Item 8. Financial Statements and Supplementary Data
Item
8. Financial Statements and Supplementary Data.
INDEX
TO FINANCIAL STATEMENTS
Page
No.
Report of Independent Registered Public Accounting Firm
F-2
Financial
Statements:
Balance Sheet as of December 31, 2020 (as restated)
F-3
Statement of Operations for the period from August 11, 2020 (inception) to December 31, 2020 (as restated)
F-4
Statement of Changes in Stockholders’ Equity for the period from August 11, 2020 (inception) to December 31, 2020 (as restated)
F-5
Statement of Cash Flows for the period from August 11, 2020 (inception) to December 31, 2020 (as restated)
F-6
Notes to Financial Statements (as restated)
F-7
F- 1
Report
of Independent Registered Public Accounting Firm
To
the Stockholders and the Board of Directors of
DocGo
Inc. (formerly known as Motion Acquisition Corp.)
Opinion
on the Financial Statements
We
have audited the accompanying balance sheet of DocGo Inc. (formerly known as Motion Acquisition Corp.) (the “Company”) as
of December 31, 2020, the related statements of operations, changes in stockholders’ equity (deficit) and cash flows for the period
from August 11, 2020 (inception) through December 31, 2020, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2020, and the results of its operations and its cash flows for the period August 11, 2020 (inception) through December 31, 2020,
in conformity with accounting principles generally accepted in the United States of America.
Restatement
of Financial Statements
As
discussed in Note 2 to the financial statements, the 2020 financial statements have been restated to correct certain misstatements.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included
performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for
our opinion.
/s/
WithumSmith+Brown, PC
We
have served as the Company’s auditor since 2020.
New
York, New York
May 28, 2021, except for the effects of the
restatement disclosed in Note 2, as to which the date is November 23, 2021
F- 2
DOCGO
INC.
(f/k/a
MOTION ACQUISITION CORP.)
BALANCE
SHEET
DECEMBER
31, 2020
(As
restated – see Note 2)
Assets:
Current Assets:
Cash
$ 878,653
Prepaid
expenses
168,527
Other
current assets
350
Total
Current Assets
1,047,530
Cash
and marketable securities held in Trust Account
115,020,078
Total
Assets
$ 116,067,608
Liabilities,
Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit:
Current
liabilities:
Accounts
payable
$ 11,658
Franchise
taxes payable
78,192
Other
accrued liabilities
70,000
Total
Current Liabilities
159,850
Warrant
liabilities
9,040,670
Deferred
underwriting commissions in connection with the initial public offering
4,025,000
Total
Liabilities
13,225,520
Commitments
and Contingencies
Class A common stock, 11,500,000 shares subject to possible redemption at $ 10.00 per share redemption value
115,000,000
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; 50,000,000 shares authorized; - 0 - shares issued and outstanding (excluding 11,500,000 shares subject to possible redemption)
-
Class B common stock, $ 0.0001 par value; 12,500,000 shares authorized; 2,875,000 shares issued and outstanding (1) (2)
288
Additional
paid-in capital
-
Accumulated
deficit
( 12,158,200 )
Total
Stockholders’ Deficit
( 12,157,912 )
Total
Liabilities and Stockholders’ Deficit
$ 116,067,608
(1) On October 14, 2020, the Sponsor effected a surrender of 431,250 Class B common shares to the Company for no consideration, resulting in a decrease in the total number of Class B common shares then outstanding from 3,737,500 to 3,306,250 (see Note 5).
(2) Effective November 16, 2020, the Sponsor forfeited 431,250 Class B common shares as a result of the underwriter waiving its over-allotment option (see Note 4).
The
accompanying notes are an integral part of these financial statements.
F- 3
DOCGO
INC.
(f/k/a
MOTION ACQUISITION CORP.)
STATEMENT
OF OPERATIONS
FOR
THE PERIOD FROM AUGUST 11, 2020 (INCEPTION) TO DECEMBER 31, 2020
(As
restated – See Note 2)
Operating and formation costs
$
168,829
Loss from operations
( 168,829
)
Other income (expense):
Interest earned on marketable securities held in Trust Account
20,078
Change in fair value of warrant liabilities
( 3,883,670
)
Offering expense associated with warrants recorded as liabilities
( 191,112
)
Total other income (expense)
( 4,054,704
)
Net loss
$
( 4,223,533
)
Weighted average number of Class A common shares outstanding, basic and diluted
5,911,972
Basic and diluted net loss per Class A common share
$
( 0.48
)
Weighted average number of Class B common shares outstanding, basic and diluted
2,875,000
Basic and diluted net loss per Class B common share
$
( 0.48
)
(1)
On
October 14, 2020, the Sponsor effected a surrender of 431,250 Class B common shares to the Company for no consideration, resulting
in a decrease in the total number of Class B common shares then outstanding from 3,737,500 to 3,306,250. All shares and associated
amounts have been retroactively restated to reflect the share surrender (see Note 5).
(2)
Effective
November 16, 2020, the Sponsor forfeited 431,250 Class B common shares as a result of the underwriter waiving its over-allotment
option (see Note 4). These forfeited shares are excluded from weighted average Class B common shares outstanding.
The
accompanying notes are an integral part of these financial statements.
F- 4
DOCGO
INC.
(f/k/a
MOTION ACQUISITION CORP.)
STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR
THE PERIOD FROM AUGUST 11, 2020 (INCEPTION) TO DECEMBER 31, 2020
(As
restated – See Note 2)
Common
Stock
Additional
Total
Stockholders’
Class
A
Class
B
Paid-In
Accumulated
Equity
Shares
Amount
Shares
Amount
Capital
Deficit
(Deficit)
Balance
– August 11, 2020 (inception)
-
$
-
-
$
-
$
-
$
-
$
-
Issuance
of Class B common shares to Sponsor (1)
-
-
3,306,250
331
24,669
-
25,000
Excess
cash received over fair value of private placement warrants
-
-
-
-
1,748,000
-
1,748,000
Forfeiture
of Class B common stock (2)
-
-
( 431,250
)
( 43
)
43
-
-
Accretion
of Class A common stock subject to possible redemption
-
-
-
-
( 1,772,712
)
( 7,934,667
)
( 9,707,379
)
Net
loss
-
-
-
-
-
( 4,223,533
)
( 4,223,533
)
Balance
– December 31, 2020
-
$
-
2,875,000
$
288
$
-
$
( 12,158,200
)
$
( 12,157,912
)
(1) On October 14, 2020, the Sponsor effected a surrender of 431,250 Class B common shares to the Company for no consideration, resulting in a decrease in the total number of Class B common shares then outstanding from 3,737,500 to 3,306,250 (see Note 5).
