified as permanent equity to maintain stockholders’ equity greater than $5 million on the basis that the Company may not redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as described in the Company’s amended and restated certificate of incorporation. Pursuant to the
re-evaluation,
the company’s management revised its interpretation to include temporary equity in net tangible assets. As a result, management reclassified all Class A common stock subject to possible redemption as temporary equity. This resulted in an adjustment to the initial carrying value of the Class A common stock subject to possible redemption with the offset recorded to additional
paid-in
capital (to the extent available), accumulated deficit and Class A common stock.
In connection with the change in presentation for the Class A common stock subject to possible redemption, the Company restated its earnings per share calculation to allocate income and losses shared pro rata between all classes of shares. This presentation differs from the previously presented method of earnings per share, which was similar to the
two-class
method.
The Company had determined the changes were not qualitatively material to the Company’s previously issued financial statements and therefore did not restate its financial statements. Instead, the Company revised its previous financial statements in Note 1 to its Q3 Form
10-Q.
Although the qualitative factors that management assessed tended to support a conclusion that the misstatements were not material, in retrospect, these factors were not strong enough to overcome the significant quantitative errors in the prior financial statements. The qualitative and quantitative factors support a conclusion that the misstatements are material. Management concluded that the misstatement was of such magnitude that it is probable that the judgment of a reasonable person relying upon the financial statements would have been influenced by the inclusion or correction of the foregoing items. As such, upon further consideration of the change, the Company determined the change in classification of the Class A common stock is material quantitatively and it should restate its previously issued financial statements.
Therefore, on December 1, 2021, the Company’s management and the audit committee of the Company’s board of directors (the “Audit Committee”) concluded that the Company’s previously issued (i) audited balance sheet as of December 14, 2020 (the
“Post-IPO
Balance Sheet”), as previously revised in the Company’s Annual Report on Form
10-K,
as amended, for the fiscal year ended December 31, 2020, filed with the SEC on May 25, 2021 (“2020 Form
10-K/A
No. 1”), (ii) audited financial statements as of December 31, 2020 and for the period from September 11, 2020 (inception) through December 31, 2020 included in the 2020 Form
10-K/A
No. 1, (iii) unaudited interim financial statements included in the Company’s Quarterly Report on Form
10-Q
for the quarterly period ended March 31, 2021, filed with the SEC on May 28, 2021, (iv) unaudited interim financial statements included in the Company’s Quarterly Report on Form
10-Q
for the quarterly period ended June 30, 2021, filed with the SEC on August 13, 2021 and (v) Note 1 to the unaudited interim financial statements and Item 4 of Part I included in the Company’s Quarterly Report on Form
10-Q
for the quarterly period ended September 30, 2021, filed with the SEC on November 12, 2021 (collectively, the “Affected Periods”), should no longer be relied upon. As such, the Company will restate its financial statements for the Affected Periods in a Form
10-K/A,
Amendment No. 2, for the
Post-IPO
Balance Sheet and the Company’s audited financial statements included in the 2020 Form
10-K/A
No. 1, and will restate the unaudited condensed financial statements for the periods ended March 31, 2021, June 30, 2021 and September 30, 2021 in this Quarterly Report on Form
10-Q/A.
None of the above changes impacted the Company’s cash position and cash held in the trust account established in connection with the IPO.
After
re-evaluation,
the Company’s management has concluded that in light of the errors described above, a material weakness existed in the Company’s internal control over financial reporting related to the accounting for complex financial instruments during the Affected Periods and that the Company’s disclosure controls and procedures were not effective. The Company’s remediation plan with respect to such material weakness is described in more detail in Item 4 of Part I in this Quarterly Report on
Form 10-Q/A.
 
  
 
  
Page
 
PART I. FINANCIAL INFORMATION
  
     
     
Item 1.
  
  
 
1
 
 
  
  
 
1
 
 
  
  
 
2
 
 
  
  
 
3
 
 
  
  
 
4
 
 
  
  
 
5
 
Item 2.
  
  
 
20
 
Item 3.
  
  
 
23
 
Item 4.
  
  
 
23
 
   
PART II. OTHER INFORMATION
  
     
Item 1.
  
  
 
25
 
Item 1A.
  
  
 
25
 
Item 2.
  
  
 
25
 
Item 3.
  
  
 
25
 
Item 4.
  
  
 
25
 
Item 5.
  
  
 
25
 
Item 6.
  
  
 
25
 
   
  
 
26
 
 
PART I. FINANCIAL INFORMATION
 
Item 1.
Condensed Financial Statements
PERIPHAS CAPITAL PARTNERING CORPORATION
CONDENSED BALANCE SHEETS
 
    
September 30,
2021
   
December 31,
2020
 
    
(unaudited)
       
Assets:
                
Current assets:
                
Cash
   $ 561,945     $ 1,336,674  
Prepaid expenses
     260,089       412,626  
    
 
 
   
 
 
 
Total current assets
     822,034       1,749,300  
Investments held in Trust Account
     414,029,696       414,001,166  
    
 
 
   
 
 
 
Total Assets
  
$
414,851,730
 
 
$
415,750,466
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders’ Deficit:
                
Current liabilities:
                
Accounts payable
   $ 1,837     $ 76,800  
Accrued expenses
     55,000       186,500  
Franchise tax payable
     141,050       11,625  
    
 
 
   
 
 
 
Total current liabilities
     197,887       274,925  
Derivative warrant liabilities
     6,366,660       16,481,150  
    
 
 
   
 
 
 
Total Liabilities
     6,564,547       16,756,075  
Commitments and Contingencies
                
Class A common stock subject to possible redemption, $0.0001 par value; 16,560,000 shares at $25.00 per share as of September 30, 2021 and December 31, 2020
     414,000,000       414,000,000  
Stockholders’ Deficit:
                
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
     —         —    
Class A common stock, $0.0001 par value; 380,000,000 shares authorized; 245,600 shares issued and outstanding as of September 30, 2021 and December 31, 2020
     25       25  
Class B common stock, $0.0001 par value; 1,000,000 shares authorized; 120,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020
     12       12  
Class F common stock, $0.0001 par value; 50,000,000 shares authorized; 828,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020
     83       83  
Additional
paid-in
capital
     —         —    
Accumulated deficit
     (5,712,937 )      (15,005,729 ) 
    
 
 
   
 
 
 
Total stockholders’ deficit
     (5,712,817 )      (15,005,609 ) 
    
 
 
   
 
 
 
Total Liabilities and Stockholders’ Deficit
  
$
414,851,730
 
 
$
415,750,466
 
    
 
 
   
 
 
 
The accompanying notes are an integral part of these condensed financial statements.
 
1
PERIPHAS CAPITAL PARTNERING CORPORATION
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
 
    
For the Three
Months Ended
September 30,
2021
   
For the Nine
Months
Ended
September 30,
2021
   
For the
Period from
September 11,
2020
(Inception)
Through
September 30,
2020
 
General and administrative expenses
   $ 140,054     $ 519,203  
 
$ 5,000
 
General and administrative expenses - related party
     60,000       183,030  
 
 
—  
 
Franchise tax expense
     49,863       147,995  
 
 
—  
 
    
 
 
   
 
 
   
 
 
 
Total operating expenses
     (249,917 )      (850,228 ) 
 
 
(5,000 ) 
Other income
                
 
 
 
 
Change in fair value of derivative warrant liabilities
     2,668,190       10,114,490  
 
 
—  
 
Gain on investments held in Trust Account
     16,016       28,530  
 
 
—  
 
    
 
 
   
 
 
   
 
 
 
Net income (loss)
   $ 2,434,289     $ 9,292,792  
 
$ (5,000 ) 
    
 
 
   
 
 
   
 
 
 
Weighted average shares outstanding of Class A common stock, basic and diluted
     16,805,600       16,805,600  
 
 
—  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted net income per share, Class A common stock
   $ 0.14     $ 0.52  
 
$ —  
 
    
 
 
   
 
 
   
 
 
 
Weighted average shares outstanding of Class B common stock, basic and diluted
     120,000       120,000  
 
 
120,000
 
    
 
 
   
 
 
   
 
 
 
Basic and diluted net income (loss) per share, Class B common stock
   $ 0.14     $ 0.52  
 
$ (0.01 ) 
    
 
 
   
 
 
   
 
 
 
Weighted average shares outstanding of Class F common stock, basic and diluted
     828,000       828,000  
 
 
828,000
 
    
 
 
   
 
 
   
 
 
 
Basic and diluted net income (loss) per share, Class F common stock
   $ 0.14     $ 0.52  
 
$ (0.01 ) 
    
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited condensed financial statements.
 
