| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Units, each consisting of one share of Class A Common Stock, $0.0001 par value, and one-fifth of one redeemable warrant | PICC.U | The New York Stock Exchange | ||
Class A Common Stock, $0.0001 par value | PICC | The New York Stock Exchange | ||
Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share | PICC WS | The New York Stock Exchange |
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
| Emerging growth company | ☒ | |||||
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Item 1. | Interim Financial Statements. |
ASSETS Current assets Cash Prepaid expenses Total Current Assets Deferred offering costs Marketable securities held in Trust Account TOTAL ASSETS LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued expenses Accrued offering costs Total Current Liabilities Warrant liabilities Deferred underwriting fee payable TOTAL LIABILITIES Commitments and Contingencies Class A common stock subject to possible redemption 24,015,645 shares outstanding and none outstanding at redemption value at March 31, 2021 and December 31, 2020, respectively Stockholders’ Equity Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding Class A common stock, $0.0001 par value; 125,000,000 shares authorized; 3,584,355 shares issued and outstanding (excluding 24,015,645 shares subject to possible redemption) at March 31, 2021 and none on December 31, 2020, respectively Class B common stock, $0.0001 par value; 25,000,000 shares authorized; 6,900,000 shares issued and outstanding, at March 31, 2021 and December 31, 2020 Additional paid-in capital Accumulated deficit Total Stockholders’ Equity TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY MARCH 31, 2021 March 31,
2021 December 31,
2020 (Unaudited) (Audited) $ 1,338,479 $ — 21,923 — 1,360,402 — — 51,025 276,018,978 — $ 277,379,380 $ 51,025 $ 125,108 $ 851 106,475 26,025 231,583 26,876 22,331,340 — 9,660,000 — 32,222,923 26,876 240,156,450 — — — 358 — 690 690 11,805,844 24,310 (6,806,885 ) (851 ) 5,000,007 24,149 $ 277,379,380 $ 51,025 (Unaudited) (Audited) $ 807,853 $ 0 171,940 0 979,793 0 0 51,025 276,038,248 0 $ 185,046 $ 851 31,025 26,025 216,071 26,876 11,255,200 0 9,660,000 0 0 0 276,000,000 0 0 0 690 690 0 24,310 (20,113,920 ) (851 )
THREE MONTHS ENDED MARCH 31, 2021
Operating and formation costs | $ | 129,793 | ||
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Loss from operations | 129,793 | |||
Other income (loss): | ||||
Interest earned on marketable securities held in Trust Account | 10,465 | |||
Transaction costs incurred in connection with initial public offering | (526,599 | ) | ||
Change in fair value of warrants | (6,168,620 | ) | ||
Unrealized gain on marketable securities held in Trust Account | 8,513 | |||
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Other loss, net | (6,676,241 | ) | ||
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Loss before provision for benefit from income taxes | (6,806,034 | ) | ||
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Net loss | $ | (6,806,034 | ) | |
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Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption | 24,199,392 | |||
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Basic and diluted net loss per share, Class A common stock subject to possible redemption | $ | 0.00 | ||
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Basic and diluted weighted average shares outstanding, Non-redeemable common stock | 8,319,429 | |||
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Basic and diluted net loss per share, Non-redeemable common stock | $ | (0.82 | ) | |
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Three Months Ended September 30, 2021 | Nine months Ended September 30, 2021 | |||||||
Operating and formation costs | $ | 168,787 | $ | 494,890 | ||||
Loss from operations | (168,787 | ) | (494,890 | ) | ||||
Other income (expenses): | ||||||||
Change in fair value of warrant liabilities | 4,220,700 | 4,907,520 | ||||||
Transaction costs allocated to warrant liabilities | 0— | (526,599 | ) | |||||