(2) Effective November 16, 2020, the Sponsor forfeited 431,250 Class B common shares as a result of the underwriter waiving its over-allotment option (see Note 4).
The
accompanying notes are an integral part of these financial statements.
F- 5
DOCGO
INC.
(f/k/a
MOTION ACQUISITION CORP.)
STATEMENT
OF CASH FLOWS
FOR
THE PERIOD FROM AUGUST 11, 2020 (INCEPTION) TO DECEMBER 31, 2020
(As
restated – see Note 2)
Cash
Flows from Operating Activities:
Net
loss
$ ( 4,223,533 )
Adjustments
to reconcile net loss to net cash used in operating activities:
Interest
earned on marketable securities held in Trust Account
( 20,078 )
Offering
costs allocable to warrant liabilities
191,112
Change
in fair value of warrant liabilities
3,883,670
Changes
in operating assets and liabilities:
Prepaid
expenses
( 168,527 )
Other
current assets
( 350 )
Accounts
payable
11,658
Franchise
taxes payable
78,192
Net
cash used in operating activities
( 247,856 )
Cash
flow from investing activities:
Deposit
of cash into Trust Account
( 115,000,000 )
Net
cash used in investing activities
( 115,000,000 )
Cash
flow from financing activities:
Proceeds
from sale of Units, net of underwriting discounts paid
112,700,000
Proceeds
from sale of Private Warrants
3,800,000
Proceeds
from related party note payable
71,473
Repayment
of related party note payable
( 71,473 )
Payment
of offering costs
( 373,491 )
Net
cash provided by financing activities
116,126,509
Net
change in cash
878,653
Cash
- beginning of the period
-
Cash
- end of the period
$ 878,653
Supplemental
disclosure of noncash investing and financing activities:
Offering
costs paid by related party in exchange for issuance of Class B common stock
$ 25,000
Offering
costs included in other accrued liabilities
$ 70,000
Deferred
underwriting fees recorded as non-current liability in connection with initial public offering
$ 4,025,000
The
accompanying notes are an integral part of these financial statements.
F- 6
DOCGO
INC.
(f/k/a
MOTION ACQUISITION CORP.)
NOTES TO FINANCIAL STATEMENTS
PERIOD
FROM INCEPTION (AUGUST 11, 2020) TO DECEMBER 31, 2020
(as
restated – See Note 2)
NOTE
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Motion
Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on August 11, 2020. The Company’s
sponsor is Motion Acquisition LLC, a Delaware limited liability company (the “Sponsor”). The Company’s fiscal year
end is December 31.
Business
Combination
On
November 5, 2021 (the “Closing Date”), subsequent to the fiscal year to which this Annual Report on Form 10-K/A relates,
Motion Acquisition Corp. (the “Company” or, prior to the closing of the Business Combination (as defined below), sometimes
referred to herein as “Motion”) consummated the previously announced Business Combination following meeting of its stockholders,
where the stockholders of the Company considered and approved, among other matters, a proposal to adopt that certain Agreement and Plan
of Merger dated March 8, 2021 (the “Merger Agreement”), by and among the Company, Motion Merger Sub Corp., a Delaware corporation
and a direct wholly owned subsidiary of the Company, and Ambulnz, Inc., a Delaware corporation (“Ambulnz”). In connection
with the consummation of the Business Combination, the registrant changed its name from Motion Acquisition Corp. to DocGo Inc.
As
contemplated by the Merger Agreement and as described in Motion’s definitive proxy statement/consent solicitation/prospectus filed
with the U.S. Securities and Exchange Commission (the “SEC”) on October 14, 2021 (the “Prospectus”), Merger Sub
was merged with and into Ambulnz, with Ambulnz continuing as the surviving corporation (the “Merger” and, together with the
other transactions contemplated by the Merger Agreement, the “Business Combination”). As a result of the Merger, Ambulnz
is a wholly-owned subsidiary of DocGo and each share of Series A preferred stock of Ambulnz, no par value (“Ambulnz Preferred Stock”),
Class A common stock of Ambulnz, no par value (“Ambulnz Class A Common Stock”), and Class B common stock of Ambulnz, no par
value (“Ambulnz Class B Common Stock”, together with Ambulnz Class A Common Stock, “Ambulnz Common Stock”) was
cancelled and converted into the right to receive a portion of merger consideration issuable as common stock of DocGo, par value $ 0.0001 ,
pursuant to the terms and conditions set forth in the Merger Agreement.
The material
provisions of the Merger Agreement are described in the Prospectus in the section entitled “Proposal No.1—The Business Combination
Proposal—The Merger Agreement” beginning on page 97.
Business
Purpose Prior to the Business Combination
The
Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization
or other similar business combination with one or more businesses or entities. The Company is not limited to a particular industry or
geographic region for purposes of consummating a business combination. The Company has neither engaged in any operations nor generated
revenue to date.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of its initial public offering
of units (the “Initial Public Offering”), although substantially all of the net proceeds of the Initial Public Offering are
intended to be generally applied toward completing a business combination. Furthermore, there is no assurance that the Company will be
able to successfully complete a business combination.
F- 7
Financing Prior to the Business Combination
The registration statement
for the Company’s Initial Public Offering was declared effective on October 14, 2020. On October 19, 2020, the Company consummated
its Initial Public Offering of 11,500,000 units (the “Units” and, with respect to the Class A common stock
included in the Units being offered, the “Public Shares”) at $ 10.00 per Unit, generating gross proceeds of $ 115.0 million,
and incurring offering costs of approximately $ 6.7 million, inclusive of $ 4.0 million in deferred underwriting commissions (Note 4).
Simultaneously with the
closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 2,533,333
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price
of $ 1.50 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $ 3.8 million (Note
5).
The Company granted the
underwriter a 45-day option from the date of Initial Public Offering to purchase up to 1,725,000 additional Units to cover over-allotments
at the Initial Public Offering price less the underwriting discounts and commissions. In November 2020, the underwriter advised the Company
that it had elected to not exercise the over-allotment option (Note 4).
Trust Account
Prior to the Business Combination
Upon the closing of the
Initial Public Offering and the Private Placement, $ 115.0 million ($ 10.00 per Unit) of the net proceeds of the sale of the Units
in the Initial Public Offering and Private Placement Warrants in the Private Placement were placed in a trust account (“Trust
Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee. The proceeds held
in the Trust Account will either be held as cash or invested only in 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 in money market funds meeting certain
conditions 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 business combination and (ii) the distribution of the Trust Account as described below.