2
PERIPHAS CAPITAL PARTNERING CORPORATION
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
For The Three and Nine Months Ended September 30, 2021
 
 
  
Common Stock
 
  
 
 
  
 
 
 
 
 
 
  
Class A
 
  
Class B
 
  
Class F
 
  
 
 
  
 
 
 
Total

Stockholders’

Deficit
 
 
  
Shares
 
  
Amount
 
  
Shares
 
  
Amount
 
  
Shares
 
  
Amount
 
  
Additional Paid-
In Capital
 
  
Accumulated
Deficit
 
Balance - December 31, 2020
 
 
245,600
 
 
$
25
 
 
 
120,000
 
 
$
12
 
 
 
828,000
 
 
$
83
 
 
$
—  
 
 
$
(15,005,729
) 
 
$
(15,005,609
) 
Net incom
e
    —         —         —         —         —         —         —         7,167,069       7,167,069  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance - March 31, 2021
(Unaudited),
as restated, see Note 1
 
 
245,600
 
 
 
25
 
 
 
120,000
 
 
 
12
 
 
 
828,000
 
 
 
83
 
 
 
—  
 
 
 
(7,838,660
) 
 
 
(7,838,540
) 
Net loss
    —         —         —         —         —         —         —         (308,566 )      (308,566 ) 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance - June 30, 2021
(Unaudited),
as restated, see Note 1
 
 
245,600
 
 
 
25
 
 
 
120,000
 
 
 
12
 
 
 
828,000
 
 
 
83
 
 
 
—  
 
 
 
(8,147,226
) 
 
 
(8,147,106
) 
Net income
    —         —         —         —         —         —         —         2,434,289       2,434,289  
Balance - September 30, 2021 (Unaudited)
 
 
245,600
 
 
$
25
 
 
 
120,000
 
 
$
12
 
 
 
828,000
 
 
$
83
 
 
$
—  
 
 
$
(5,712,937
) 
 
$
(5,712,817
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
For The Period From September 11, 2020 (Inception) Through September 30, 2020
 
 
  
Common Stock
 
  
 
 
  
 
 
 
 
 
 
  
Class A
 
  
Class B
 
  
Class F
 
  
 
 
  
 
 
 
Total

Stockholders’
Deficit
 
 
  
Shares
 
  
Amount
 
  
Shares
 
  
Amount
 
  
Shares
 
  
Amount
 
  
Additional Paid-
In Capital
 
  
Accumulated
Deficit
 
Balance - September 11, 2020 (inception)
 
 
—  
 
 
$
—  
 
 
 
—  
 
 
$
—  
 
 
 
—  
 
 
$
—  
 
 
$
—  
 
 
$
—  
 
 
$
—  
 
Issuance of Class B common stock to
Sponsor
    —         —         120,000       12       —         —         18,738       —         18,750  
Issuance of Class F common stock to
Sponsor
    —         —         —         —         690,000       69       6,181       —         6,250  
Net income
    —         —         —         —         —         —         —         (5,000 )      (5,000 ) 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance - September 30, 2020 (unaudited)
 
 
—
 
 
$
—
 
 
 
120,000
 
 
$
12
 
 
 
690,000
 
 
$
69
 
 
$
24,919
 
 
$
(5,000
) 
 
$
20,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these unaudited condensed financial statements.
 
3
PERIPHAS CAPITAL PARTNERING CORPORATION
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
 
    
For the Nine
Months Ended

September 30,
2021
   
For the 
Period From
September 11, 2020

(Inception) Through
September 30, 2020
 
Cash Flows from Operating Activities:
                
Net income (loss)
   $ 9,292,792     $ (5,000 ) 
Adjustments to reconcile net income (loss) to net cash used in operating activities:
                
Change in fair value of derivative warrant liabilities
     (10,114,490 )         
Gain on investments held in Trust Account
     (28,530 )         
Changes in operating assets and liabilities:
                
Prepaid expenses
     152,537          
Accounts payable
     (74,963 )         
Accrued expenses
     (131,500 )     
 
5,000
 
Franchise tax payable
     129,425          
    
 
 
   
 
 
 
Net cash used in operating activities
     (774,729 )      —    
    
 
 
   
 
 
 
Net change in cash
     (774,729 )      —    
Cash - beginning of the period
     1,336,674       —    
    
 
 
   
 
 
 
Cash - end of the period
  
$
561,945
 
 
$
—  
 
    
 
 
   
 
 
 
Supplemental disclosure of noncash activities:
                
Def
erred o
ffering costs paid in exchange for issuance of Class B common stock to Sponsor
   $ —       $ 18,750  
Deferred o
ffering costs paid in exchange for issuance of Class F common stock to Sponsor
   $ —       $ 6,250  
Deferred o
ffering costs included in accrued expenses
   $ —       $ 5,000  
The accompanying notes are an integral part of these unaudited condensed financial statements.
 
4
PERIPHAS CAPITAL PARTNERING CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1—Description of Organization, Business Operations and Basis of Presentation
Incorporation
Periphas Capital Partnering Corporation (the “Company”) was incorporated as a Delaware corporation on September 11, 2020.
Sponsor
The Company’s sponsor is PCPC Holdings, LLC, a Delaware limited liability company (the “Sponsor”).
Business Purpose
The Company was formed for the purpose of identifying a company to partner with in order to effectuate a merger, share exchange, asset acquisition, share purchase, reorganization or similar partnering transaction with one or more businesses (“Partnering Transaction”). The Company has not selected any business to partner with and has not, nor has anyone on the Company’s behalf, engaged in any substantive discussions, directly or indirectly, with respect to a specific Partnering Transaction. The Company may pursue a Partnering Transaction in any business or industry but expects to focus on a business where the Company believes its strong network, operational background, and aligned economic structure will provide the Company with a competitive advantage. The Company has neither engaged in any operations nor generated revenue as of September
 
30, 2021.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of its initial public offering (the “Initial Public Offering”) of its securities called CAPS
™
(“CAPS”), although substantially all of the net proceeds of the Initial Public Offering are intended to be generally applied toward completing a Partnering Transaction. Furthermore, there is no assurance that the Company will be able to successfully complete a Partnering Transaction.
Financing
The registration statement for the Company’s Initial Public Offering was declared effective on December
 
9, 2020. On December
 
14, 2020, the Company consummated its Initial Public Offering of 14,400,000 CAPS
™
at $25.00 per CAPS
™
, generating gross proceeds of $360.0 million, and incurring offering costs of approximately $4.0 million (net of reimbursement of offering costs of approximately $350,000 from the underwriter). On December 14, 2020, the underwriter exercised the over-allotment option in full, and on December 16, 2020, purchased 2,160,000 additional CAPS
™
(the “Over-Allotment CAPS
™
”), generating additional gross proceeds of $54.0 million, and incurred additional offering costs of approximately $540,000 in underwriting fees (the “Over-Allotment”).
Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 224,000 private placement CAPS
™
(the “Private Placement CAPS
™
”) at a price of $25.00 per CAPS
™
to the Sponsor, generating proceeds of $5.6 million (Note
 
4). Simultaneously with the closing of the Over-Allotment on December 16, 2020, the Company consummated the second closing of the Private Placement, resulting in the purchase of an aggregate of an additional 21,600 Private Placement CAPS
™
at a price of $25.00 per CAPS
™
by the Sponsor, generating gross proceeds to the Company of $540,000.
Trust Account
The Company must complete a Partnering Transaction with one or more partner candidate businesses having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (as defined below) (excluding the taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the initial Partnering Transaction. However, the Company will only complete a Partnering Transaction if the post- transaction company owns or acquires 50% or more of the voting securities of the partner candidate or otherwise acquires a controlling interest in the partner candidate 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”).
Upon the closing of the Initial Public Offering and the Private Placement on December 14, 2020, $360.0 million ($25.00 per CAPS
™
)
 
of the net proceeds of the sale of the CAPS
™
in the Initial Public Offering and of the Private Placement CAPS
™
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 were invested in money market funds meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule
2a-7
under the Investment Company Act, which invest only in direct
U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Partnering Transaction and (ii) the distribution of the Trust Account as described below. Upon the closing of the Over-Allotment on December 16, 2020, additional net proceeds from the consummation of the Over-Allotment of
 
$54.0 million were placed in the Trust Account, for a total of $414.0 
million held in the Trust Account. 
 