Interest earned on marketable securities held in Trust Account | 16,642 | 46,388 | ||||||
Unrealized loss on marketable securities held in Trust Account | (6,302 | ) | (8,140 | ) | ||||
Total other income, net | 4,231,040 | 4,419,169 | ||||||
Net income | $ | 4,062,253 | $ | 3,924,279 | ||||
Basic and diluted weighted average shares outstanding, Class A common stock | 27,600,000 | 23,353,846 | ||||||
Basic and diluted net income per share, Class A common stock | $ | 0.12 | $ | 0.13 | ||||
Basic and diluted weighted average shares outstanding, Class B common stock | 6,900,000 | 6,761,538 | ||||||
Basic and diluted net income per share, Class B common stock | $ | 0.12 | $ | 0.13 | ||||
| Class A Common Stock | Class B Common Stock | Additional Paid in Capital | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance – December 31, 2020 | — | $ | — | 6,900,000 | $ | 690 | $ | 24,310 | $ | (851 | ) | $ | 24,149 | |||||||||||||||
Sale of 27,600,000 Unit, net of underwriting discounts, initial value of public and private placement warrants, and offering expenses | 27,600,000 | 2,760 | 251,935,582 | 251,938,342 | ||||||||||||||||||||||||
Class A common stock subject to possible redemption | (24,015,645 | ) | (2,402 | ) | — | — | (240,154,048 | ) | — | (240,156,450 | ) | |||||||||||||||||
Net loss | — | — | — | — | — | (6,806,034 | ) | (6,806,034 | ) | |||||||||||||||||||
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Balance – March 31, 2021 | 3,584,355 | $ | 358 | 6,900,000 | $ | 690 | $ | 11,805,844 | $ | (6,806,885 | ) | $ | 5,000,007 | |||||||||||||||
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Class B Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | |||||||||||||||||
Shares | Amount | |||||||||||||||||||
Balance – January 1, 2021 | 6,900,000 | $ | 690 | $ | 24,310 | $ | (851 | ) | $ | 24,149 | ||||||||||
| Remeasurement adjustment on redeemable common stock | — | — | (7,294,310 | ) | (24,037,348 | ) | (31,331,658 | ) | ||||||||||||
Sale of 7,270,000 Private Placement Warrants | — | — | 7,270,000 | — | 7,270,000 | |||||||||||||||
Net loss | — | — | — | (6,806,034 | ) | (6,806,034 | ) | |||||||||||||
Balance – March 31, 2021 ( restated , See Note 2) | $ | 6,900,000 | $ | 690 | $ | 0 | $ | (30,844,233 | ) | $ | (30,843,543 | ) | ||||||||
Net income | — | — | — | 6,668,060 | 6,668,060 | |||||||||||||||
Balance – June 30, 2021 ( restated , See Note 2) | $ | 6,900,000 | $ | 690 | $ | 0 | $ | (24,176,173 | ) | $ | (24,175,483 | ) | ||||||||
Net income | — | — | — | 4,062,253 | 4,062,253 | |||||||||||||||
Balance – September 30, 2021 | $ | 6,900,000 | $ | 690 | $ | 0 | $ | (20,113,920 | ) | $ | (20,113,230 | ) | ||||||||
THREE
Cash Flows from Operating Activities: | ||||
Net loss | $ | (6,806,034 | ) | |
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Change in fair value of warrant liabilities | 6,168,620 | |||
Interest earned on marketable securities held in Trust Account | (10,465 | ) | ||
Transaction costs incurred in connection with IPO | 526,599 | |||
Unrealized gain on marketable securities held in Trust Account | (8,513 | ) | ||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | (21,923 | ) | ||
Accounts payable and accrued expenses | 124,257 | |||
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Net cash used in operating activities | (27,459 | ) | ||
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Cash Flows from Investing Activities: | ||||
Investment of cash in Trust Account | (276,000,000 | ) | ||
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Net cash used in investing activities | (276,000,000 | ) | ||
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Cash Flows from Financing Activities: | ||||
Proceeds from sale of Units, net of underwriting discounts paid | 270,480,000 | |||
Proceeds from sale of Private Warrants | 7,270,000 | |||
Repayment of promissory note – related party | (125,000 | ) | ||
Proceeds from promissory note – related party | 125,000 | |||
Payment of offering costs | (384,062 | ) | ||
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Net cash provided by financing activities | 277,365,938 | |||
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Net Change in Cash | 1,338,479 | |||
