☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2022
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
511 6th Ave #7342 New York, New York | 10011 | |
(Address of principal executive offices) | (Zip Code) |
Class A ordinary share at an exercise price of $11.50
$11.50
Large accelerated filer | ☐ | Accelerated filer | ||||
Non-accelerated filer | Smaller reporting company | ☒ | ||||
Emerging growth company | ☒ |
FAR PEAK ACQUISITION CORPORATION
Form 10-Q
Table of Contents
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Item 1. | ||||||
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5 | ||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||||
Item 3. | ||||||
Item 4. | ||||||
27 | ||||||
Item 1. | 27 | |||||
Item 1a. | 27 | |||||
Item 2. | ||||||
Item 3. | ||||||
Item 4. | ||||||
Item 5. | ||||||
Item 6. |
Assets Current assets: Cash Prepaid expenses Total current assets Investments held in Trust Account Total Assets Liabilities and Shareholders’ Equity Current liabilities: Accrued expenses Accounts payable Total current liabilities Deferred legal fees Deferred underwriting commissions Total liabilities Commitments and Contingencies Class A ordinary shares; 58,111,792 shares subject to possible redemption at $10.00 per share Shareholders’ Equity Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 1,888,208 shares issued and outstanding (excluding 58,111,792 shares subject to possible redemption) Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 9,750,000 shares issued and outstanding Additional paid-in capital Accumulated deficit Total shareholders’ equity Total Liabilities and Shareholders’ Equity SHEETSUNAUDITED SHEETAS OF DECEMBER 31, 2020 $ 1,756,985 857,475 2,614,460 599,976,631 $ 602,591,091 $ 510,000 125,666 635,666 400,000 15,437,500 16,473,166 581,117,920 — 189 975 5,684,511 (685,670 ) 5,000,005 $ 602,591,091
2022
2022 $ 1,897,876 $ 2,220,941 85,348 76,042 1,983,224 2,296,983 606,938,498 602,690,646 $ 13,451,792 $ 10,436,125 206,091 69,668 13,657,883 10,505,793 — 400,000 — 5,983,998 13,657,883 16,889,791 606,838,498 602,590,646 — — — — 975 975 — — (11,575,634 ) (14,493,783 ) (11,574,659 ) (14,492,808 )
FOR THE PERIOD FROM OCTOBER 19, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
General and administrative expenses | $ | 662,301 | ||
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Total operating expenses | (662,301 | ) | ||
Gain (loss) on investments held in Trust Account | (23,369 | ) | ||
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Net loss | $ | (685,670 | ) | |
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Weighted average shares outstanding of Class A ordinary shares | 57,200,000 | |||
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Basic and diluted net loss per share, Class A | $ | (0.00 | ) | |
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Weighted average shares outstanding of Class B ordinary shares | 9,750,000 | |||
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Basic and diluted net loss per share, Class B | $ | (0.07 | ) | |
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For the Three Months Ended December 31, | ||||||||
2022 | 2021 | |||||||
General and administrative expenses | $ | 3,065,849 | $ | 2,362,050 | ||||
Loss from operations | (3,065,849 | ) | (2,362,050 | ) | ||||
Other income (expenses): | ||||||||
Change in fair value of derivative warrant liabilities | 5,983,998 | (7,020,000 | ) | |||||
Income from investments held in Trust Account | 4,247,852 | 11,767 | ||||||
Net income (loss) | $ | 7,166,001 | $ | (9,370,283 | ) | |||
Weighted average shares outstanding of Class A ordinary shares - Basic and diluted | 60,000,000 | 60,000,000 | ||||||
Basic and diluted net income (loss) per ordinary share, Class A | $ | 0.10 | $ | (0.13 | ) | |||
Weighted average shares outstanding of Class B ordinary shares - Basic and diluted | 9,750,000 | 9,750,000 | ||||||
Basic and diluted net income (loss) per ordinary share, Class B | $ | 0.10 | $ | (0.13 | ) | |||
FOR THE PERIOD FROM OCTOBER 19, 2020 (INCEPTION) THROUGH DECEMBERDEFICIT
Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
Class A | Class B | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
Balance - October 19, 2020 (inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Issuance of Class B ordinary shares to Sponsor | — | — | 9,750,000 | 975 | 24,025 | — | 25,000 | |||||||||||||||||||||
Sale of units in initial public offering, gross | 60,000,000 | 6,000 | — | — | 599,994,000 | — | 600,000,000 | |||||||||||||||||||||
Offering costs, net of reimbursement from underwriters | — | — | — | — | (23,721,405 | ) | — | (23,721,405 | ) | |||||||||||||||||||
Sale of private placement warrants to Sponsor | — | — | — | — | 10,500,000 | — | 10,500,000 | |||||||||||||||||||||
Shares subject to possible redemption | (58,111,792 | ) | (5,811 | ) | — | — | (581,112,109 | ) | — | (581,117,920 | ) | |||||||||||||||||