5
The Company’s certificate of incorporation provides that, other than the withdrawal of interest earned on the funds that may be released to the Company for withdrawals (the “permitted withdrawals”) to pay taxes including income and franchise taxes and to withdraw up to $100,000 in dissolution expenses in the event the Company does not complete the Partnering Transaction within the Partnering Period (as defined below), none of the funds held in the Trust Account will be released until the earlier of: (i) the completion of the Partnering Transaction; (ii) the redemption of any of the common stock included in the CAPS
™
being sold in the Initial Public Offering (the “Public Shares”) to its holders (the “Public Stockholders”) properly tendered in connection with a stockholder vote to amend certain provisions of the Company’s certificate of incorporation prior to a Partnering Transaction or (iii) the redemption of 100% of the Public Shares if the Company does not complete a Partnering Transaction within the Partnering Period (defined below).
The Company, after signing a definitive agreement for a Partnering Transaction, will either (i) seek stockholder approval of the Partnering Transaction at a meeting called for such purpose in connection with which Public Stockholders may seek to redeem their Public Shares, regardless of whether they vote for or against the Partnering Transaction or do not vote at all, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial Partnering Transaction, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes, or (ii) provide the Public Stockholders with the opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to commencement of the tender offer, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes. As a result, such common stock will be recorded at redemption amount and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.” The amount in the Trust Account is initially anticipated to be $25.00 per Public Share. The decision as to whether the Company will seek stockholder approval of the Partnering Transaction or will allow stockholders to sell their shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval. If the Company seeks stockholder approval, it will complete its Partnering Transaction only if a majority of the outstanding shares of common stock voted are voted in favor of the Partnering Transaction. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 immediately prior to or upon consummation of the Company’s initial Partnering Transaction. In such case, the Company would not proceed with the redemption of its Public Shares and the related Partnering Transaction, and instead may search for an alternate Partnering Transaction.
The Company will have until December 14, 2022, (or March 14, 2023, if the Company has executed a letter of intent, agreement in principle or definitive agreement for the Partnering Transaction by December 14, 2022) to complete its initial Partnering Transaction (the “Partnering Period”). If the Company does not complete a Partnering Transaction within this period of time (and stockholders do not approve an amendment to the certificate of incorporation to extend this date), it 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, of $25.00, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to the Company’s obligations under Delaware law to provide for claims of creditors and in all cases subject to the other requirements of applicable law.
The holders of the Founder Shares immediately prior to the Initial Public Offering (the “Initial Stockholders”) have entered into a letter agreement with the Company, pursuant to which they agreed to (i) waive their redemption rights with respect to any Founder Shares (as defined in Note 4) and Public Shares they hold in connection with the completion of the Partnering Transaction, (ii) waive their redemption rights with respect to any Founder Shares and Public Shares they hold in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company has not consummated a Partnering Transaction within the Partnering Period or with respect to any other material provisions relating to stockholders’ rights or
pre-Partnering
Transaction activity and (iii) waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares they hold if the Company fails to complete the Partnering Transaction within 24 months of the Partnering Period (although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete the Partnering Transaction within the Partnering Period).
Pursuant to the letter agreement, the Sponsor agreed that it will 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 entered into a written letter of intent, confidentiality or other similar agreement or Partnering Transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of
(i)
$25.00 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 $25.00 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 prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriter of our initial public offering against certain liabilities, including liabilities under the Securities Act.
 
6
Liquidity and Capital Resources
As of September
 
30, 2021, the Company had $0.6 million in its operating bank account and working capital of approximately $0.6 million.
The Company’s liquidity needs through the Initial Public Offering had been satisfied through a payment of $25,000 from the Sponsor to cover certain offering costs on behalf of the Company in exchange for the issuance of the Founder Shares and the Performance Shares (as defined in Note 4), the loan under the Note from the Sponsor of approximately $148,000 (as defined in Note 4) to the Company, and the net proceeds from the consummation of the Private Placement not held in the Trust Account. The Company fully repaid the Note on December 15, 2020 and borrowing is no longer available. In addition, in order to finance transaction costs in connection with a Partnering Transaction, 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 (see Note 4). As of September 30, 2021 and December 31, 2020, there were no amounts outstanding under any Working Capital Loans.
Based on the foregoing, man
a
gement believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Partnering Transaction 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 Partnering Transaction 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 Partnering Transaction.
Basis of Presentation
The accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form
10-Q
and Article 8 of Regulation
S-X
and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the period presented. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected through December 31, 2021.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report as amended on
Form 10-K/A
Amendment No. 2 for the year ended December 31, 2020 as filed with the SEC on December 2
9
, 2021, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2020 is derived from the audited financial statements presented in the Company’s Annual Report as amended on Form
10-K/A
Amendment No. 2 for the year ended December 31, 2020 as filed with the SEC on December 2
9
, 2021.
Restatement of Previously Reported Financial Statements
During the
 preparation of the Company’s unaudited condensed financial statements for the quarterly period ended September 30, 2021, the Company concluded it should revise its previously issued financial statements to classify all Class A common stock subject to redemption in temporary equity. Subsequent to the filing of the 10-Q for the quarterly period ending September 30, 2021, the Company concluded it should restate its prior-filed financial statements to classify all Class A common stock subject to possible redemption in temporary equity. In accordance with ASC 480-10-S99, redemption provisions not solely within the control of the Company require 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 stock 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 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. As such, the Company is reporting these restatements to those periods in this quarterly report. In connection with the change in presentation for the Class A common stock subject to possible redemption, the Company restated its earnings per share calculation to allocate income and losses shared pro rata between all classes of shares. This presentation differs from the previously presented method of earnings per share, which was similar to the two-class method.
The impact of the restatement on the financial statements for the Affected Quarterly Periods is presented below.
 
7
The change in the carrying value of the redeemable Class A common stock at March 31, 2021 resulted in a reclassification of approximately 0.5 million shares of Class A common stock from permanent equity to temporary equity. The table below presents the effect of the restatement discussed above on 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
  
$
415,447,939
 
  
$
—  
 
  
$
415,447,939
 
Total liabilities
  
$
9,286,479
 
  
$
—  
 
  
$
9,286,479
 
Class A common stock subject to possible redemption
  
 
401,161,450
 
  
 
12,838,550
 
  
 
414,000,000
 
Preferred stock
  
 
—
 
  
 
—
 
  
 
—
 
Class A common stock
  
 
76
 
  
 
(51
)
  
 
25
 
Class B common stock
  
 
12
 
  
 
—  
 
  
 
12
 
Class F common stock
  
 
83
 
  
 
—  
 
  
 
83
 
Additional
paid-in
capital
  
 
2,996,739
 
  
 
(2,996,739
) 
  
 
—  
 
Retained earnings (accumulated deficit)
  
 
2,003,100
 
  
 
(9,841,760
)
  
 
(7,838,660
)
 
  
 
 
 
  
 
 
 
  
 
 
 
Total stockholders’ equity (deficit)
  
$
5,000,010
 
  
$
(12,838,550
) 
  
$
(7,838,540
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
  
$
415,447,939
 
  
$
—  
 
  
$
415,447,939
 
 
  
 
 
 
  
 
 
 
  
 
 
 
The Company’s unaudited condensed statement of shareholders’ equity has been restated to reflect the changes to the impacted shareholders’ equity accounts described above.
The table below presents the effect of the restatement discussed above on the Company’s previously reported unaudited condensed statement of
cash
flows for the three months ended March 31, 2021:
 
For the Three Months Ended March 31, 2021
 (unaudited)
 
 
  
As Reported
 
  
Adjustment
 
  
As Restated
 
Supplemental Disclosure of Noncash Financing Activities:
  
     
  
     
  
     
Change in value of Class A common stock subject to possible redemption
  
$
(7,167,075
) 
  
$
7,167,075
 
  
$
—
 
The change in the carrying value of the redeemable Class A common stock at June 30, 2021 resulted in a reclassification of approximately 0.5 million shares of Class A common stock from permanent equity to temporary equity. The table below presents the effect of the restatement discussed above on 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
  
$
415,085,146
 
  
$
—  
 
  
$
415,085,146
 
Total liabilities
  
$
9,232,252
 
  
$
—  
 
  
$
9,232,252
 
Class A common stock subject to possible redemption
  
 
400,852,875
 
  
 
13,147,125
 
  
 
414,000,000
 
Preferred stock
  
 
—
 
  
 
—
 
  
 
—
 
Class A common stock
  
 
77
 
  
 
(52
)
  
 
25
 
Class B common stock
  
 
12
 
  
 
—  
 
  
 
12
 
Class F common stock
  
 
83
 
  
 
—  
 
  
 
83
 
Additional
paid-in
capital
  
 
3,305,313
 
  
 
(3,305,313
) 
  
 
—  
 
Retained earnings (accumulated deficit)
  
 
1,694,534
 
  
 
(9,841,760
)
  
 
(8,147,226
)
 
  
 
 
 
  
 
 
 
  
 
 
 
Total stockholders’ equity (deficit)
  
$
5,000,019
 
  
$
(13,147,125
) 
  
$
(8,147,106
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
  
$
415,085,146
 
  
$
—  
 
  
$
415,085,146
 
 
  
 
 
 
  
 
 
 
  
 
 
 
The Company’s unaudited condensed statement of shareholders’ equity has been restated to reflect the changes to the impacted shareholders’ equity accounts described above.
The table below presents the effect of the restatement discussed above on the Company’s previously reported unaudited condensed statement of cash flows for the three months ended June 30, 2021:
 
For the Six Months Ended June 30, 2021
 (unaudited)
 