Cash – Beginning of period | — | |||
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Cash – End of period | $ | 1,338,479 | ||
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Non-Cash investing and financing activities: | ||||
Deferred underwriting fee payable | $ | 9,660,000 | ||
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Initial classification of common stock subject to possible redemption | $ | 241,993,920 | ||
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Change in value of common stock subject to possible redemption | $ | (1,837,470 | ) | |
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Offering costs included in accrued offering costs | $ | 106,475 | ||
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Cash Flows from Operating Activities: | ||||
Net income | $ | 3,924,279 | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Change in fair value of warrant liabilities | (4,907,520 | ) | ||
Interest earned on marketable securities held in Trust Account | (46,388 | ) | ||
Transaction costs allocated to warrant liabilities | 526,599 | |||
Unrealized loss on marketable securities held in Trust Account | 8,140 | |||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | (171,940 | ) | ||
Accounts payable and accrued expenses | 184,195 | |||
Net cash used in operating activities | $ | (482,635 | ) | |
Cash Flows from Investing Activities: | ||||
Investment of cash in Trust Account | $ | (276,000,000 | ) | |
Net cash used in investing activities | $ | (276,000,000 | ) | |
Cash Flows from Financing Activities: | ||||
Proceeds from sale of Units, net of underwriting discounts paid | $ | 270,480,000 | ||
Proceeds from sale of Private Warrants | 7,270,000 | |||
Repayment of promissory note – related party | (125,000 | ) | ||
Proceeds from promissory note – related party | 125,000 | |||
Payment of offering costs | (459,512 | ) | ||
Net cash provided by financing activities | $ | 277,290,488 | ||
Net Change in Cash | $ | 807,853 | ||
Cash – Beginning of period | 0 | |||
Cash – End of period | $ | 807,853 | ||
Non-Cash investing and financing activities: | ||||
Remeasurement adjustment on redeemable common stock | $ | 31,331,658 | ||
Offering costs included in accrued offering costs | $ | 31,025 | ||
Deferred underwriting fee payable | $ | 9,660,000 | ||
MARCH 31,
4.
5.
The
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31,
(Unaudited)
STATEMENTS
On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the Securities and Exchange Commission together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement (the “Warrant Agreement”).
In further consideration of the SEC Statement,future events considered outside 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. Based on management’s evaluation, the Company’s audit committee, in consultation withcontrol. Therefore, management concluded that the Company’s Private Placement Warrants are not indexed to the Company’stemporary equity should include all shares of common stock subject to possible redemption. As a result, management has noted a reclassification error related to temporary equity and permanent equity. This resulted in the manner contemplated by ASC Section 815-40-15 because the holdera restatement of the instrument is not an input intopreviously issued financial statements to adjust initial carrying value of the pricingcommon stock subject to possible redemption with the offset recorded to additional
As a result of the above, the Company should have classified the Warrants as derivative liabilities in its previously issued financial statementstatements will need to be restated to report all public shares as of February 11th, 2021. Under this accounting treatment,temporary equity. As such the Company is requiredreporting upon restating to measure the fair valuethose periods in this Quarterly Report.
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 investments held in trust or cash.
The following tables summarizes the effectimpact of the restatement on the belowCompany’s financial statement line items asstatements is reflected in the following table.