Net loss | — | — | — | — | — | (685,670 | ) | (685,670 | ) | |||||||||||||||||||
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Balance - December 31, 2020 | 1,888,208 | $ | 189 | 9,750,000 | $ | 975 | $ | 5,684,511 | $ | (685,670 | ) | $ | 5,000,005 | |||||||||||||||
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2022
Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
Class A | Class B | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance - September 30, 2022 | — | $ | — | 9,750,000 | $ | 975 | $ | — | $ | (14,493,783 | ) | $ | (14,492,808 | ) | ||||||||||||||
Increase in redemption value of Class A ordinary shares subject to possible redemption | — | — | — | — | — | (4,247,852 | ) | (4,247,852 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | 7,166,001 | 7,166,001 | |||||||||||||||||||||
Balance - December 31, 2022 (unaudited) | — | $ | — | 9,750,000 | $ | 975 | $ | — | $ | (11,575,634 | ) | $ | (11,574,659 | ) | ||||||||||||||
Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
Class A | Class B | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance - September 30, 2021 | — | $ | — | 9,750,000 | $ | 975 | $ | — | $ | (66,708,816 | ) | $ | (66,707,841 | ) | ||||||||||||||
Net loss | — | — | — | — | — | (9,370,283 | ) | (9,370,283 | ) | |||||||||||||||||||
Balance - December 31, 2021 (unaudited) | — | $ | — | 9,750,000 | $ | 975 | $ | — | $ | (76,079,099 | ) | $ | (76,078,124 | ) | ||||||||||||||
FOR THE PERIOD FROM OCTOBER 19, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
Cash Flows from Operating Activities: | ||||
Net loss | $ | (685,670 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
General and administrative expenses paid by Sponsor under note payable | 31,015 | |||
(Gain) loss on investments held in Trust Account | 23,369 | |||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | (857,475 | ) | ||
Accrued expenses | 435,000 | |||
Accounts payable | 125,666 | |||
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Net cash used in operating activities | (928,095 | ) | ||
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Cash Flows from Investing Activities: | ||||
Cash deposited in Trust Account | (600,000,000 | ) | ||
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Net cash used in investing activities | (600,000,000 | ) | ||
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Cash Flows from Financing Activities: | ||||
Repayment of note payable to related party | (195,396 | ) | ||
Proceeds received from initial public offering, gross | 600,000,000 | |||
Proceeds received from private placement | 10,500,000 | |||
Offering costs paid | (11,219,524 | ) | ||
Reimbursement from underwriters | 3,600,000 | |||
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Net cash provided by financing activities | 602,685,080 | |||
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Net change in cash | 1,756,985 | |||
Cash - beginning of the period | — | |||
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Cash - end of the period | $ | 1,756,985 | ||
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Supplemental disclosure of noncash financing activities: | ||||
Offering costs paid by Sponsor in exchange for issuance of Class B ordinary shares | $ | 25,000 | ||
Offering costs included in accrued expenses | $ | 75,000 | ||
Offering costs funded with note payable - related party | $ | 164,381 | ||
Deferred legal fees | $ | 400,000 | ||
Deferred underwriting commissions | $ | 15,437,500 | ||
Initial value of Class A ordinary shares subject to possible redemption | $ | 531,739,700 | ||
Change in value of Class A ordinary shares subject to possible redemption | $ | 49,378,220 |
For the Three Months Ended December 31, | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | 7,166,001 | $ | (9,370,283 | ) | |||
Adjustments to reconcile net income (loss) to cash used in operating activities: | ||||||||
Change in fair value of derivative warrant liabilities | (5,983,998 | ) | 7,020,000 | |||||
Income from investments held in Trust Account | (4,247,852 | ) | (11,767 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | (9,306 | ) | 157,500 | |||||
Accrued expenses | 2,615,667 | 2,026,500 | ||||||
Accounts payable | 136,423 | 38,524 | ||||||
Net cash used in operating activities | (323,065 | ) | (139,526 | ) | ||||
Net change in cash | (323,065 | ) | (139,526 | ) | ||||
Cash - beginning of the period | 2,220,941 | 172,454 | ||||||
Cash - end of the period | $ | 1,897,876 | $ | 32,928 | ||||
(excluding (excluding the amount of any deferred underwriting discount held in the Trust Account and taxes payable on the
intent, agreement in principle or definitive agreement for the initial Business Combination within 24 months from the closing of the Initial Public Offering but has not completed the initial Business Combination
2023.