Pursuant
to stock exchange listing rules, the Company must complete an initial business combination with one or more target businesses that together
have an aggregate fair market value of at least 80 % of the assets held in the Trust Account (as defined below) (excluding the deferred
underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the
initial business combination. However, the Company will only complete a business combination if the post-transaction company owns
or acquires 50 % or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target
business 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”).
The
Company’s amended and restated certificate of incorporation provides that, other than the withdrawal of interest earned on the
funds that may be released to the Company to pay taxes, none of the funds held in the Trust Account will be released until the earliest
of: (i) the completion of the business combination; (ii) the redemption of any of Public Shares to its holders (the “Public Stockholders”)
properly tendered in connection with a stockholder vote to amend certain provisions of the Company’s amended and restated certificate
of incorporation prior to an initial business combination and (iii) the redemption of 100 % of the Public Shares if the Company does not
complete a business combination within the Combination Period (as defined below).
The
Company will have 24 months from the closing of the Initial Public Offering, or October 19, 2022, to complete its initial business
combination (the “Combination Period”). If the Company does not complete a business combination within this period of time
(and stockholders do not approve an amendment to the Company’s amended and restated 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, equal to the aggregate amount then
on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company
to pay its taxes (less up to $ 100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares,
which redemption will completely extinguish Public Stockholder’s rights as stockholders (including the right to receive further
liquidating distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
the remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in the case of clauses (ii) and
(iii) to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. The Company’s Sponsor and the Company’s officers and directors have entered into agreements with the Company, pursuant
to which they have waived their rights to participate in any redemption with respect to their Founder Shares (as defined below) in the
event the Company does not complete a business combination within the required time period; provided, however, if the Sponsor or any
of the Company’s officers, directors or affiliates acquire Public Shares after the Initial Public Offering, they will be entitled
to a pro rata share of the Trust Account upon the Company’s redemption or liquidation in the event the Company does not complete
a business combination within the Combination Period. In the event of such distribution, it is possible that the per share value in the
Trust Account will be less than the Initial Public Offering price per Unit of $ 10.00 .
F- 8
NOTE
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
First
Restatement
The
Company previously accounted for its outstanding warrants as components of equity instead of as derivative liabilities. The warrant
agreement governing the warrants includes a provision that provides for potential changes to the settlement amounts dependent upon the
characteristics of the holder of the warrant.
On
May 10, 2021, upon review of the “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose
Acquisition Companies (SPACs)” promulgated by the SEC on April 12, 2021, the Company’s management further evaluated the warrants
under Accounting Standards Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. ASC Section 815-40-15
addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states
that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s common
stock. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s common stock if the terms of the warrant require an
adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. An instrument
would be considered indexed to an entity’s own stock if its settlement amount were equal to the difference between the fair value
of a fixed number of the entity’s equity shares and a fixed monetary amount or an instrument that includes variables that would
be inputs to the fair value of a fixed-for-fixed forward or option on equity shares. Based on management’s evaluation, the Company’s
audit committee, in consultation with management, concluded that the Company’s warrants are not indexed to the Company’s
common stock in the manner contemplated by ASC Section 815-40-15 because the holder of the instrument is not an input into the pricing
of a fixed-for-fixed option on equity shares.
As
a result of the above, the Company has reclassified the warrants as derivative liabilities in its previously issued financial statements.
Under this accounting treatment, the Company is required to measure the fair value of the warrants at the end of each reporting period
and recognize changes in the fair value from the prior period in the Company’s operating results for the current period.
The
Company’s accounting for the warrants as components of equity instead of as derivative liabilities did not have any effect on the
Company’s previously reported cash balance, loss from operations or cash flows.
Following
is a summary of the effects of the restatements on previously issued financial statements, as filed in the First Amended Report:
As
Previously
Reported
Adjustments
As
Restated
Balance
sheet as of October 19, 2020 (audited)
Warrant
liabilities
$ —
$ 5,157,000
$ 5,157,000
Class
A common stock subject to possible redemption
107,104,620
( 5,157,000 )
101,947,620
Class
A common stock
79
52
131
Additional
paid-in capital
5,004,204
191,060
5,195,264
Accumulated
deficit
( 4,608 )
( 191,112 )
( 195,720 )
Balance
sheet as of December 31, 2020 (audited)
Warrant
liabilities
$ —
$ 9,040,670
$ 9,040,670
Class
A common stock subject to possible redemption
106,882,750
( 9,040,670 )
97,842,080
Class
A common stock
81
91
172
Additional
paid-in capital
5,148,390
4,074,691
9,223,081
Accumulated
deficit
( 148,751 )
( 4,074,782 )
( 4,223,533 )
Statement
of Operations for the period from August 11, 2020 (inception) to December 31, 2020 (audited)
Change
in fair value of warrant liabilities
$ —
$ 3,883,670
$ 3,883,670
Offering
expense associated with warrant liabilities
—
191,112
191,112
Net
loss
( 148,751 )
( 4,074,782 )
( 4,223,533 )
Basic
and diluted net loss per share, Class B common stock
( 0.06 )
( 1.42 )
( 1.48 )
Statement
of Cash Flows for the period from August 11, 2020 (inception) to December 31, 2020 (audited)
Net
loss
$ ( 148,751 )
$ ( 4,074,782 )
$ ( 4,223,533 )
Offering
costs allocable to warrant liabilities
—
191,112
191,112
Change
in fair value of warrant liabilities
—
3,883,670
3,883,670
Initial
classification of Class A common shares subject to possible redemption
107,104,620
( 5,157,000 )
101,947,620
Change
in value of Class A common shares subject to possible redemption
( 221,870 )
( 3,883,670 )
( 4,105,540 )
F- 9
Second
Restatement
On
November 22, 2021, the Company concluded it should restate its previously issued financial statements by amending the First Amended
Report, to classify all Class A common stock subject to possible redemption in temporary equity.
In
accordance with the SEC and its staff’s guidance on redeemable equity instruments, ASC 480, paragraph 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, or total stockholders’ equity.