Balance Sheet as of February 11, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
Restated | ||||||||||||
Class A common stock subject to possible redemption | $ | 241,993,920 | $ | 34,006,080 | $ | 276,000,000 | ||||||
Class A common stock | $ | 340 | $ | (340) | $ | — | ||||||
Additional paid-in capital | $ | 9,968,392 | $ | (9,968,392) | $ | — | ||||||
Accumulated deficit | $ | (4,969,420 ) | $ | (24,037,348) | $ | (29,006,768) | ||||||
Total Stockholders’ Equity (Deficit) | $ | 5,000,002 | $ | (34,006,080) | $ | (29,006,078) | ||||||
Condensed Balance Sheet as of March 31, 2021 (unaudited) | ||||||||||||
Class A common stock subject to possible redemption | $ | 240,156,450 | $ | 35,843,550 | $ | 276,000,000 | ||||||
Class A common stock | $ | 358 | $ | (358) | $ | — | ||||||
Additional paid-in capital | $ | 11,805,844 | $ | (11,805,844) | $ | — | ||||||
Accumulated deficit | $ | (6,806,885) | $ | (24,037,348) | $ | (30,844,233) | ||||||
Total Stockholders’ Equity (Deficit) | $ | 5,000,007 | $ | (35,843,550) | $ | (30,843,543) | ||||||
Condensed Balance Sheet as of June 30, 2021 (unaudited) | ||||||||||||
Class A common stock subject to possible redemption | $ | 246,824,510 | $ | 29,175,490 | $ | 276,000,000 | ||||||
Class A common stock | $ | 292 | $ | (292) | $ | — | ||||||
Additional paid-in capital | $ | 5,137,850 | $ | (5,137,850) | $ | — | ||||||
Accumulated deficit | $ | (138,825) | $ | (24,037,348) | $ | (24,176,173) | ||||||
Total Stockholders’ Equity (Deficit) | $ | 5,000,007 | $ | (29,175,490) | $ | (24,175,483) | ||||||
Condensed Statement of Operations for the Three Months Ended March 31, 2021 (unaudited) | ||||||||||||
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption | 24,199,392 | (9,313,999) | 14,885,393 | |||||||||
Basic and diluted net income per share, Common stock subject to possible redemption | $ | — | 0.32 | $ | 0.32 | |||||||
Basic and diluted weighted average shares outstanding, Non-redeemable common stock | 8,319,429 | (1,834,036) | 6,485,393 | |||||||||
Basic and diluted net income per share, Non-redeemable common stock | $ | (0.82) | $ | 0.50 | $ | (0.32) | ||||||
Condensed Statement of Operations for the Three Months Ended June 30, 2021 (unaudited) | ||||||||||||
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption | 24,015,645 | 3,584,355 | 27,600,000 | |||||||||
Basic and diluted net income per share, Common stock subject to possible redemption | $ | — | 0.19 | $ | 0.19 | |||||||
Basic and diluted weighted average shares outstanding, Non-redeemable common stock | 10,484,355 | (3,584,355) | 6,900,000 | |||||||||
Basic and diluted net loss per share, Non-redeemable common stock | $ | 0.64 | $ | (0.45) | $ | 0.19 | ||||||
Condensed Statement of Operations for the Six Months Ended June 30, 2021 (unaudited) | ||||||||||||
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption | 24,101,033 | (2,787,700) | 21,313,333 | |||||||||
Basic and diluted net income per share, Common stock subject to possible redemption | $ | — | — | $ | — | |||||||
Basic and diluted weighted average shares outstanding, Non-redeemable common stock | 9,413,919 | (2,718,919) | 6,695,000 | |||||||||
Basic and diluted net income per share, Non-redeemable common stock | $ | (0.01) | $ | 0.01 | $ | — | ||||||
Condensed Statement of Changes in Shareholders’ Equity (Deficit) for the Three Months Ended March 31, 2021 (Unaudited) | ||||||||||||
Sale of 27,600,000 Units, net of underwriter discounts and offering expenses | $ | 251,938,342 | $ | (251,938,342) | $ | — | ||||||
Initial value of common stock subject to redemption | $ | (240,156,450) | $ | 240,156,450 | $ | — | ||||||
Remeasurement adjustment on redeemable common stock | $ | — | $ | (31,331,658) | $ | (31,331,658) | ||||||
Total Stockholders’ Equity (Deficit) | $ | 5,000,007 | $ | (35,843,550) | $ | (30,843,543) | ||||||
Condensed Statement of Changes in Shareholders’ Equity (Deficit) for the Three Months Ended June 30, 2021 (Unaudited) | ||||||||||||
Total Stockholders’ Equity (Deficit) | $ | 5,000,007 | $ | (29,175,490) | $ | (24,175,483) | ||||||
Condensed Statement of Cash Flows for the Three Months Ended March 31, 2021 (unaudited) | ||||||||||||
Supplemental disclosures of non-cash investing and financing activities | ||||||||||||
Change in value of common stock subject to possible redemption | $ | (1,837,470) | $ | 1,837,470 | $ | — | ||||||
Balance Sheet as of February 11, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
Restated | ||||||||||||
Condensed Statement of Cash Flows for the Six Months Ended June 30, 2021 (unaudited) | ||||||||||||
Supplemental disclosures of non-cash investing and financing activities | ||||||||||||
Change in value of common stock subject to possible redemption | $ | 4,830,590 | $ | (4,830,590) | $ | — | ||||||
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
All of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying condensed statements of operations. The estimated fair values of investments held in Trust Account are determined using available market information.
Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities were expensed as incurred in the condensed consolidated statements of operations. Offering costs associated with the Class A common stock issued are included in the remeasurement adjustment from carrying value to redemption value.
sheets.
Gross proceeds | $ | 276,000,000 | ||
Less: | ||||
Proceeds allocated to Public Warrants | $ | (8,892,720 | ) | |
Class A common stock issuance costs | $ | (22,438,938 | ) | |
Plus: | ||||
Remeasurement adjustment from carrying value to redemption value | $ | 31,331,658 | ||
Class A common stock subject to possible redemption, 12/31/20 | $ | 276,000,000 | ||
Remeasurement adjustment from carrying value to redemption value | — | |||
Class A common stock subject to possible redemption, 9/30/21 | $ | 276,000,000 | ||
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
those temporary differences are expectedbenefit to be recoveredderived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or settled. The effect ona portion of deferred tax assets and liabilities of a changewill not be realized.
ASC 740an enterprise’s financial statements and prescribes a recognition threshold and a measurement attributeprocess for the financial statement recognition and measurement of a tax positionsposition taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not -likely -than
The Company’s statement of operations includes a presentation of loss per share for common stock subject to possible redemption in a manner similar to the two-class method of loss per share. Net loss per common share, basic and diluted, for Class A common stock subject to possible redemption is calculated by dividing the proportionate share of loss on marketable securities held by the Trust Account by the weighted average number of Class A common stock subject to possible redemption outstanding since original issuance.
Net loss per share, basic and diluted, for non-redeemable common stock is calculated by dividing the net loss, adjusted for loss on marketable securities attributable to Class A common stock subject to possible redemption, by the weighted average number of non-redeemable common stock outstanding for the period.
Non-redeemable common stock includes Founder Shares and non-redeemable shares of common stock as these shares do not have any redemption features. Non-redeemable common stock participates in the income or loss on marketable securities based on non-redeemable shares’ proportionate interest.
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
| Three Months Ended March 31, 2021 | ||||
Class A common stock subject to possible redemption | ||||
Numerator: Earnings allocable to Class A common stock subject to possible redemption | ||||
Interest earned on marketable securities held in Trust Account | 18,978 | |||
Less: interest available to be withdrawn for payment of taxes | (18,978 | ) | ||
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Net income attributable | $ | — | ||
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Denominator: Weighted Average Class A common stock subject to possible redemption | ||||
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption | 24,199,392 | |||
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Basic and diluted net income per share, Class A common stock subject to possible redemption | $ | 0.00 | ||
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Non-Redeemable Common Stock | ||||
Numerator: Net Loss minus Net Earnings | ||||
Net loss | $ | (6,806,034 | ) | |
Add: Net loss allocable to Class A common stock subject to possible redemption | — | |||
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Non-Redeemable Net Loss | $ | (6,806,034 | ) | |
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Denominator: Weighted Average Non-redeemable Common stock | ||||
Basic and diluted weighted average shares outstanding, Non-redeemable Common stock | 8,319,429 | |||
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Basic and diluted net loss per share, Non-redeemable Common stock | $ | (0.82 | ) | |
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Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2021 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted net income per common stock | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income, as adjusted | $ | 3,249,802 | $ | 812,451 | $ | 3,043,196 | $ | 881,083 | ||||||||
Denominator: | ||||||||||||||||
Basic and diluted weighted average shares outstanding | 27,600,000 | 6,900,000 | 23,353,846 | 6,761,538 | ||||||||||||
Basic and diluted net income per common stock | $ | 0.12 | $ | 0.12 | $ | 0.13 | $ | 0.13 | ||||||||
nature, except for warrant liabilities.