Going Concern
Loans (see Note 5).
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. Management is continuing to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have an effect onwill facilitate the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
One of the more significant accounting estimates included in these unaudited condensed 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.
2022 and September 30, 2022.
the derivative warrant liabilities, see Note 10).
ASC 820, Fair Value Measurement, defines fair value and requires disclosures about fair value measurements. Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
As of December 31, 2020
Deferred offering
the listed market price of such warrants. As the transfer of Private Placement Warrants to anyone who is not a permitted transferee would result in the Private Placement Warrants having substantially the same terms as the Public Warrants, the Company determined, through use of a Binomial Lattice model, that the fair value of each Private Placement Warrant is equivalent to that of each Public Warrant. 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.
sheets.
The Company’s unaudited condensed statements of operations include a presentation of income (loss) per ordinary share, subject to redemption inbecause their exercise is contingent upon future events. As a manner similar toresult, diluted net income (loss) per share is the two-class method of income per share. Netsame as basic net income (loss) per share for the period from October 19, 2020 (inception) throughthree months ended December 31, 2020,2022 and 2021. Accretion associated with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value. The following table reflects the calculation of basic and diluted for Public Shares, was calculated by dividing the gainnet income (loss) on investments held in the Trust Account of approximately $23,000 by the weighted average number of Public Shares outstanding for the period. Net loss per share for the period from October 19, 2020 (inception) through December 31, 2020, basic and diluted for Founder Shares, was calculated by dividing the net loss approximately $686,000, less income (loss) attributable to Public Shares, by the weighted average number of Founder Shares outstanding for the period.
ordinary share:
For the Three Months Ended December 31, 2022 | For the Three Months Ended December 31, 2021 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted net income (loss) per ordinary share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income (loss) - basic and diluted | $ | 6,164,302 | $ | 1,001,699 | $ | (8,060,458 | ) | $ | (1,309,825 | ) | ||||||
Denominator: | ||||||||||||||||
Basic weighted average ordinary shares outstanding | 60,000,000 | 9,750,000 | 60,000,000 | 9,750,000 | ||||||||||||
Basic and diluted net income (loss) per ordinary share | $ | 0.10 | $ | 0.10 | $ | (0.13 | ) | $ | (0.13 | ) | ||||||
PronouncementsManagementPronouncement
In January 2022 and March 2022, pursuant to commitments made at the time of the Initial Public Offering, the Company completed the sale of an additional 133,332 Private Placement Warrants at $1.50 per warrant for aggregate gross proceeds of approximately $200,000.
Note 6—Commitmentsimpact of the
has concluded that while it is reasonably possible that the virus could have an effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
On May 20, 2022, the underwriters waived their deferred fee, resulting in a gain from settlement of deferred underwriting commissions of approximately $15.4 million.
Note 7—Shareholders’ Equity
Preference Shares —
Class A Ordinary Shares— The Company is authorized to issue 500,000,000 Class A ordinary shares, withclosing a par value of $0.0001 per share. Holders of Class A ordinary shares are entitled to one vote for each share. At December 31, 2020, there were 60,000,000 Class A ordinary shares issued and outstanding, including 58,111,792 Class A ordinary shares subject to possible redemption.