Although the Company did not specify a maximum redemption threshold, the Motion Charter as it existed prior to consummation of the Business
Combination on November 5, 2021 provided that the Company would 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 financial statements, the Company revised this interpretation to include temporary equity in net tangible assets. Also, in
connection with the change in presentation for the Class A common stock subject to possible redemption, the Company also revised its
earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. This presentation contemplates
a business combination as the most likely outcome, in which case, both classes of shares share pro rata in the income and losses of the
Company. As a result, the Company restated its previously filed financial statements to present all redeemable Class A common stock as
temporary equity and to recognize accretion from the initial book value to redemption value at the time of its Initial Public Offering
and in accordance with ASC 480. The Company’s previously filed financial statements that contained the error were initially reported
in the Company’s Form 8-K filed with the SEC on October 23, 2020 (the “Post-IPO Balance Sheet”) and the Company's Annual
Report on 10-K for the annual period ended December 31, 2020, which were previously restated in the Company's Amendment No. 1 to its
Form 10-K as filed with the SEC on May 28, 2021, as well as the Form 10-Qs for the subsequent quarterly periods ended March 31, 2021,
June 30, 2021 and September 30, 2021 (collectively the “Affected Periods”). These financial statements restate the Company’s
previously issued audited financial statements covering the periods through December 31, 2020. The quarterly periods ended March 31,
2021, June 30, 2021 and September 30, 2021 will be restated in the Company’s Form 10-Q/A for the quarterly period ended September
30, 2021 that will be filed following this Second Amended Report.
Following
is a summary of the effects of the restatements on previously issued financial statements:
The
change in the carrying value of the redeemable shares of Class A common stock in the IPO Balance Sheet resulted in a decrease of approximately
$ 5.2 million in additional paid-in capital and an increase of approximately $ 7.9 million in the accumulated deficit, as well as a reclassification
of 1,305,238 shares of Class A common stock from permanent equity to temporary equity at a redemption value of $ 10.00 per share, as presented
below.
Balance
sheet as of October 19, 2020 (audited)
As
Previously Restated and Reported in
Form 10-K/A
Amendment
No. 1
Adjustments
As
Restated
Total
assets
$ 116,390,976
-
$ 116,390,976
Total
liabilities
$ 9,443,350
-
$ 9,443,350
Class
A common stock subject to possible redemption
101,947,620
13,052,380
115,000,000
Preferred
stock
-
-
-
Class
A common stock
131
( 131 )
-
Class
B common stock
331
-
331
Additional
paid-in capital
5,195,264
( 5,195,264 )
-
Accumulated
deficit
( 195,720 )
( 7,856,985 )
( 8,052,705 )
Total
stockholders’ equity (deficit)
$ 5,000,006
$ ( 13,052,380 )
$ ( 8,052,374 )
Total
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
$ 116,390,976
$ -
$ 116,390,976
F- 10
The
impact of the restatement on the audited balance sheet as of December 31, 2020 is presented below:
Balance
sheet as of December 31, 2020 (audited)
As
Previously
Restated and Reported in
Form 10-K/A
Amendment
No. 1
Adjustments
As
Restated
Total
assets
$ 116,067,608
-
$ 116,067,608
Total
liabilities
$ 13,225,520
-
$ 13,225,520
Class
A common stock subject to possible redemption
97,842,080
17,157,920
115,000,000
Preferred
stock
-
-
-
Class
A common stock
172
( 172 )
-
Class
B common stock
288
-
288
Additional
paid-in capital
9,223,081
( 9,223,081 )
-
Accumulated
deficit
( 4,223,533 )
( 7,934,667 )
( 12,158,200 )
Total
stockholders’ equity (deficit)
$ 5,000,008
$ ( 17,157,920 )
$ ( 12,157,912 )
Total
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
$ 116,067,608
$ -
$ 116,067,608
The
impact of the restatement to the previously reported as restated statement of cash flows for the period ended December 31, 2020, is presented
below:
For the Period From August 11, 2020 (Inception) Through December 31, 2020
As Previously
Restated and Reported in
Form 10-K/A
Amendment
No. 1
Adjustments
As Restated
Supplemental Disclosure of Noncash Financing Activities:
Initial value of Class A common stock subject to possible redemption
$ 101,947,620
$ ( 101,947,620 )
$ -
Change in value of Class A common stock subject to possible redemption
$ ( 4,105,540 )
$ 4,105,540
$ -
The impact
to the reported amounts of weighted average shares outstanding and basic and diluted earnings per common share is presented below for
the period from August 11, 2020 (Inception) through December 31, 2020:
Net
Loss Per Share
For
the Period From August 11, 2020 (Inception) Through December 31, 2020
As Previously
Restated and Reported in
Form 10-K/A
Amendment
No. 1
Adjustments
As
Restated
Net loss
$ ( 4,223,533 )
$ -
$ ( 4,223,533 )
Weighted average shares outstanding - Class
A common stock
11,500,000
( 5,588,028 )
5,911,972
Basic and diluted net loss per share - Class
A common stock
$ 0.00
$ ( 0.48 )
$ ( 0.48 )
Weighted average shares outstanding - Class
B common stock
2,875,000
-
2,875,000
Basic and diluted net loss per share - Class
B common stock
$ ( 1.48 )
$ 1.00
$ ( 0.48 )
F- 11
NOTE
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant
to the rules and regulations of the Securities and
Exchange Commission (“SEC”).
As described in the Company’s Form
8-K filed on November 22, 2021 and in Note 2—Restatement of Previously Issued Financial Statements herein, the Company’s
financial statements as of December 31, 2020 and for the period from August 11, 2020 (inception) through December 31, 2020
(collectively, the “2020 Affected Period”), are restated in this Annual Report on Form 10-K/A (Amendment No. 2) (this
“Annual Report”) to correct the misapplication of accounting guidance related to the Company’s Public Shares in
the Company’s previously restated audited financial statements for such period. The restated financial statements are
indicated as “Restated” in the audited financial statements and accompanying notes, as applicable. See Note
2—Restatement of Previously Issued Financial Statements for further discussion.
Use
of Estimates
The
preparation of the financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates
included in these financial statements is the determination of the fair value of the warrant liability. Such estimates may be subject
to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.
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
of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved.
Further,
section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with
the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has
elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different
application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard
at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements
with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the
extended transition period difficult or impossible because of the potential differences in accounting standards used.
Cash
and Cash Equivalents
Cash
consists of proceeds from the sale of the Private Placement Warrants held outside of the Trust Account which may be used to pay for operating
expenses, including expenses associated with identifying target businesses and consummating an initial business combination. The Company
considers cash equivalents to be all short-term investments with an original maturity of three months or less when purchased. The Company
did not have any cash equivalents as of December 31, 2020.
F- 12
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution
which, at times, may exceed the Federal depository insurance coverage of $ 250,000 . The Company has not experienced losses on these accounts
and management believes the Company is not exposed to significant risks on such accounts. At December 31, 2020, the assets held
in the Trust Account were substantially all held in U.S. Treasury Bills.