 
  
As Previously Reported
 
  
Adjustment
 
  
As Restated
 
Supplemental Disclosure of Noncash Financing Activities:
  
     
  
     
  
     
Change in value of Class A common stock subject to possible redemption
  
$
(6,858,500
) 
  
$
  6,858,500
 
  
$
—  
 
 
8
 The impact to the reported amounts of weighted average shares outstanding and basic and diluted earnings per share is presented below for the Affected Quarterly Periods:
 
 
  
Earnings Per Share
 
 
  
As Reported 
(1)
 
  
Adjustment
 
  
As
Restated
 
For the three months ended March 31, 2021 (unaudited)
  
 
 
 
  
 
 
 
  
 
 
 
Net income
  
$
7,167,069
 
  
$
—  
 
  
$
7,167,069
 
Class A common stock
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding
  
 
—
 
  
 
16,805,600
 
  
 
16,805,600
 
Basic and diluted income per share
  
$
—  
 
  
$
0.40
 
  
$
0.40
 
Class 
B
common stock
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding
  
 
—
 
  
 
120,000
 
  
 
120,000
 
Basic and diluted income per share
  
$
—
 
  
$
0.40
 
  
$
0.40
 
Class 
F
common stock
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding
  
 
—
 
  
 
828,000
 
  
 
828,000
 
Basic and diluted income per share
  
$
—
 
  
$
0.40
 
  
$
0.40
 
Class 
A
 redeemable 
common stock
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding
  
 
16,560,000
 
  
 
(16,560,000
)
  
 
—
 
Basic and diluted income per share
  
$
—
 
  
$
—
 
  
$
—
 
Class A
non-redeemable,
Class B, and Class F common stock
  
     
  
     
  
     
Weighted average shares outstanding
  
 
1,193,600
 
  
 
(1,193,600
) 
  
 
—  
 
Basic and diluted income per share
  
$
6.00
 
  
$
(6.00
) 
  
$
—  
 
 
 
  
Earnings Per Share
 
 
  
As Reported 
(1)
 
  
Adjustment
 
  
As
Restated
 
For the three months ended June 30, 2021
 (
unaudite
d
)
  
 
 
 
  
 
 
 
  
 
 
 
Net loss
  
$
(308,566
) 
  
$
—  
 
  
$
(308,566
) 
Class A common stock
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding
  
 
—
 
  
 
16,805,600
 
  
 
16,805,600
 
Basic and diluted
los
s per share
  
$
—  
 
  
$
(0.02
) 
  
$
(0.02
) 
Class 
B
common stock
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding
  
 
—
 
  
 
120,000
 
  
 
120,000
 
Basic and diluted
los
s per share
  
$
—
 
  
$
(0.02
)
  
$
(0.02
)
 
Class 
F
common stock
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding
  
 
—
 
  
 
828,000
 
  
 
828,000
 
Basic and diluted
l
os
s per share
  
$
—
 
  
$
(0.02
) 
  
$
(0.02
) 
Class 
A
 redeemable 
common stock
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding
  
 
16,560,000
 
  
 
(16,560,000
)
  
 
—
 
Basic and diluted
los
s per share
  
$
—
 
  
$
—
 
  
$
—
 
Class A
non-redeemable,
Class B, and Class F common stock
  
     
  
     
  
     
Weighted average shares outstanding
  
 
1,193,600
 
  
 
(1,193,600
) 
  
 
—  
 
Basic and diluted
los
s per share
  
$
(0.26
) 
  
$
0.26
 
  
$
—  
 
 
 
  
Earnings Per Share
 
 
  
As Reported 
(1)
 
  
Adjustment
 
  
As
Restated
 
For the six months ended June 30, 2021
 (unaudited)
  
 
 
 
  
 
 
 
  
 
 
 
Net income
  
$
6,858,503
 
  
$
—  
 
  
$
6,858,503
 
Class A common stock
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding
  
 
—
 
  
 
16,805,600
 
  
 
16,805,600
 
Basic and diluted
income
per share
  
$
—  
 
  
$
0.39
 
  
$
0.39
 
Class 
B
common stock
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding
  
 
—
 
  
 
120,000
 
  
 
120,000
 
Basic and diluted
income
per share
  
$
—
 
  
$
0.39
 
  
$
0.39
 
Class 
F
common stock
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding
  
 
—
 
  
 
828,000
 
  
 
828,000
 
Basic and diluted
income
per share
  
$
—
 
  
$
0.39
 
  
$
0.39
 
Class 
A
 redeemable 
common stock
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding
  
 
16,560,000
 
  
 
(16,560,000
)
  
 
—
 
Basic and diluted
income
per share
  
$
—
 
  
$
—
 
  
$
—
 
Class A
non-redeemable,
Class B, and Class F common stock
  
     
  
     
  
     
Weighted average shares outstanding
  
 
1,193,600
 
  
 
(1,193,600
) 
  
 
—  
 
Basic and diluted
income
per share
  
$
5.75
 
  
$
(5.75
) 
  
$
—  
 
 
(
1
)
In connection with the change in presentation for the Class A common stock subject to possible redemption, the Company revised its earnings per share calculation to allocate income and losses shared pro rata between all classes of shares. This presentation differs from the previously presented method of earnings per share, which was similar to the
two-class
method.
 
9
Going Concern
Subsequent to the previously issued Form 10-Q on November 12, 2021, the Company assessed going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” and the Company has until December 14, 2022 (or March 14, 2023 if we execute a letter of intent, agreement in principle or definitive agreement for the Partnering Transaction by December 14, 2022) to consummate a Partnering Transaction. It is uncertain that the Company will be able to consummate a Partnering Transaction by this time. If a Partnering Transaction is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the liquidity condition and mandatory liquidation, should a Partnering Transaction not occur, and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after December 14, 2022, as the Company intends to complete a Partnering Transaction before the mandatory liquidation date.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, 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 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 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 accountant standards used.
Note 2—Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial 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 had no cash equivalents as of September 30, 2021 and December 31, 2020.
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 Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Investments Held in the 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 income on investments held in the Trust Account in the accompanying unaudited condensed statement of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
 
10
Fair Value of Financial Instruments
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers 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.
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB Topic ASC 820, “Fair Value Measurements and Disclosures, equal or approximate the carrying amounts represented in the condensed balance sheets.
As of September 30, 2021 and December 31, 2020, the carrying values of cash, prepaid expenses, accounts payable, accrued expenses, and franchise tax payable approximate their fair values due to the short-term nature of the instruments.
Offering Costs Associated with the Initial Public Offering
Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs were 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 derivative warrant liabilities were expensed as incurred and presented as
non-operating
expenses in the unaudited condensed statements of operations. Offering costs associated with the Class A common stock issued were charged against the carrying value of the Class A common stock subject to possible redemption upon the completion of the Initial Public Offering and subsequent over-allotment. The Company classifies deferred underwriting commissions 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.
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 Company issued 4,140,000 warrants to purchase Class A common stock to investors in our Initial Public Offering and Over-Allotment (the “Public Warrants”) and issued 61,400 Private Placement Warrants (the “Private Warrants”). All of its outstanding warrants are recognized as derivative liabilities in accordance with ASC
815-40.
Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the carrying value of the instruments to fair value at each reporting period until they are exercised. The initial fair value of the Public Warrants was calculated using an option pricing method and the fair value of the Private Warrants was calculated using the Black-Scholes Option Pricing Model as of December
 
31, 2020. Subsequently, as of September
 
30, 2021, the fair value of the Private Warrants was calculated using the Black-Scholes Option Pricing Model, and the fair value of the Public Warrants has been measured based on the listed market price of such warrants. The determination of the fair value of the warrant liability 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.
 
11
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480. Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including 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) is classified as temporary equity. At all other times, shares of Class A common stock are classified as stockholders’ equity. The Company’s Class A common stock subject to possible redemption feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly,
 
16,560,000
shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the Company’s condensed balance sheet. 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 and the over-allotment option, 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.
Net Income (Loss) Per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has three classes of shares, which are referred to as Class A common stock, Class B common stock, and Class F common stock. Income and losses are shared pro rata between the three classes of shares. Net income (loss) per common stock 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
share does not consider the effect of the warrants issued in connection with the Initial Public Offering (including exercise of the over-allotment option) and the Private Placement to purchase an aggregate of 4,201,400 Class A common stock in the calculation of diluted income (loss) per
common
share, because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income (loss) per
common
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.
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
 share:
 
    
For the Three Months Ended
September 30, 2021
    
For the Nine Months Ended
September 30, 2021
 
    
Class A
    
Class B
    
Class F
    
Class A
    
Class B
    
Class F
 
Basic and diluted net income per common share:
                                                     
Numerator:
                                                     
Allocation of net income
   $ 2,304,304      $ 16,454      $ 113,531      $ 8,796,579      $ 62,812      $ 433,401  
Denominator:
                                                     
Basic and diluted weighted average
common
 shares outstanding
     16,805,600        120,000        828,000        16,805,600        120,000        828,000  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Basic and diluted net income per
common
share
   $ 0.14      $ 0.14      $ 0.14      $ 0.52      $ 0.52      $ 0.52  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Income Taxes
The Company complies with the accounting and reporting requirements of FASB Topic ASC 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 as income tax expense.
 