Class B Ordinary Shares — The Company is authorized to issue 50,000,000 Class B ordinary shares, with a par value of $0.0001 per share. Holders of the Class B ordinary shares are entitled to one vote for each share.Business Combination. As of December 31, 2020, there were 9,750,000 Class B ordinary shares issued2022 and outstanding.
Only holders of2021, the Class B ordinary shares will have the right to vote on the election of directors priorCompany has incurred approximately $7.7 million in contingent fees pursuant to the Business Combination. Holders of Class A ordinary shares and Class B ordinary sharesagreement. The Company will vote together as a single class on all other matters submitted to a vote of shareholders, except as required by law. The Class B ordinary sharesrecognize an expense for these services when the performance trigger is considered probable, which in this case will automatically convert into Class A ordinary shares at the timeoccur upon closing of a Business Combination or earlier atCombination.
Warrants — lease payment of $37,500 during the term of the sublease, which ended on April 30, 2022. For the three months ended December 31, 2022 and 2021, the Company incurred approximately $0 and $38,000 of rental lease expenses, respectively.
Gross proceeds from Initial Public Offering | $ | 600,000,000 | ||
Less: | ||||
Fair value of Public Warrants at issuance | (40,000,000 | ) | ||
Offering costs allocated to Class A ordinary shares subject to possible redemption | (22,036,645 | ) | ||
Plus: | ||||
Accretion on Class A ordinary shares subject to possible redemption amount | 62,036,645 | |||
Class A ordinary shares subject to possible redemption at September 30, 2021 | 600,000,000 | |||
Remeasurement of redemption value of Class A ordinary shares subject to possible redemption | 2,590,646 | |||
Class A ordinary shares subject to possible redemption at September 30, 2022 | 602,590,646 | |||
Remeasurement of redemption value of Class A ordinary shares subject to possible redemption | 4,247,852 | |||
Class A ordinary shares subject to possible redemption at December 31, 2022 | $ | 606,838,498 | ||
December 31, 2020 | ||||||||||||
Description | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||
Investments held in Trust Account | ||||||||||||
U.S. Treasury Securities | $ | 599,976,631 | $ | — | $ | — | ||||||
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Total | $ | 599,976,631 | $ | — | $ | — | ||||||
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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 - money market fund | $ | 606,938,498 | $ | — | $ | — |
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 - money market fund | $ | 602,690,646 | $ | — | $ | — | ||||||
Liabilities: | ||||||||||||
Derivative warrant liabilities - Public Warrants | $ | 4,400,000 | $ | — | $ | — | ||||||
Derivative warrant liabilities - Private Warrants | $ | — | $ | 1,583,998 | $ | — |
The Company
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we”, “us”, “our” or the “Company” are to Far Peak Acquisition Corporation, except where the context requires otherwise. References to our “management” or our “management team” are to our officers and directors, and references to the “Sponsor” are to Far Peak LLC. The following discussion should be read in conjunction with our unaudited condensed financial statements and related notes thereto included elsewhere in this Quarterly Report.
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 Securities Exchange Act of 1934, as amended (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. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Form 10-Q. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company on October 19, 2020. We were incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (a “Business Combination”). We are not limited to a particular industry or sector for purposes of consummating a Business Combination. We are an early stage and emerging growth company and, as such, are subject to all of the risks associated with early stage and emerging growth companies. As of December 31, 2022, we had not completed a Business Combination and accordingly do not expect to be able to do so by March 7, 2023, the last day on which we have to do so. See “-Liquidity and Going Concern.”
Our sponsor is Far Peak LLC, a Cayman Islands exempted limited liability company (“Sponsor”). The registration statement for our Initial Public Offering was declared effective on December 2, 2020. On December 7, 2020, we consummated our Initial Public Offering of 55,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $550.0 million, and incurring offering costs of approximately $23.7 million, inclusive of $7.5 million in underwriting commissions, approximately $15.4 million in deferred underwriting commissions, (Note 6), $400,000 in deferred legal fees, approximately $4.0 million of other expenses, and net of reimbursement from the underwriters of $3.6 million. Our underwriters were granted a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 8,250,000 additional Units to cover over-allotments, if any, at $10.00 per Unit. On December 21, 2020 the underwriters’ partially exercised the over-allotment option and purchased an additional 5,000,000 Units at an offering price of $10.00 per Unit, generating gross proceeds of $50,000,000$50.0 million (the “Over-Allotment Option”).