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 ASC 815-15. The classification of derivative instruments, including
whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.
The
Company accounts for its 6,366,666 common stock warrants issued in connection with its initial public offering ( 3,833,333 ) and Private
Placement ( 2,533,333 ) as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant
instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject
to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement
of operations. The fair value of warrants issued by the Company in connection with the initial public offering and Private Placement
was determined using Monte Carlo simulations at the initial public offering date (October 19, 2020) and at December 31, 2020.
Class
A Common Stock Subject to Possible Redemption
The
Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption (if any) are classified as liability instruments
and are measured at fair value. Shares of 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) are classified as temporary equity. At all other times, shares of Class A common stock are
classified as stockholders’ equity. Prior to consummation of the Business Combination, the Company’s Public Shares featured
certain redemption rights that were considered to be outside of the Company’s control. Accordingly, at December 31, 2020, 11,500,000
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 balance sheet.
Effective
with the closing of the Initial Public Offering, the Company recognized the accretion from the initial carrying value of the Public Shares
to the redemption amount, which resulted in charges to additional paid-in capital (to the extent available) and accumulated deficit.
Offering
Costs Associated with the Initial Public Offering
Offering
costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the initial
public offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering on a relative
fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities were recorded and presented
as non-operating expenses in the statement of operations, while offering costs associated with the Public Shares were charged against
the carrying value of such Class A common stock upon the completion of the Initial Public Offering.. On December 31, 2020, offering costs
totaled $ 6,793,491 (consisting of $ 2,300,000 of underwriting fees, $ 4,025,000 of deferred underwriting fees and $ 468,491 of other offering
costs), of which $ 191,112 was charged to expense and $ 6,602,379 was charged against the carrying value of the Public Shares.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value
Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet primarily due to their short-term
nature.
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes” (“ASC
740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax
assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income during the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount expected to be realized.
In
assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of
the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future
taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. Because the future realization
of tax benefits is not considered to be more likely than not, the Company provided a full valuation allowance for the deferred tax assets
at December 31, 2020.
F- 13
Net
Income (Loss) Per Common Share
The
Company complies with the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company
has two classes of shares, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata
between the two classes of shares. Net income (loss) per common share is calculated by dividing the net income (loss) by the weighted
average shares of common stock outstanding for the respective period.
The
Company did not consider the effect of the warrants issued in connection with the Initial Public Offering and the Private Placement to
purchase an aggregate of approximately 6,367,000 shares of common stock in the calculation of diluted income (loss) per share because
their exercise is contingent upon future events and because their inclusion would be anti-dilutive under the treasury stock method. 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 loss per share
for each class of common stock:
For
the period from August 11,
2020 (inception) through December 31,2020
Class
A
Class
B
Basic and diluted net loss per common share:
Numerator:
Allocation
of net loss
$ ( 2,841,640 )
$ ( 1,381,893 )
Denominator:
Basic
and diluted weighted average common shares outstanding
5,911,972
2,875,000
Basic and diluted
net loss per common share
$ ( 0.48 )
$ ( 0.48 )
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
effect on the Company’s financial statements.
NOTE
4. INITIAL PUBLIC OFFERING
Public
Units
On October
19, 2020, the Company consummated its Initial Public Offering of 11,500,000 Units at $ 10.00 per Unit, generating gross
proceeds of $ 115.0 million, and incurring offering costs of approximately $ 6.7 million, inclusive of $ 4.0 million in deferred
underwriting commissions. Upon the closing of the Initial Public Offering and the Private Placement, $ 115.0 million ($ 10.00 per Unit)
of the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement Warrants in the Private Placement
were placed in the Trust Account.
Each
Unit consists of one of the Company’s shares of Class A common stock, $ 0.0001 par value, and one-third of one redeemable warrant
(the “Public Warrants” and, collectively with the Private Placement Warrants, the “warrants”). Each whole Public
Warrant entitles the holder to purchase one share of Class A common stock at a price of $ 11.50 per share, subject to adjustment under
certain circumstances.
Underwriting
Agreement
The
Company granted the underwriter a 45-day option to purchase up to 1,725,000 additional Units to cover any over-allotments, at the
Initial Public Offering price less the underwriting discounts and commissions. On November 16, 2020, the underwriter advised the Company
that it would not exercise the over-allotment option, and consequently 431,250 Class B common shares were forfeited, resulting in a decrease
in the total number of Class B common shares outstanding from 3,306,250 to 2,875,000 , such that the Founder Shares (as defined below)
will represent 20.0 % of the Company’s issued and outstanding shares after the Initial Public Offering.
The
underwriter was entitled to an underwriting discount of $ 0.20 per unit, or $ 2.3 million in the aggregate, paid upon the closing
of the Initial Public Offering. In addition, $ 0.35 per unit, or approximately $ 4.0 million in the aggregate, will be payable to
the underwriter for deferred underwriting commissions from the amounts held in the Trust Account solely in the event that the Company
completes an initial business combination, subject to the terms of the underwriting agreement.
F- 14
NOTE
5. RELATED PARTY TRANSACTIONS
Founder
Shares
On
August 12, 2020, the Company’s Chief Executive Officer paid for certain offering costs for an aggregate price of $ 25,000 in exchange
for issuance of 3,737,500 shares of Class B common stock, par value $ 0.0001 per share (the “Founder Shares”), issued
to the Sponsor. On October 14, 2020, the Sponsor effected a surrender of 431,250 Class B common shares to the Company for no consideration,
resulting in a decrease in the total number of Class B common shares outstanding from 3,737,500 to 3,306,250 . On November 16, 2020, the
underwriter advised the Company that it would not exercise its over-allotment option to purchase additional shares, and consequently
431,250 Class B common shares were forfeited, resulting in a decrease in the total number of Class B common shares outstanding from 3,306,250
to 2,875,000 such that the Founder Shares represent 20.0 % of the Company’s issued and outstanding shares after the Initial Public
Offering. The Class B common stock shares were allocated among the Company’s officers, certain directors as well as to certain
third parties.
The
Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur
of: (A) one year after the completion of the initial business combination and (B) subsequent to the initial business combination, (x)
if the last reported sale price of the Class A common stock equals or exceeds $ 12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150
days after the initial business combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange,
reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their
shares of common stock for cash, securities or other property.