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Borrowings under the Promissory Note are no longer available.
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
outstanding.
MARCH 31,
NOTE 9. WARRANTS
The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available. The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of a Business Combination, warrantholders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption.
The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
Once the warrants become exercisable, the Company may redeem the Public Warrants:
in whole and not in part;
at a price of $0.01 per warrant;
upon not less than 30 days’ prior written notice of redemption; and
if, and only if, the reported last sale price of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending three business days before 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. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of 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.
The Private Warrants are identical to the Public Warrants underlying the Units sold in the Initial Offering, except that the Private Warrants and the Class A common stock issuable upon the exercise of the Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of an initial Business Combination at an issue price or effective issue price of less than $9.20 per share of common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such issuance to the Sponsor, initial stockholders 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 an 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 Class A common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates the initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of (i) the Market Value or (ii) the Newly Issued Price, and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market Value and the Newly Issued Price.
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Additionally, 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.
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
| Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |
| Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. | |
| Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. | |
Description | Level | March 31, 2021 | ||||||
Assets: | ||||||||
Marketable securities held in Trust Account | 1 | $ | 276,018,978 | |||||
Liabilities: | ||||||||
Warrant Liability – Public Warrants | 3 | 9,637,920 | ||||||
Warrant Liability – Private Placement Warrants | 3 | 12,693,420 | ||||||
Level | February 08, 2021 | September 30, 2021 | ||||||||||
Assets: | ||||||||||||
Marketable securities held in Trust Account | 1 | $ | — | $ | 276,038,248 | |||||||
Liabilities: | ||||||||||||
Warrant Liability – Private Placement Warrants | 1 | $ | 11,711,970 | 6,397,600 | ||||||||
Warrant Liability – Public Warrants | 2 | 8,892,720 | 4,857,600 | |||||||||
At September 30, 2021 the Private Warrants transferred to Level 2 due to the use of an observable market quote for a similar asset in an active market.
| At February 8, 2021 (Initial Measurement) | As of March 31, 2021 | |||||||
Stock price | $ | 10.00 | $ | 10.00 | ||||
Strike price | $ | 11.50 | $ | 11.50 | ||||
Term (in years) | 6.00 | 5.86 | ||||||
Volatility | 24.0 | % | 24.0 | % | ||||
Risk-free rate | 0.65 | % | 1.12 | % | ||||
Probability of acquisition | 90.0 | % | 90.0 | % | ||||
warrant liabilities:
Private Placement | Public | Warrant Liabilities | ||||||||||
Initial measurement on February 11 , 2021 | $ | 11,711,970 | $ | 8,892,720 | $ | 20,604,690 | ||||||
Change in valuation inputs or other assumptions | 981,450 | 745,200 | 1,726,650 | |||||||||
Transfer to Level 1 | — | (9,637,920 | ) | (9,637,920 | ) | |||||||
Fair value as of March 31, 2021 | 12,693,420 | �� | — | 12,693,420 | ||||||||
Change in fair value | (3,896,720 | ) | — | (3,896,720 | ) | |||||||
Fair value as of June 30, 2021 | $ | 8,796,700 | $ | — | $ | 8,796,700 | ||||||
Change in fair value | (2,399,100 | ) | — | (2,399,100 | ) | |||||||
Transfer to Level 2 | (6,397,600 | ) | — | (6,397,600 | ) | |||||||
Fair value as of September 30, 202 1 | $ | 0 | $ | 0 | $ | 0 | ||||||
| Private Placement(1) | Public | Warrant Liabilities | ||||||||||
Fair value as of January 1, 2021 | $ | — | — | — | ||||||||