Simultaneously with the closing of our Initial Public Offering, we consummated the private placement (“Private Placement”) of 7,000,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”), at a price of $1.50 per Private Placement Warrant with the Sponsor and certain funds and accounts managed by subsidiaries of BlackRock, Inc., who invested in us at the time of our initial public offering, (collectively, the “Anchor Investor”), generating gross proceeds of $10.5 million.million (and in January, March and May 2022, pursuant to commitments made the sponsor and the Anchor Investor at the time of the Initial Public Offering, we sold, in each of three similar transactions, an additional 33,333 Private Placement Warrants to each of the sponsor and the Anchor Investor at a price of $1.50 per warrant for aggregate gross proceeds of $300,000).
21
Upon the closing of our Initial Public Offering, the Private Placement, and the Over-Allotment Option $600.0 million ($10.00 per Unit) of the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement were placed in a trust account (“Trust Account”) and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 of the Investment Company Act.
We will have until 24 months from the closing of the Initial Public Offering, or December 7, 2022 (or 27 months from the closing of the Initial Public Offering, or March 7, 2023 if we(we have executed a letter of intent, agreement in principle or definitive agreement for the initial Business Combination within 24 months from the closing of the Initial Public Offering but has not completed the initial Business Combination within such 24 month period) to consummate a Business Combination (the “Combination Period”). However, if we have not completed a Business Combination within the Combination Period, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the 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 and not previously released to us to pay our taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish the rights of the Public Shareholders as shareholders (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 our remaining Public Shareholders and our Board of Directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete a Business Combination within the Combination Period.
Results of Operations
Our entire activity for the period from October 19, 2020 (inception) through December 31, 2020 relates to our formation, the initial public offering (“Initial Public Offering”), and since closing of the Initial Public Offering, our search for a prospective initial Business Combination. We will not generate any operating revenues until after the completion of a Business Combination, at the earliest. We will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
For the period from October 19, 2020 (inception) through December 31, 2020, we had a loss of approximately $686,000, which consisted of approximately $662,000 of general and administrative expenses and approximately $(23,000) of gain (loss) on investments held in the Trust Account.
Liquidity and Capital ResourcesGoing Concern
As of December 31, 2020,2022, we had approximately $1.7$1.9 million cash in cashour operating bank account and a working capital deficit of approximately $2.0$11.7 million.
Our liquidity needs have been satisfied through a payment of $25,000 from our Sponsor to cover certain offering costs in exchange for the issuance of the Founder Shares (as defined below), a loan of approximately $195,000 to us under a promissory note from our Sponsor (the “Promissory Note”), the reimbursement of certain offering costs from the underwriters of $3.6 million, and the net proceeds from the consummation of the Private Placement not held in the Trust Account. We fully repaid(including the Promissory Noteadditional Private Placements completed in January, March and May 2022). Additionally, the Sponsor and the Anchor Investor have agreed to provide to the Company an aggregate of $1,000,000 of proceeds from the purchase of additional private placement warrants, at $1.50 per warrant, split between them pro rata in relation to their holdings of private placement warrants as necessary for working capital (or in lieu of such warrant purchase, the Sponsor will lend up to such amount to the Company) ($300,000 of this commitment has been funded to date). Liquidity needs have also been met through the $2.5 million extension fee paid by Bullish Global on December 7, 2020.June 29, 2022. In addition, in order to finance transaction costs in connection with a Business Combination, our officers, directors and Initial Shareholders may, but are not obligated to, provide us Working Capital Loans. As of December 31, 2020,2022 and September 30, 2022, there were no amounts outstanding under any Working Capital Loans.
Based onIn connection with the foregoing, management believesassessment of going concern considerations in accordance with the Financial Accounting Standard Board (“FASB”) ASC Topic 205-40, “Presentation of Financial Statements—Going Concern,” we have until March 7, 2023 to consummate a Business Combination. We do not expect that we will have sufficient working capitalbe able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and borrowing capacity to meet our needs through the earliersubsequent dissolution of the consummationCompany. We have determined that the liquidity condition and mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after March 7, 2023.