Private
Placement Warrants
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 2,533,333 Private Placement Warrants at a
price of $ 1.50 per Private Placement Warrants, generating gross proceeds of $ 3,800,000 million in the Private Placement, of which
$ 2,052,000 was included in warrant liabilities at the initial public offering date and $ 1,748,000 was recorded as Additional Paid-In
Capital. Each Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $ 11.50 per share, subject
to adjustment. A portion of the proceeds from the sale of the Private Placement Warrants was added to the net proceeds from the Initial
Public Offering to be held in the Trust Account. If the Company does not complete a business combination within the Combination Period,
the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable for cash (subject to
certain exceptions) and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
The
Private Placement Warrants (and the 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 the initial business combination (subject to certain exceptions).
Related
Party Loans
On
August 18, 2020, the Sponsor agreed to loan the Company up to an aggregate of $ 150,000 pursuant to an unsecured Note Payable to cover
expenses related to the Initial Public Offering. This loan was payable without interest upon the completion of the Initial Public Offering.
The Company borrowed approximately $ 71,000 under the Note Payable and fully repaid the borrowings on October 19, 2020.
Working
Capital Loans
In
order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination,
the Company’s officers, directors and their affiliates 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 Working Capital Loans may be convertible into warrants of
the post-business combination entity at a price of $ 1.50 per warrant at the option of the lender. Such warrants would be identical to
the Private Placement Warrants. 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 to date. The Company had no borrowings under the Working Capital Loans at December 31, 2020.
F- 15
NOTE
6. COMMITMENTS AND CONTINGENCIES
Registration
Rights
The
Sponsor is entitled to registration rights with respect to the Founder Shares, Private Placement Warrants and any additional warrants
that may be issued upon conversion of working capital loans pursuant to a registration rights agreement. The Sponsor will be entitled
to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the
Securities Act. In addition, Sponsor will have “piggy-back” registration rights to include their securities in other registration
statements filed by the Company. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
NOTE
7. WARRANT LIABILITIES
Public
Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units
and only whole Public Warrants will trade. After giving effect to the separation of all Units into the constituent Class A common shares
and fractional warrants, there would be 3,833,333 Public Warrants outstanding before giving effect to the reduction resulting from not
issuing fractional warrants upon separation of Units. The Public Warrants will become exercisable on the later of (a) 30 days after the
completion of a business combination and (b) 12 months from the closing of the Initial Public Offering; provided in each case that
the Company has an effective registration statement under the Securities Act covering the issuance of the shares of Class A common stock
issuable upon exercise of the Public Warrants and a current prospectus relating to them is available 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 (or the Company
permits holders to exercise their Public Warrants on a cashless basis under certain circumstances). The Company has agreed that as soon
as practicable, but in no event later than 15 business days after the closing of the initial business combination, the Company will use
its reasonable best efforts to file, and within 60 business days following the initial business combination to have declared effective,
a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise
of the warrants and to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of
Class A common stock until the warrants expire or are redeemed; provided that, if the Class A common stock is at the time of any exercise
of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under
Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants
to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so
elects, it will not be required to file or maintain in effect a registration statement, but it will be required to use its best efforts
to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
The
Warrants will have an exercise price of $ 11.50 per share, subject to adjustment, and will expire five years after the completion of a
business combination or earlier upon redemption or liquidation.
In
addition, if (x) the Company issues additional shares or equity-linked securities for capital raising purposes in connection with
the closing of the initial business combination at an issue price or effective issue price of less than $9.20 per share (as adjusted
for stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) (with such issue
price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such
issuance to the Company’s Sponsor or to its officers, directors or their affiliates, without taking into account any Founder Shares
held by them prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent
more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial business combination on the
date of the consummation of the initial business combination (net of redemptions), and (z) the volume weighted average trading price
of the Company’s shares of Class A common stock during the 20 trading day period starting on the trading day prior to the day on
which the Company consummates its initial business combination (such price, the “Market Value”) is below $9.20 per share,
the exercise price of each warrant will be adjusted (to the nearest cent) such that the effective exercise price per full share will
be equal to 115% of the higher of (i) the Market Value and (ii) the Newly Issued Price, and the $18.00 per-share redemption trigger
price described below will be adjusted (to the nearest cent) to be equal to 180% of the higher of (i) the Market Value and (ii) the Newly
Issued Price.
The
2,533,333 Private Placement Warrants are identical to the Public Warrants, except that (1) the Private Placement Warrants and the shares
of Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until
30 days after the completion of a business combination, subject to certain limited exceptions, (2) the Private Placement Warrants will
be non-redeemable (subject to certain exceptions) and exercisable on a cashless basis so long as they are held by the Sponsor or
its permitted transferees and (3) the Sponsor and its permitted transferees will also have certain registration rights related to the
Private Placement Warrants (including the shares of Class A common stock issuable upon exercise of the Private Placement Warrants). 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.
F- 16
Once
the warrants become exercisable, the Company may redeem the outstanding warrants (except for the Private Placement Warrants):
●
in
whole and not in part;
●
at
a price of $0.01 per Warrant;
●
upon
a minimum of 30 days’ prior written notice of redemption; and
● if, and only if, the last reported sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing once the warrants become exercisable and ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
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.
Commencing
ninety days after the warrants become exercisable, the Company may redeem the outstanding warrants:
●
in
whole and not in part;
●
at
$0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise
their warrants on a cashless basis prior to redemption and receive that number of shares of Class A common stock to be determined
by reference to an agreed table based on the redemption date and the “fair market value” of the Company’s Class
A common stock;
●
if,
and only if, the last reported sale price of the Company’s Class A common stock equals or exceeds $10.00 per share (as adjusted
for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which
the Company sends the notice of redemption to the warrant holders;
●
if,
and only if, the Private Placement Warrants are also concurrently called for redemption on the same terms as the outstanding Public
Warrants, as described above; and
● if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock (or a security other than the Class A common stock into which the Class A common stock has been converted or exchanged for in the event the Company is not the surviving company in the initial business combination) issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given.
The
“fair market value” of the Class A common stock for this purpose shall mean the average last reported sale price of the Class
A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to
the holders of warrants.
In
no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a business combination within
the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such
funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust
Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
NOTE
8 – CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION
Prior
to the consummation of the Business Combination, the Company’s Class A common stock feature certain redemption rights that were
considered to be outside of the Company’s control and subject to the occurrence of future events. At December 31, 2020, there were
11,500,000 shares of Class A common stock outstanding subject to possible redemption. The carrying value of potentially redeemable Class
A common stock reported in temporary equity of the balance sheet at December 31, 2020 is comprised as follows:
Gross proceeds from issuance
of potentially redeemable Class A common stock
$ 115,000,000
Less:
Proceeds allocated to
Public Warrants
( 3,105,000 )
Class A common stock
issuance costs
( 6,793,491 )
Plus:
Accretion of carrying
value to redemption value
9,898,491
Class A common stock
subject to possible redemption
$ 115,000,000
F- 17
NOTE
9. STOCKHOLDERS’ DEFICIT
Class
A Common Stock —The Company is authorized to issue 50,000,000 shares of Class A common stock with a par shares value
of $ 0.0001 per share. At December 31, 2020, there were 1,715,792 shares of Class A common stock issued and outstanding, excluding 9,784,208
shares of Class A common stock subject to possible redemption.