1
2
Recent Adopted Accounting Standards
In August 2020, the FASB issued ASU
No. 2020-06,
Debt—Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic
815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The Company early adopted the ASU on January 1, 2021 using the modified retrospective method for transition. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
The Company’s management does not believe that any
other
recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the accompanying financial statement.
Note 3—Initial Public Offering
Public CAPS
™
On December
 
14, 2020, the Company consummated its Initial Public Offering of 14,400,000 CAPS
™
at $25.00 per CAPS
™
, generating gross proceeds of $360.0 million, and incurring offering costs of approximately $4.0 million (net of reimbursement of offering costs of approximately $350,000 from the underwriter). On December
 
14, 2020, the underwriter exercised the over-allotment option in full, and on December
 
16, 2020, purchased 2,160,000 Over-Allotment CAPS
™
, generating additional gross proceeds of $54.0 million, and incurred additional offering costs of approximately $540,000 in underwriting fees.
Each CAPS
™
consists of one share of Class A common stock and
one-quarter
of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant may be exercised to purchase one share of Class A common stock for $28.75 per share, subject to adjustment (see Note 6).
Underwriting Agreement
The Company granted the underwriter a
45-day
option to purchase up to 2,160,000 additional CAPS
™
to cover any over-allotment, at the initial Public Offering price less the underwriting discounts and commissions. The underwriter exercised their over-allotment option on December 16, 2020.
The underwriter was entitled to an underwriting discount of $0.25 per CAPS
™
, or $3.6 million in the aggregate, paid upon the closing of the Initial Public Offering on December 14, 2020. In addition, the underwriter agreed to make a payment to the Company in an amount up to approximately $350,000 to reimburse the Company for
out-of-pocket
expenses incurred in connection with the Initial Public Offering, which was fully received on December
 
15, 2020.
Upon closing of the Over-Allotment on December 16, 2020, the underwriter was entitled to an additional fee of $540,000, paid upon closing of the Over-Allotment.
Note 4—Related Party Transactions
Founder Shares and Performance Shares
On September 14, 2020, the Sponsor paid for certain offering costs on behalf of the Company in exchange for (i) 690,000 Class F common stock (the “Founder Shares”) for a capital contribution of $6,250 and (b) 120,000 shares of Class B common stock (the “Performance Shares”) for a capital contribution of $18,750. On December 11, 2020, the Company effected a 1 for 1.2 forward stock split of the shares of Class F common stock that increased the number of outstanding shares of Class F common stock from 690,000 to 828,000 shares. All shares and associated amounts have been retroactively restated to reflect the stock split. The Founder Shares will be entitled to (together with the Performance Shares) a number of votes representing 20% of the Company’s outstanding common stock (not including the private placement shares) prior to the completion of the Partnering Transaction.
The Initial Stockholders agreed not to transfer, assign or sell (i) any of its Performance Shares except to any permitted transferees which will be subject to the same restrictions and other agreements of the Sponsor with respect to any Founder Shares, and (ii) any of its Class A common stock deliverable upon conversion of the Performance Shares for 3 years following the completion of the Partnering Transaction. In connection with this arrangement, the Sponsor also agrees not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (i) 180 days after the completion of the Partnering Transaction and (ii) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction after the Partnering Transaction that results in all of the Company’s stockholders having the right to exchange their Class A common stock for cash, securities or other property; except to certain permitted transferees and under certain circumstances as described herein. Any permitted transferees will be subject to the same restrictions and other agreements of the Initial Stockholders with respect to any Founder Shares.
 
1
3
Private Placement CAPS
™
Simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 224,000 Private Placement CAPS
™
at a price of $25.00 per CAPS
™
to the Sponsor, generating proceeds of $5.6 million. Simultaneously with the closing of the Over-allotment on December 16, 2020, the Company consummated the second closing of the Private Placement, resulting in the purchase of an aggregate of an additional 21,600 Private Placement CAPS
™
at a price of $25.00 per CAPS
™
by the Sponsor, generating gross proceeds to the Company of $540,000.
Each Private Placement CAPS
™
consists of one share of Class A common stock and
one-quarter
of one redeemable warrant (each, a “Private Placement Warrant”). Each Private Placement Warrant entitles the holder to purchase one share of Class A common stock at $28.75 per share. A portion of the proceeds from the sale of the Private Placement CAPS
™
was added to the proceeds from the Initial Public Offering and held in the Trust Account. If the Company does not complete a Partnering Transaction, then the proceeds will be part of the liquidating distribution to the Public Stockholders and the warrants will expire worthless.
The Initial Stockholders also agreed not to transfer, assign or sell any of their Private Placement CAPS
™
, private placement shares, private placement warrants and any shares of Class A common stock issued upon conversion or exercise thereof until 30 days after the completion of the initial Partnering Transaction, except to permitted transferees. Any permitted transferees will be subject to the same restrictions and other agreements of the Initial Stockholders with respect to any Founder Shares, Private Placement CAPS
™
, private placement shares and Private Placement Warrants.
Related Party Loans
On September 14, 2020, the Sponsor agreed to loan the Company up to an aggregate of $300,000 pursuant to an unsecured promissory note (the “Note”) to cover expenses related to this Initial Public Offering. This loan is payable without interest upon the completion of the Initial Public Offering. As of December 14, 2020, the Company borrowed approximately $148,000 under the Note. The Company repaid the Note in full on December 15, 2020 and borrowing is no longer available.
In order to finance transaction costs in connection with an intended initial Partnering Transaction, 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 (the “Working Capital Loans”). Up to $1.5 million of such loans may be convertible into private placement CAPS
™
at a price of $25.00 per private placement CAPS
™
at the option of the lender. The private placement CAPS
™
would be identical to the Private Placement CAPS
™
issued to the Sponsor. Except for the foregoing, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. As of September 30, 2021 and December 31, 2020, the Company had no outstanding Working Capital Loans.
Administrative Services Agreement
Commencing on the date that the Company’s securities were first listed on the New York Stock Exchange through the earlier of consummation of the Partnering Transaction and the Company’s liquidation, the Company agreed to pay an affiliate of the Sponsor for office space, secretarial and administrative services provided to members of the Company’s management team $20,000 per month. During the three and nine months ended September 30, 2021, the Company incurred $60,000 and $180,000
of such costs, respectively, which have been included in the accompanying unaudited condensed statements of operations.
During the period from September 11, 2020 (inception) through September 30, 2020 the Company incurred $0 of such costs, which have been included in the accompanying unaudited condensed statement of operations.
As of September 30, 2021
,
December 31, 2020
, and September 30, 2020
the Company had included
$0
,
 
$14,194,
and $0, respectively, for services in connection with such agreement on the accompanying c
o
ndensed balance sheets in accrued expenses.
In addition, the Sponsor, executive officers and directors, or any of their respective affiliates will be reimbursed for any
out-of-pocket
expenses incurred in connection with activities on the Company’s behalf such as identifying potential partnering candidates and performing due diligence on suitable Partnering Transactions. The Company’s audit committee will review on a quarterly basis all payments that were made to the Sponsor, executive officers or directors, or the Company’s or their affiliates.
Forward Purchase Agreements
The Company entered into forward purchase agreements with each of certain qualified institutional buyers or institutional accredited investors (the “Anchor Investors”), pursuant to which the Anchor Investors committed to purchase in the aggregate, up to an aggregate of $75,000,000 of shares of Class A common stock at a purchase price of $25.00 per share, in private placements to occur simultaneously, and only in connection with, the closing of the initial Partnering Transaction, (collectively, the “Forward Purchase Agreements”). The proceeds from the sale of forward purchase shares may be used as part of the consideration to the sellers in the Company’s initial Partnering Transaction, expenses in connection with the initial Partnering Transaction or for working capital in the post-transaction company.
 