Results of Operations
Our entire activity for the period from October 19, 2020 (inception) through December 31, 2022 relates to our formation, the initial public offering (“Initial Public Offering”), and since closing of the Initial Public Offering, our search for a prospective initial Business Combination. We will not generate any operating revenues until after the completion of a Business Combination, or one yearat the earliest. We generate non-operating income in the form of interest income from this filing. Over this time period,the proceeds derived from the Initial Public Offering.
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For the three months ended December 31, 2022, we will be using these funds for paying existing accounts payable, identifyinghad net income of approximately $7.2 million, which consisted of approximately $6.0 million gain change in fair value of derivative warrant liabilities and evaluating prospective initial Business Combination candidates, performing due diligenceapproximately $4.2 million in gain on prospective target businesses, paying for travel expenditures, selectinginvestments held in Trust Account, offset by approximately $3.1 million in general and administrative expenses.
For the target business to merge with or acquire,three months ended December 31, 2021, we had net loss of approximately $9.4 million, which consisted of approximately $7.0 million change in fair value of derivative warrant liabilities and structuring, negotiatingapproximately $2.4 million in general and consummating the Business Combination.administrative expenses, offset by approximately $12,000 in gain on investments held in Trust Account.
Related Party Transactions
Founder Shares
On October 21, 2020, our Sponsor paid $25,000 to cover certain offering costs in consideration for 9,750,000 Class B ordinary shares (the “Founder Shares”). Our Sponsor agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earliest of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which we complete a liquidation, merger, share exchange or other similar transaction that results in all of the Public Shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.
Promissory Note – Related Party
On October 21, 2020, we issued a Promissory Note to our Sponsor, pursuant to which we may borrow up to an aggregate principal amount of $300,000. The Promissory Note was non-interest bearing and payable upon the completion of the Initial Public Offering. We borrowed approximately $195,000 under the Promissory Note and repaid the Promissory Note in full on December 7, 2020. Subsequent to the repayment, the facility is no longer available to us.
In order to finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, loan us funds as may be required (“Working Capital Loans”). Such Working Capital Loans will be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be converted upon completion of a Business Combination into warrants at a price of $1.50 per warrant. Such warrants would be identical to the Private Placement Warrants. In the event that a Business Combination does not close, we may use a portion of the proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Additionally, our Sponsor and the Anchor Investor have agreed to provide to us an aggregate of $1,000,000 of proceeds from the purchase of additional private placement warrants, at $1.50 per warrant, split between them pro rata in relation to their holdings of private placement warrants as necessary for working capital (or in lieu of such warrant purchase, our Sponsor will lend up to such amount to us). As of December 31, 2020,2022 and September 30, 2022, we had no outstanding borrowings under the Working Capital Loans.
Additional Private Placements – Related Party
Additionally, our Sponsor and Anchor Investor have agreed to provide to us an aggregate of $1,000,000 of proceeds from the purchase of additional private placement warrants, at $1.50 per warrant, split between them pro rata in relation to their holdings of private placement warrants as necessary for working capital (or in lieu of such warrant purchase, the Sponsor will lend up to such amount to us) ($300,000 of this commitment has been funded to date). In January 2022 and March 2022, pursuant to this commitment, the Sponsor and the Anchor Investor purchased (in each private placement transaction), an additional 66,666 Private Placement Warrant (33,333 each) for aggregate gross
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proceeds of approximately $100,000. On May 13, 2022, pursuant to commitments made at the time of the Initial Public Offering, we completed the sale of an additional 66,666 Private Placement Warrants at $1.50 per warrant for aggregate gross proceeds of approximately $100,000) to the Sponsor and the Anchor Investor (33,333 each).
Services Agreement – Related Party
On July 5, 2022, we entered into a Services Agreement with Far Peak Management Company LLC (“Management Company”), an affiliate of the Sponsor, pursuant to which Management Company provides certain services necessary for the conduct of our business, and we agreed to reimburse Management Company for its reasonable and documented out-of-pocket costs (including without limitation, reasonable out-of-pocket costs of salary and benefits to Service Provider’s employees) incurred in providing the services in amounts not to exceed $70,000 per calendar quarter. For the three months ended December 31, 2022, we incurred approximately $64,000 in such costs and there was approximately $21,000 outstanding as of December 31, 2022 payable to Management Company.