Class
B Common Stock —The Company is authorized to issue 12,500,000 shares of Class B common stock with a par value of $ 0.0001
per share. Holders of the Company’s Class B common stock are entitled to one vote for each share . At December 31, 2020, there were
2,875,000 shares of Class B common stock issued and outstanding.
The
shares of Class B common stock will automatically convert into shares of Class A common stock at the time of the initial business combination,
or earlier at the option of the holder, 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 described herein). In the case that additional shares of Class A
common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering
and related to the closing of the initial business combination (including pursuant to a specified future issuance), the ratio at which
shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of
the then-outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance,
including pursuant to a specified future issuance) so that the number of shares of Class A common stock issuable upon conversion of all
shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20 % of the sum of the total number of all
shares of common stock outstanding upon the completion of the Initial Public Offering plus all shares of Class A common stock and equity-linked securities
issued or deemed issued in connection with the Company’s initial business combination (excluding any shares or equity-linked securities
issued or issuable to any seller in the initial business combination).
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 December 31, 2020, there were no shares of preferred stock issued or outstanding.
NOTE
10. FAIR VALUE MEASUREMENTS
The
Company classifies its U.S. Treasury and equivalent securities as held-to-maturity in accordance with ASC 320 “Investments ‒
Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold
until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying balance sheet and adjusted for
the amortization or accretion of premiums or discounts.
At
December 31, 2020, assets held in the Trust Account were comprised of $ 743 in cash and $ 115,019,335 in U.S. Treasury Bills. During the
period ended December 31, 2020, the Company did not withdraw any interest income from the Trust Account to pay its franchise taxes and
income taxes.
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company
seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is
used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and
liabilities:
Level 1 :
Quoted
prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions
for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 :
Observable
inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets
or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3:
Unobservable
inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability.
F- 18
The
gross holding gains and fair value of held-to-maturity securities at December 31, 2020 are as follows:
Held-To-Maturity
Securities
Carrying
Value at
December 31,
2020
(Amortized
Cost)
Gross
Unrealized
Holding
Gain
Fair
Value - Quoted Prices in Active Markets
(Level
1)
U.S.
Treasury Bills (mature on February 18, 2021)
$ 115,019,335
$ 4,462
$ 115,024,797
At
December 31, 2020, there were 3,833,333 Public Warrants and 2,533,333 Private Placement Warrants outstanding. The following table presents
information about the Company’s warrant liabilities that are measured at fair value on a recurring basis at December 31, 2020 and
indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
December 31,
Quoted
Prices In
Active
Markets
Significant
Other
Observable
Inputs
Significant
Other
Unobservable
Inputs
2020
(Level
1)
(Level
2)
(Level
3)
Warrant
Liabilities – Public Warrants
$ 5,443,335
$ -
$ -
$ 5,443,335
Warrant
Liabilities – Private Warrants
$ 3,597,335
$ -
$ -
$ 3,597,335
The
Company utilized a Monte Carlo simulation model to value the warrants at the initial public offering date (October 19, 2020) and December
31, 2020, with changes in fair value subsequent to October 19, 2020 recognized in the statement of operations. The estimated fair value
of the warrant liability was determined using Level 3 inputs. Inherent in a binomial options pricing model are assumptions related
to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of
its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate
is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the
warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based
on the historical rate, which the Company anticipates to remain at zero. However, inherent uncertainties are involved. If factors or
assumptions change, the estimated fair values could be materially different.
The
aforementioned warrant liabilities are not subject to qualified hedge accounting.
There
were no transfers between Levels 1, 2 or 3 during the period from August 11, 2020 (inception) to December 31, 2020.
The
following table provides quantitative information regarding Level 3 fair value measurements:
At
October 19,
2020
(Initial Measurement)
As
of
December 31,
2020
Stock
price
$ --
$ 10.15
Strike
price
$ 11.50
$ 11.50
Term
(in years)
5.0
5.0
Volatility
16.3 %
21.2 %
Risk-free
rate
0.34 %
0.34 %
Dividend
yield
0.0 %
0.0 %
Probability
of completing a Business Combination
70.0 %
70.0 %
The
following table presents the changes in the fair value of warrant liabilities:
Public
Private
Placement
Total
Warrant
Liabilities
Fair
value as of August 11, 2020 (inception)
$ —
$ —
$ —
Initial
measurement on October 19, 2020
3,105,000
2,052,000
5,157,000
Change
in fair value recognized in earnings
2,338,335
1,545,335
3,883,670
Fair
value as of December 31, 2020
$ 5,443,335
$ 3,597,335
$ 9,040,670
F- 19
Level
3 financial liabilities consist of the Public Warrant and Private Placement Warrant liability for which there is no current market for
these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements
categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded
as appropriate.
NOTE
11. INCOME TAXES
The
income tax provision (benefit) for the year ended December 31, 2020 consists of the following:
Current
Federal
$ ( 12,204 )
State
—
Deferred
Federal
( 19,009 )
State
—
Change
in valuation allowance
31,213
Income
tax provision (benefit)
$ —
The
Company’s net deferred tax assets are as follows:
Deferred
tax asset
Net
operating loss carryforward
$ 12,204
Startup/organizational
costs
19,009
Total
deferred tax assets
31,213
Valuation
allowance
( 31,213 )
Deferred
tax assets, net of allowance
$ —
In
assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management
considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment.
After consideration of all of the information available, management believes that significant uncertainty exists with respect to future
realization of the deferred tax assets and has therefore established a full valuation allowance as of December 31, 2020.
A
reconciliation of the statutory income tax rate to the Company’s effective tax rate for the period from August 11, 2020 (inception)
to December 31, 2020 is as follows:
Tax
benefit at statutory federal income tax rate
( 21.0 %)
Permanent
book/tax difference
20.3 %
Valuation
allowance
0.7 %
Income
tax provision (benefit)
0.0 %
NOTE
12. SUBSEQUENT EVENTS
The Company evaluated
subsequent events and transactions that occurred after the balance sheet date up to the date the audited financial statements were issued.