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4
Note 5—Commitments & Contingencies
Registration Rights
The holders of the Founder Shares, Performance Shares, Forward Purchase Shares, Private Placement Warrants and private placement shares underlying Private Placement CAPS
™
and private placement CAPS
™
that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants that are part of the Private Placement CAPS
™
, and CAPS
™
may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares and the Performance Shares) are entitled to registration rights pursuant to a registration rights agreement signed upon the effective date of the Initial Public Offering, requiring the Company to register such securities for resale. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the Partnering Transaction. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
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, results of its operations and search for a partner candidate company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Partnering Transaction Advisory Engagement Letter
In December 2020, the Company engaged Evercore as a capital markets advisor in connection with the Partnering Transaction, to assist the Company with the potential Partnering Transaction. The Company agreed to pay Evercore for such services upon the consummation of the Partnering Transaction a cash fee in an amount equal to 2.25% of the gross proceeds of the Initial Public Offering (exclusive of any applicable finders’ fees which might become payable), which equates to approximately $9.3 million. Pursuant to the terms of the capital markets advisory agreement, no fee will be due if the Company does not complete a Partnering Transaction.
Anchor Investments
The Anchor Investors purchased 2.4 million CAPS
™
in the aggregate, and the Company agreed to direct the underwriter to sell to the Anchor Investors such number of CAPS
™
. Further, each of the Anchor Investors entered into a separate agreement with the Sponsor pursuant to which each such investor agreed to purchase membership interests in the Sponsor representing an indirect beneficial interest in an aggregate of up to 10,800 Performance Shares for approximately $0.16 per Performance Share. The membership interests in the Sponsor to be directly owned by such investors will be subject to forfeiture under certain circumstances (or any additional restrictions agreed to by the Sponsor in connection with the initial Partnering Transaction). The Performance Shares to be indirectly owned by such investors will be otherwise identical to the Performance Shares owned by the Sponsor. The Company’s discussions with each Anchor Investor were separate and the Company’s arrangements with them are not contingent on each other.
There can be no assurance that the Anchor Investors will retain any CAPS
™
, if any, prior to or upon the consummation of a Partnering Transaction and certain of the membership interests in the Sponsor to be directly owned by such investors will be subject to forfeiture under such circumstances. In the event that the Anchor Investors purchase such CAPS
™
and vote in favor of a Partnering Transaction, a smaller portion of affirmative votes from other Public Shareholders would be required to approve a Partnering Transaction.
Note 6—Derivative Warrant Liabilities
As of September 30, 2021 and December 31, 20
20
, the Company has 4,140,000 Public Warrants and 61,400 Private Placement Warrants, outstanding.
No fractional warrants will be issued upon separation of the CAPS
™
and only whole warrants will trade. Each whole warrant entitles the registered holder to purchase one share of Class A common stock at a price of $28.75
 
per share, subject to adjustment as discussed below, at any time commencing on the later of 12 months from the closing of the Initial Public Offering and 30 days after the completion of a Partnering Transaction, 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 warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement) and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. The Company agreed that as soon as practicable, but in no event later than fifteen (15) business days after the closing of the Partnering Transaction, the Company will use its commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of 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 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 the Partnering Transaction, 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 shares of 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 elect, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
 
1
5
The warrants will expire five years after the completion of the Partnering Transaction, or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities, excluding the Forward Purchase Shares, for capital raising purposes in connection with the Partnering Transaction at an issue price or effective issue price of less than $23.00 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 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 Partnering Transaction on the date of the consummation of the Partnering Transaction (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 after the day on which the Company consummates the Partnering Transaction (such price, the “Market Value”) is below $23.00 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 110% of the higher of the Market Value and the Newly Issued Price, and the $45.00 redemption price trigger described below will be equal to 180% of 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 Partnering Transaction, 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.
The Company may also redeem the Public Warrants, in whole and not in part, at a price of $0.01 per warrant:
 
  •  
at any time while the warrants are exercisable,
 
  •  
upon a minimum of 30 days’ prior written notice of redemption,
 
  •  
if, and only if, the last sales price of shares of the Class A common stock equals or exceeds $45.00 per share for any 20 trading days within a
30-trading
day period (the
“30-day
trading period”) ending three business days before the Company sends the notice of redemption, and
 
  •  
if, and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying such warrants commencing five business days prior to the
30-day
trading period and continuing each day thereafter until the date of redemption.
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
In no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Partnering Transaction within the Partnering 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.
Note 7 – 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 380,000,000 shares of Class A common stock with
a
 par value of $0.0001 per s
hare. Holders of the Company’s Class A common stock are entitled to one vote for each shar
e. As of September 30, 2021
 and December 31, 2020
, there were 16,805,600
shares of Class A common stock o
utstanding, 16,560,000 of which were subject to possible redemptio
n.
As of September 30, 2021 and December 31, 2020, the Class A common stock subject to possible redemption reflected on the condensed balance sheets is reconciled on the following table:
 
Gross proceeds
   $ 414,000,000  
Less:
        
Fair value of Public Warrants at issuance
     (11,509,200 ) 
Offering costs allocated to Class A common stock subject to possible redemption
     (4,323,061 ) 
Plus:
        
Accretion on Class A common stock subject to possible redemption amount
     15,832,261  
    
 
 
 
Class A common stock subject to possible redemption
   $ 414,000,000  
    
 
 
 
 
1
6
Note 8—Stockholders’ Deficit
Class
 A Common Stock
— The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001
per share. As of September 30, 2021 and December 31, 2020, there
were 245,600 shares of Class A common stock issued and outst
a
nding
 excluding
 16,560,000 shares of Class A common stock subject to possible redemption and are classified as temporary equity (see Note 7).
Class
 B Common Stock
— The Company is authorized to issue 1,000,000 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 120,000 shares of Class B common stock issued and outstanding.
On the last day of each fiscal year following the completion of a Partnering Transaction (and, with respect to any year in which the Company has a change of control or in which the Company liquidates, dissolves or winds up, on the business day immediately prior to such event instead of on the last day of such fiscal year), 10,000 shares of the Company’s Class B common stock will automatically convert into shares of Class A common stock (“conversion shares”), as follows:
 
  •  
If the price per share of Class A common stock has not exceeded $27.50 for 20 out of 30 consecutive trading days at any time following completion of the Partnering Transaction, the number of conversion shares for any fiscal year will be 1,000 shares of Class A common stock.
 
  •  
If the price per share of Class A common stock exceeded $27.50 for 20 out of any 30 consecutive trading days at any time following completion of the Partnering Transaction, then the number of conversion shares for any fiscal year will be the greater of:
 
  •  
20% of the increase in the price of one Class A share, year-over-year but in respect of the increase above the relevant “price threshold” (as defined below),
multiplied by
the number of shares of Class A common stock outstanding at the close of the Partnering Transaction, excluding those shares of Class A common stock received by the Sponsor through the Class F common stock,
divided by
the annual volume weighted average price of shares of Class A common stock for such fiscal year (the “annual VWAP”); and
 
  •  
1,000 shares of Class A common stock.
 
  •  
The increase in the price of the Company’s Class A common stock will be based on the annual VWAP for the relevant fiscal year.
For purposes of the foregoing calculations, the “price threshold” will initially equal $25.00 for the first fiscal year following completion of the Partnering Transaction and will thereafter be adjusted at the beginning of each subsequent fiscal year to be equal to the greater of (i) the annual VWAP for the immediately preceding fiscal year and (ii) the price threshold for the preceding fiscal year.
For calculation purposes, the total number of shares of Class A common stock outstanding at the closing of the Partnering Transaction can be no smaller than 33,120,000 shares of Class A common stock and no greater than 66,240,000 shares of Class A common stock.
Upon a change of control occurring after the Partnering Transaction (but not in connection with the Partnering Transaction), holders of the Performance Shares shall receive cash in the amount is the greater of: (a) the value of approximately 3.3 million shares of Class A common stock at the time of the announcement of the change of control or (b) $82.8 million. Such calculation shall decrease by 1/12 each year based on the number of days that have occurred during the fiscal year divided by 360.
For so long as any shares of Class B common stock remain outstanding, including prior to the Partnering Transaction, in connection with the Partnering Transaction, or following the Partnering Transaction, the Company may not, without the prior vote or written consent of the holders of a majority of the Performance Shares then outstanding, voting separately as a single class, (A) amend, alter or repeal any provision the amended and restated certificate of incorporation, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class B common stock, (B) change the Company’s fiscal year, (C) increase the number of directors on the board, (D) pay any dividends or effect any split on any of the Company’s capital stock or make any distributions of cash, securities or any other property, (E) adopt any stockholder rights plan, (F) acquire any entity or business with assets at a purchase price greater than 10% or more of the Company’s total assets, (G) issue any Class A shares in excess of 20% of the Company’s then outstanding Class A shares or that would otherwise require a stockholder vote pursuant to the rules of the stock exchange on which the Class A shares are then listed or (H) make a rights offering to all or substantially all of the holders of shares of Class B common stock or issue additional shares of Class B common stock.
Class
 F Common Stock
— The Company is authorized to issue 50,000,000 shares of Class F common stock with a par value of $0.0001
per share. As of September 30, 2021 and December 31, 2020, there were 828,000 shares of Class F common stock issued and outstanding. 
 