Commitments and Contingencies
Registration Rights
The holders of our Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans) will be entitled to registration rights pursuant to a registration rights agreement signed on the effective date of the Initial Public Offering. The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lockup period.
Underwriting Agreement
The underwriters were entitled to a cash underwriting discount of approximately $0.14 per Unit, or $7.5 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, the underwriters will be entitled to a deferred fee of approximately $0.2807 per Unit, or approximately $15.4 million in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Deferred Legal Fees
We entered into an engagement letter with legal counsel to obtain legal advisory services, related to our Initial Public Offering, pursuant to which the legal counsel agreed to defer their fees (“deferred legal fees”). The deferred legal fees will become payable solely in the event that we complete a Business Combination, subject to the terms of the engagement letter. On December 7, 2020, we recorded deferred legal fees of $400,000 in connection with legal services received for the Initial Public Offering in the accompanying unaudited condensed balance sheet.sheets.
Lease Agreement
On January 12, 2021, we executed a lease agreement with an affiliate of the Sponsor, subleasing office approximately 2,300 square feet space in New York, New York. The lease calls for monthly minimum lease payments of $12,500 during the term of the sublease, which ended on January 30, 2022. On July 27, 2021, we amended the lease agreement to a lease payment of $37,500 during the term of the sublease, which ended on April 30, 2022.
Litigation
From time to time, we may be subject to legal proceedings and claims that arise in the search for a potential target business; however, we are not aware of any pending or threatened litigation that it believes is reasonably likely to have a material adverse effect on its results of operations, financial position, or cash flows.
Critical Accounting Policies and Estimates
This management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these unaudited condensed financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure
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of contingent assets and liabilities in our unaudited condensed 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. Management has identified the following as its critical accounting policies:
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 ordinary share 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 re-assessed at the end of each reporting period.
The Public Warrants issued in connection with the Initial Public Offering and the Private Placement 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 instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. The fair value of the Public Warrants issued in connection with the Initial Public Offering and Private Placement Warrants were initially measured at fair value using a Binomial Lattice simulation model. The fair value of Public Warrants issued in connection with the Initial Public Offering have subsequently been measured based on the listed market price of such warrants. As the transfer of Private Placement Warrants to anyone who is not a permitted transferee would result in the Private Placement Warrants having substantially the same terms as the Public Warrants, we determined, through use of a Binomial Lattice model, that the fair value of each Private Placement Warrant is equivalent to that of each Public Warrant. 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.
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares 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) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, at December 31, 2020, 58,111,792as of Initial Public Offering, 60,000,000 Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of our unaudited condensed balance sheet.sheets.
We recognize changes in redemption value immediately as they occur and adjusts the carrying value of the Class A ordinary shares 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 (including exercise of 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 Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share. We have two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per ordinary share is computedcalculated by dividing the net income (loss) by the weighted-average number ofweighted average ordinary shares outstanding duringfor the periods. We haverespective period.
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The calculation of diluted net income (loss) per ordinary shares does not consideredconsider the effect of the warrants soldissued in connection with the Initial Public Offering (including the consummationexercise of the full over-allotment option) and the Private Placement to purchase an aggregate of 22,125,00027,000,000 ordinary shares in the calculation of diluted income (loss) per share, because their inclusion would be anti-dilutive under the treasury stock method.