Based upon this review, the Company determined that there have been no events that have occurred that would require adjustment to or
disclosure in the financial statements other than as described below, the consummation of the Business Combination described in Note
1 above, and in Note 2 – Restatement of Previously Issued Financial Statements..
Proposed Business
Combination Prior to the Business Combination
On
March 8, 2021, the Company entered into a merger agreement (the “Merger Agreement”) with Ambulnz, Inc. dba DocGo (“DocGo”)
pursuant to which DocGo would merge with a newly incorporated subsidiary of the Company (the “Merger”), with DocGo being
the surviving entity of the Merger and becoming a wholly-owned subsidiary of the Company. The Merger is expected to be consummated in
the second quarter of 2021, following the receipt of required approval by the stockholders of the Company and DocGo, required regulatory
approvals, and the fulfillment of other conditions.
F- 20
Consideration
Upon
consummation of the Merger, DocGo stockholders will receive 83,600,000 shares of the Company’s Class A common stock as consideration
and up to 5,000,000 additional shares of the Company’s Class A common stock as earn-out consideration issuable in the future upon
attainment of the following stock price conditions: (i) 1,250,000 shares if the closing stock price equals or exceeds $12.50 per share
on any 20 trading days in a 30-trading-day period at any time until the first anniversary of the closing date; (ii) 1,250,000 shares
if the closing stock price equals or exceeds $15.00 per share on any 20 trading days in a 30-trading-day period at any time until the
third anniversary of the closing date; (iii) 1,250,000 shares if the closing stock price equals or exceeds $15.00 per share on any 20
trading days in a 30-trading-day period at any time until the third anniversary of the closing date; and (iv) 1,250,000 shares if the
closing stock price stock equals or exceeds $15.00 per share on any 20 trading days in a 30-trading-day period at any time until the
fifth anniversary of the closing date.
Sponsor
Escrow Agreement
Pursuant
to the Merger Agreement, the Company’s Sponsor will enter into an escrow agreement (the “Sponsor Escrow Agreement”)
with the Company and Continental Stock Transfer & Trust Company, as escrow agent, providing that, immediately following the closing
of the Merger, the Sponsor shall deposit 575,000 shares of the Company’s Class A common stock (the “Sponsor Earnout Shares”)
into escrow. The Sponsor Escrow Agreement will provide that such Sponsor Earnout Shares will either be released to the Sponsor or terminated
and canceled by the Company if certain stock price conditions are met or not, as follows: (i) with respect to 287,500 Sponsor Earnout
Shares, the closing stock price equals or exceeds $ 12.50 per share on any 20 trading days in a 30-trading-day period at any time until
the third anniversary of the closing date, and (ii) with respect to 287,500 Sponsor Earnout Shares, the closing stock price equals or
exceeds $ 15.00 per share on any 20 trading days in a 30-trading-day period at any time at any time until the fifth anniversary of the
closing date.
Lock-Up
Agreements
Concurrently
with the execution of the Merger Agreement, the Company, DocGo and Doc stockholders who will hold 72.19 % of the fully-diluted equity
of Company following the consummation of the Merger entered into lock-up agreements providing that such Company stockholders will not
transfer the consideration shares for earn-out shares received by such stockholders for a period of six months following the consummation
of the Merger, in each case on the terms and subject to the provisions set forth therein.
Sponsor
Waiver Agreement
Concurrently
with the execution of the Merger Agreement, the Company, the Sponsor and DocGo entered into an agreement providing for the Sponsor’s
waiver of the anti-dilution and conversion price adjustments set forth in the Company’s Amended and Restated Certificate of Incorporation.
As a result of such waiver, all outstanding Class B common stock of the Company will convert on a one-to-one basis into the Company’s
Class A Common Stock concurrently with the closing of the Merger Agreement.
Other
Agreements
The
Merger Agreement also calls for additional agreements, including, among others, non-competition agreements, employment agreements, voting
support agreements, and a registration rights agreement.
PIPE
Subscription Agreements Prior to the Business
Combination
The
Company engaged Barclays Capital Inc. and Deutsche Bank Securities Inc. as co-lead private placement agents, and engaged Canaccord Genuity
LLC as co-placement agent for a private placement of the Company’s Class A common stock.
Concurrently
with the execution of the Merger Agreement, the Company entered into subscription agreements (“Subscription Agreements”)
with certain qualified institutional buyers and institutional accredited investors (collectively, the “Investors”), pursuant
to which the Company will, substantially concurrently with, and contingent upon, the consummation of the Merger, issue an aggregate of
12,500,000 shares of the Company’s Class A Common Stock to the Investors at a price of $ 10.00 per share, for aggregate gross proceeds
to the Company of $ 125,000,000 (the “PIPE”). The closing of the Subscription Agreements is conditioned upon, among other
things, (i) the substantially concurrent consummation of the Merger, (ii) the accuracy of all representations and warranties of the Company
and the Investors in the Subscription Agreements, and (iii) the Merger Agreement shall not have been amended or modified, and no waiver
shall have occurred thereunder, that would reasonably be expected to materially and adversely affect the economic benefits that the Investor
would reasonably expect to receive under the Subscription Agreement without having received the Investor’s prior written consent.
The
Company has agreed that, as soon as reasonably practicable, but in no event later than 30 calendar days following the closing date of
the Merger, it shall file a registration statement with the SEC covering the resale by the Investors of the shares of the Company Common
Stock issued to them in the PIPE and use its best efforts to have such registration statement declared effective as promptly as practicable
thereafter, but in no event later than the earlier of 60 calendar days after filing (or 90 calendar days in the event the SEC issues
written comments) or the 10th business day after the Company is notified that the registration statement will not be subject to review
or further review.
The
shares of the Company’s Class A common stock were offered and sold to the Investors in reliance on the exemption from registration
provided by Section 4(a)(2) of the Securities Act, based on the fact that the sale will have been made without any general solicitation
or advertising and based on representations from each Investor that (a) it was a “qualified institutional buyer” (as defined
in Rule 144A under the Securities Act) or an institutional “accredited investor” (within the meaning of Rule 501(a) under
the Securities Act), (b) it was purchasing the shares of the Company Common Stock for its own account investment, and not with a view
to distribution, (c) it had been given full and complete access to information regarding the Company, DocGo, and the Merger, and (d)
it understood that the offer and sale of the shares of the Company’s common stock was not registered and the shares may not be
publicly sold or otherwise disposed of without registration under the Securities Act or an applicable exemption therefrom.
F- 21
Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.