17
The Class F common stock will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation of the Partnering Transaction 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 connection with the Partnering Transaction, the number of shares of Class A common stock issuable upon conversion of
all
Founder Shares will equal, in the aggregate, on an
as-converted
basis
, 5
% of the total number of shares of
as-converted
Class A common stock outstanding after such conversion (including the private placement shares), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the Partnering Transaction; provided that such conversion of Founder Shares into shares of Class A common stock will never occur on a less
than
one-for-one
basis.
For so
long as any shares of Class F common stock remain outstanding, the Company may not, without the prior vote or written consent of the holders of a majority of the shares of Class F common stock then outstanding, voting separately as a single class, amend, alter or repeal any provision of the Company’s certificate of incorporation, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the shares of Class F common stock. Any action required or permitted to be taken at any meeting of the holders of shares of Class F common stock may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding shares of Class F common stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Class F common stock were present and voted.
Preferred stock
— The Company is authorized to issue 1,000,000
 
shares of preferred stock with a par value of $0.0001 per share. At September 30, 2021 and December 31, 2020, there are no shares of preferred stock issued or outstanding.
Note 9—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 December 31, 2020 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
September 30, 2021
 
Description
  
Quoted
 
Prices
 
in
Active Markets
(Level 1)
    
Significant Other
Observable
 
Inputs

(Level 2)
    
Significant
 
Other
Unobservable
Inputs
(Level 3)
 
Assets:
                          
Investments held in Trust Account
   $ 414,029,696      $ —        $ —    
Liabilities:
                          
Derivative warrant liabilities - Public warrants
   $ 6,272,100      $ —        $ —    
Derivative warrant liabilities - Private placement warrants
   $ —        $ —        $ 94,560  
December 31, 2020
 
Description
  
Quoted Prices in
Active Markets
(Level 1)
    
Significant Other
Observable Inputs
(Level 2)
    
Significant Other
Unobservable
Inputs

(Level 3)
 
Assets:
                          
Investments held in Trust Account
   $ 414,001,166      $ —        $ —    
Liabilities:
                          
Derivative warrant liabilities - Public warrants
   $ —        $ —        $ 16,228,800  
Derivative warrant liabilities - Private placement warrants
   $ —        $ —        $ 252,350  
Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. The estimated fair value of the Public Warrants was transferred from a Level 3 measurement to a Level 1 fair value measurement during the quarter ended March 31, 2021 once the Public Warrants were separately listed and traded.
Level 1 instruments include investments in mutual funds invested in U.S. government 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
.
 
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The initial fair value of the Public Warrants was calculated using an option pricing method and the fair value of the Private Placement Warrants was calculated using the Black- Scholes Option Pricing Model. Subsequently, the fair value of the Private Placement Warrants was calculated using the Black-Scholes Option Pricing Model, and the fair value of the Public Warrants has been measured based on the listed market price of such warrants as a Level 1 measurement, since February 2021. For the three and nine months ended September 30, 2021, the Company recognized a charge to the unaudited condensed statements of operations resulting from a decrease in the fair value of liabilities of approximately $2.7 million and $10.1 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 Private Placement Warrants, and the Public Warrants prior to being separately listed and traded, is determined using Level 3 inputs. Inherent in the Black-Scholes Option Pricing Model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its Class A common stock warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer company’s Class A 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 at their measurement dates:
 
    
As of
September 30,
2021
 
Exercise price
   $ 28.75  
Unit price
   $ 24.35  
Volatility
     12.16 % 
Expected life of the options to convert
     5.00  
Risk-free rate
     0.98 % 
Dividend yield
     0.00 % 
The change in the fair value of the derivative warrant liabilities, measured using Level 3 inputs, for the three and nine
months
ended September 30,
2021
is summarized as follows:
 
Derivative warrant liabilities at December 31, 2020
   $ 16,481,150  
Transfer of Public Warrants to Level 1
     (8,942,400 ) 
Change in fair value of derivative warrant liabilities
     (7,404,280 ) 
    
 
 
 
Derivative warrant liabilities at March 31, 2021
     134,470  
Change in fair value of derivative warrant liabilities
     (620 ) 
    
 
 
 
Derivative warrant liabilities at June 30, 2021
     133,850  
Change in fair value of derivative warrant liabilities
     (39,290 ) 
    
 
 
 
Derivative warrant liabilities at September 30, 2021
   $ 94,560  
    
 
 
 
Note 10—Subsequent Events
Management has evaluated subsequent events and transactions that occurred after the balance sheet date through the date the unaudited
condensed
financial statements were available for issuance. Based upon this review, except as noted above, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.
 
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9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to the “Company,” “Periphas Capital Partnering Corporation,” “Periphas,” “our,” “us” or “we” refer to Periphas Capital Partnering Corporation. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form
10-Q
includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of Amendment No. 2 to the Company’s Annual Report on Form
10-K/A
filed with the SEC on December 29, 2021.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations has been amended and restated to give effect to the restatement of our financial statements as of March 31, 2021 and June 30, 2021. Management identified errors made in its historical financial statements where, at the closing of our Initial Public Offering, we improperly classified our Class A common stock subject to possible redemption. We previously determined the Class A common stock subject to possible redemption to be equal to the redemption value of $25.00 per Class A ordinary share while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Management determined that the Class A common stock issued during the Initial Public Offering can be redeemed or become redeemable subject to the occurrence of future events considered outside of the Company’s control. Therefore, management concluded that the redemption value should include all Class A common stock subject to possible redemption, resulting in the Class A common stock subject to possible redemption being equal to their redemption value. As a result, management has noted a reclassification error related to temporary equity and permanent equity. This resulted in a restatement to the initial carrying value of the Class A common stock subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A common stock. 
In connection with the change in presentation for the Class A common stock subject to possible redemption, the Company restated its earnings per share calculation to allocate income and losses shared pro rata between all classes of shares. This presentation differs from the previously presented method of earnings per share, which was similar to the two-class method.
Overview
We are a blank check company incorporated in Delaware on September 11, 2020. We were formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Partnering Transaction”). We are an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
Our sponsor is PCPC Holdings, LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for our Initial Public Offering was declared effective on December 9, 2020. On December 14, 2020, we consummated our Initial Public Offering of 14,400,000 CAPS
™
at $25.00 per CAPS
™
, generating gross proceeds of $360.0 million, and incurring offering costs of approximately $4.0 million (net of reimbursement of offering costs of approximately $350,000 from the underwriter). On December 14, 2020, the underwriter exercised the over-allotment option in full, and on December 16, 2020, purchased 2,160,000 additional CAPS
™
(the “Over-Allotment CAPS
™
”), generating additional gross proceeds of $54.0 million, and incurred additional offering costs of approximately $540,000 in underwriting fees (the “Over-Allotment”).
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 224,000 private placement CAPS
™
(the “Private Placement CAPS
™
”) at a price of $25.00 per CAPS
™
to the Sponsor, generating proceeds of $5.6 million (Note 4). Simultaneously with the closing of the Over-Allotment on December 16, 2020, we consummated the second closing of the Private Placement, resulting in the purchase of an aggregate of an additional 21,600 Private Placement CAPS
™
at a price of $25.00 per CAPS
™
by the Sponsor, generating gross proceeds to the Company of $540,000.
Upon the closing of the Initial Public Offering and the Private Placement on December 14, 2020, $360.0 million ($25.00 per CAPS
™
) of the net proceeds of the sale of the CAPS
™
in the Initial Public Offering and of the Private Placement CAPS
™
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 were invested in money market funds meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule
2a-7
under the Investment Company Act, which invest only in direct U.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Partnering Transaction and (ii) the distribution of the Trust Account as described below. Upon the closing of the Over-Allotment on December 16, 2020, additional net proceeds from the consummation of the Over-Allotment of $54.0 million were placed in the Trust Account, for a total of $414.0 million held in Trust Account.
Our management has broad discretion with respect to the specific application of the net proceeds of its initial public offering (the “Initial Public Offering”) of its securities called CAPS
™
(“CAPS
™
”), although substantially all of the net proceeds of the Initial Public Offering are intended to be generally applied toward completing a Partnering Transaction. Furthermore, there is no assurance that we will be able to successfully complete a Partnering Transaction.
We will have until December 14, 2022, (or March 14, 2023, if we have executed a letter of intent, agreement in principle or definitive agreement for the Partnering Transaction by December 14, 2022) to complete our initial Partnering Transaction (the “Partnering Period”). If we do not complete a Partnering Transaction within this period of time (and stockholders do not approve an amendment to the certificate of incorporation to extend this date), it 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, of $25.00, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in the case of clauses (i) and (iii), to our obligations under Delaware law to provide for claims of creditors and in all cases subject to the other requirements of applicable law.
 