Our unaudited condensed statements of operations includeexercise is contingent upon future events. As a presentation ofresult, diluted net income (loss) per ordinary share subject to redemption in a manner similar tois the two-class method of income per share. Netsame as basic net income (loss) per share for the period from October 19, 2020 (inception) throughthree months ended December 31, 2020, basic2022 and diluted2021. Accretion associated with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
Recent Accounting Pronouncements
In June 2022, the FASB issued Accounting Standards Update (“ASU”) 2022-03, ASC Subtopic 820, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The ASU amends ASC 820 to clarify that a contractual sales restriction is not considered in measuring an equity security at fair value and to introduce new disclosure requirements for Public Shares, was calculated by dividing the gain (loss) on investments heldequity securities subject to contractual sale restrictions that are measured at fair value. The ASU applies to both holders and issuers of equity and equity-linked securities measured at fair value. The amendments in the Trust Account of approximately $23,000 by the weighted average number of Public Shares outstandingthis ASU are effective for the period. Net loss per shareCompany in fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is still evaluating the period from October 19, 2020 (inception) through December 31, 2020, basic and diluted for Founder Shares, was calculated by dividingimpact of this pronouncement on the net loss approximately $686,000, less income (loss) attributable to Public Shares, by the weighted average number of Founder Shares outstanding for the period.
Recent Accounting Pronouncementsfinancial statements.
Our management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying unaudited condensed financial statements.
Off-Balance Sheet Arrangements and Contractual Obligations
As of December 31, 2020,2022 and September 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or other long-term liabilities.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, our 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.
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Item 3. |
|
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 |
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended December 31, 2020,2022, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our chiefprincipal executive officer and chiefprincipal financial officer havehas concluded that during the period covered by this report, our disclosure controls and procedures were effective.effective as of December 31, 2022.
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 principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
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 December 31, 2020,2022 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.
Item 1. | Legal Proceedings |
None.
Item 1A. | Risk Factors. |
Factors that could causeThere have been no material changes in our actual results to differ materiallyrisk factors from those in this Quarterly Report are any of the risks describedincluded in our final prospectusAnnual Report on Form 10-K for our Initial Public Offeringthe fiscal year ended September 30, 2022 filed with the SEC on December 3, 2020. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our final prospectus for our Initial Public Offering filed with the SEC on December 3, 2020, although we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.12, 2022.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 2. Unregistered Sales of Equity Securities and Use of ProceedsNone. .
On October 21, 2020, our Sponsor paid $25,000 to cover certain offering costs in consideration for 9,750,000 Class B ordinary shares. The foregoing issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
On December 7, 2020, we consummated our Initial Public Offering of 55,000,000 Units at $10.00 per Unit, generating gross proceeds of $550.0 million. Our underwriters were granted a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 8,250,000 additional Units to cover over-allotments, if any, at $10.00 per Unit. On December 21, 2020, the underwriters’ partially exercised the over-allotment option and purchased an additional 5,000,000 Units at an offering price of $10.00 per Unit, generating gross proceeds of $50.0 million. The securities sold in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-250129). The SEC declared the registration statement effective on December 2, 2020.
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement of 7,000,000 Private Placement Warrants at a price of $1.50 per Private Placement Warrant with our Sponsor and the Anchor Investor generating gross proceeds of $10.5 million. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. The Private Placement Warrants (including the Class A ordinary shares issuable upon exercise of such warrants) will not be transferable or salable until 30 days after the completion of the initial Business Combination, subject to certain limited exceptions. If we do not complete a Business Combination within the Combination Period, the Private Placement Warrants and the underlying securities will expire worthless.
Upon the closing of the Initial Public Offering, the Over-Allotment Option, and the Private Placement, $600.0 million ($10.00 per Unit) of the net proceeds of the sale of the Units in the Initial Public Offering, the Over-Allotment Option, and the Private Placement were placed in a trust account.
There has been no material change in the planned use of the proceeds from the Initial Public Offering and Private Placement as is described in our final prospectus related to the Initial Public Offering.
We paid a total of approximately $7.5 million in underwriting discounts and commissions and approximately $769,000 for other costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer approximately $15.4 million in underwriting discounts and commissions.
Item 6. |
* | Filed herewith. |
** | Furnished. |
(1) | Previously filed as an exhibit to our Current Report on Form 8-K filed on December 7, 2020 and incorporated by reference herein. |
SIGNATURES
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 thereunto duly authorized on this 16th9 day of February 2021.2023.
Far Peak Acquisition Corporation | ||
By: | /s/ Thomas W. Farley | |
Name: | Thomas W. Farley | |
Title: | Chief Executive Officer | |
By: | /s/ David W. Bonanno | |
Name: | David W. Bonanno | |
Title: | Chief Financial Officer |
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