20
Liquidity and Capital Resources
At September 30, 2021, we had cash of approximately $0.6 million and working capital of approximately $0.6 million.
Our liquidity needs through the Initial Public Offering had been satisfied through a payment of $25,000 from the Sponsor to cover certain offering costs on our behalf in exchange for the issuance of the Founder Shares and the Performance Shares (as defined in Note 4), the loan under the Note from the Sponsor of approximately $148,000 (as defined in Note 4) to us, and the net proceeds from the consummation of the Private Placement not held in the Trust Account. We fully repaid the Note on December 15, 2020 and borrowing is no longer available. In addition, in order to finance transaction costs in connection with a Partnering Transaction, the Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, provide us Working Capital Loans (see Note 4). As of September 30, 2021 and December 31, 2020, there were no amounts outstanding under any Working Capital Loans.
Based on the foregoing, our management believes that we will have sufficient working capital and borrowing capacity to meet our needs through the earlier of the consummation of a Partnering Transaction or one year from this filing. Over this time period, we will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Partnering Transaction 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 Partnering Transaction.
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 our financial position, results of its operations and search for a partner candidate company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”)
2014-15,
“Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” we have until December 14, 2022 (or March 14, 2023, if we execute a letter of intent, agreement in principle or definitive agreement for the Partnering Transaction by December 14, 2022) to consummate a Partnering Transaction. It is uncertain that we will be able to consummate a Partnering Transaction by this time. If a Partnering Transaction is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the liquidity condition and mandatory liquidation, should a Partnering Transaction not occur, and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after December 14, 2022.
Results of Operations
Our entire activity since inception up to September 30, 2021 was in preparation for our Initial Public Offering, and since our Initial Public Offering, our activity has been limited to the search for a prospective Partnering Transaction. We will not be generating any operating revenues until the closing and completion of our initial Partnering Transaction.
For the three months ended September 30, 2021, we had net income of approximately $2.4 million, which consisted of approximately $2.7 million gain in change in fair value of derivative warrant liabilities and gain on investment held in Trust Account of approximately $16,000, partially offset by approximately $140,000 in general and administrative expenses, $60,000 in general and administrative expenses – related party, and approximately $50,000 in franchise tax expense.
For the nine months ended September 30, 2021, we had net income of approximately $9.3 million, which consisted of approximately $10.1 million gain in change in fair value of derivative warrant liabilities and gain on investment held in Trust Account of approximately $29,000, partially offset by approximately $519,000 in general and administrative expenses, $183,000 in general and administrative expenses – related party, and approximately $148,000 in franchise tax expense.
For the period from September 11, 2020 (inception) through September 30, 2020, we had a net loss of $5,000 which consisted of general and administrative expenses. General and administrative expenses were comprised of professional fees.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities, other than an agreement to pay Administrative Services Agreement fees to our Sponsor that total $20,000 per month for office space, secretarial and administrative services provided to members of our management team. During the three and nine months ended September 30, 2021, the Company incurred $60,000 and $180,000 in expenses in connection with such services, respectively.
Critical Accounting Policies
This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have identified the following as our critical accounting policies:
 
21
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480. Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including 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 our control) is classified as temporary equity. At all other times, shares of Class A common stock are classified as stockholders’ equity. Our shares of Class A common stock feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, 16,560,000 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of our condensed balance sheet. We recognize changes in redemption value immediately as they occur and adjust 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 and the over-allotment option, we 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.
Net Income (Loss) Per Common Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” We have three classes of shares, which are referred to as Class A common stock, Class B common stock, and Class F common stock. Income and losses are shared pro rata between the three classes of shares. Net income (loss) per common stock 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 share does not consider the effect of the warrants issued in connection with the Initial Public Offering (including exercise of the over-allotment option) and the Private Placement to purchase an aggregate of 4,201,400 Class A common stock in the calculation of diluted income (loss) per common share, because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income (loss) per common 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.
We have considered the effect of Class F common stock that were excluded from weighted average number as they were contingent on the exercise of over-allotment option by the underwriters. Since the contingency was satisfied, we included these shares in the weighted average number as of the beginning of the interim period to determine the dilutive impact of these shares.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815. 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.
We issued 4,140,000 warrants to purchase Class A common stock to investors in our Initial Public Offering and Over-Allotment (the “Public Warrants”) and issued 61,400 Private Placement Warrants (the “Private Warrants”). All of its outstanding warrants are recognized as derivative liabilities in accordance with ASC
815-40.
Accordingly, we recognize the warrant instruments as liabilities at fair value and adjust the carrying value of the instruments to fair value at each reporting period until they are exercised. The initial fair value of the Public Warrants was calculated using an option pricing method and the fair value of the Private Warrants was calculated using the Black-Scholes Option Pricing Model as of December 31, 2020.
Subsequently, as of September 30, 2021, the fair value of the Private Warrants was calculated using the Black-Scholes Option Pricing Model, and the fair value of the Public Warrants has been measured based on the listed market price of such warrants. The determination of the fair value of the warrant liability 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 noncurrent liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Recent Adopted Accounting Standards
In August 2020, the FASB issued ASU
No. 2020-06,
Debt—Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic
815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. We early adopted the ASU on January 1, 2021 using the modified retrospective method for transition. Adoption of the ASU did not impact our financial position, results of operations or cash flows.
 
22
Recent Issued Accounting Standards
Our management 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 financial statement.
Off-Balance
Sheet Arrangements
As of September 30, 2021, we did not have any
off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for
non-emerging
growth companies. As a result, the financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of
non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule
12b-2
of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the fiscal quarter ended September 30, 2021, as such term is defined in Rules
13a-15(e)
and
15d-15(e)
under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer, concluded that during the period covered by this report, our disclosure controls and procedures were not effective as of September 30, 2021, because of a material weakness in our internal control over financial reporting relating to the accounting for complex financial instruments. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, the Company’s management has concluded that our internal control around the interpretation and accounting for certain complex equity and equity-linked instruments issued by the Company and the presentation of earnings per share was not effectively designed or maintained. This material weakness resulted in the restatement of the Company’s balance sheet as of December 14, 2020, its annual financial statements for the period ended December 31, 2020 in the Company’s Form 10-K/A Amendment No. 2 for the year ended December 31, 2020 as filed with the SEC on December 29, 2021, and its interim financial statements for the quarters ended March 31, 2021, June 30, 2021, and September 30, 2021. Additionally, this material weakness could result in a misstatement of the carrying value of equity, equity-linked instruments and related accounts and disclosures, and presentation of earnings per share that would result in a material misstatement of the financial statements that would not be prevented or detected on a timely basis. As a result, our management performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with generally accepted accounting principles in the United States of America. Accordingly, management believes that the financial statements included in this Form
10-Q
present fairly, in all material respects, our financial position, result of operations and cash flows of the periods presented. Management understands that the accounting standards applicable to our financial statements are complex and has since the inception of the Company benefited from the support of experienced third-party professionals with whom management has regularly consulted with respect to accounting issues. Management intends to continue to further consult with such professionals in connection with accounting matters.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
 
23
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2021 covered by this Quarterly Report on Form
10-Q
that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting except for the below :
Our Chief Executive Officer and Chief Financial Officer performed additional accounting and financial analyses and other post-closing procedures including consulting with subject matter experts related to the accounting for certain complex equity and equity-linked instruments issued by the Company and the presentation of earnings per share. The Company’s management has expended, and will continue to expend, a substantial amount of effort and resources for the remediation and improvement of our internal control over financial reporting. While we have processes to properly identify and evaluate the appropriate accounting technical pronouncements and other literature for all significant or unusual transactions, we have expanded and will continue to improve these processes to ensure that the nuances of such transactions are effectively evaluated in the context of the increasingly complex accounting standards.
 
24
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors.
As of the date of this Quarterly Report on Form
10-Q,
there have been no material changes to the risk factors disclosed in the prospectus, in our Amendment No. 1 to our Annual Report on Form
10-K/A
filed with the SEC on May 25, 2021 and in our Amendment No. 2 to our Annual Report on Form
10-K/A
filed with the SEC on December 29, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The Company did not make any unregistered sales of its securities from January 1, 2021 to September 30, 2021.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
None
Item 5. Other Information
None
Item 6. Exhibits
 
Exhibit
Number
  
Description
   
31.1*    Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
31.2*    Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
32.1**    Certification of Chief Executive Officers (Principal Executive Officers) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
32.2**    Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101.INS    Inline XBRL Instance Document
   
101.SCH    Inline XBRL Taxonomy Extension Schema Document
   
101.CAL    Inline XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF    Inline XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB    Inline XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE    Inline XBRL Taxonomy Extension Presentation Linkbase Document
   
104    Cover page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101).
 
*
Filed herewith.
**
These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
 
25
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: December 29, 2021
 
PERIPHAS CAPITAL PARTNERING CORPORATION
   
By:  
/s/ Sanjeev Mehra
Name:   Sanjeev Mehra
Title:   Chief Executive Officer
    (Principal Executive Officer)
 
By:  
/s/ John Bowman
Name:   John Bowman
Title:   Chief Financial Officer
    (Principal Financial and Accounting Officer)
 
26
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