Initial measurement on February 8, 2021 | 11,711,970 | 8,892,720 | 20,604,690 | |||||||||
Change in valuation inputs or other assumptions | 981,450 | 745,200 | 1,726,650 | |||||||||
|
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| |||||||
Fair value as of March 31, 2021 | $ | 12,693,420 | 9,637,920 | 22,331,340 | ||||||||
|
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| |||||||
Private Placement(1) | Public | Warrant Liabilities | ||||||||||
Initial measurement on February 11 , 2021 | $ | 11,711,970 | $ | 8,892,720 | 20,604,690 | |||||||
Change in valuation inputs or other assumptions | 981,450 | 745,200 | 1,726,650 | |||||||||
Fair value as of March 31, 2021 | 12,693,420 | 9,637,920 | 22,331,340 | |||||||||
Change in valuation inputs or other assumptions | (3,896,720 | ) | (2,958,720 | ) | (6,855,440 | ) | ||||||
Fair value as of June 30, 2021 | $ | 8,796,700 | $ | 6,679,200 | 15,475,900 | |||||||
Change in valuation inputs or other assumptions | (2,399,100 | ) | (1,821,600 | ) | (4,220,700 | ) | ||||||
| Fair value as of September 30, 2021 | $ | 6,397,600 | $ | 4,857,600 | 11,255,200 | |||||||
| (1) | As a result of the difference in fair value of $1.61 per share of the Private Placement warrants and the purchase of $1.00 per share (see Note |
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
$6,302.
As of March 31, 2021, our cash balance was approximately $1.3 million. We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination.
For periods subsequent to the detachment of the Public Warrants from the Units, the Public Warrant quoted market price was used as the fair value as of each relevant date.
value approximates fair value.
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, with the exception of the below.
The Chief Executive Officer and Chief Financial Officer performed additional accounting and financial analyses and other post-closing procedures including consulting with subject matter experts relatedeffective, due to the accounting for the Public Warrants and Private Placement Warrants. The Company’s management has expended, and will continue to expend, a substantial amount of effort and resources for the remediation and improvement of our internal control over financial reporting. While we have processes to properly identify and evaluate the appropriate accounting technical pronouncements and other literature for all significant or unusual transactions, we have expanded and will continue to improve these processes to ensure that the nuances of such transactions are effectively evaluated in the context of the increasingly complex accounting standards.
Our internal control over financial reporting did not result in the proper accounting classification of certain of the warrants we issued in February 2021 which, due to its impact on our financial statements, we determined to be a material weakness. This mistake in classification was brought to our attention only when the SEC Staff issued the SEC Staff Statement. The SEC Staff Statement addresses certain accounting and reporting considerations related to warrants of a kind similar to those we issued at the time of our initial public offering in February 2021.
|
None.
|
Except as set forth below, as of the date of this Quarterly Report, there have been no material changes with respect to those risk factors previously disclosed in our Annual Report on Form 10-K filed with the SEC on March 30, 2021. 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.
Recent SEC guidance required us to reconsider the accounting of warrants and led us to conclude that our warrants be accounted for as liabilities rather than as equity and such requirement resulted in a revision of our previously issued financial statements.
On April 12, 2021, the staff of the SEC issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”) (the “Statement”). In the Statement, the SEC staff expressed it view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to equity. Since issuance, our warrants were accounted for as equity within our balance sheet, and after discussion and evaluation, including with our independent auditors, we have concluded that our warrants should be presented as liabilities with subsequent and periodic fair value re-measurement. Therefore, we conducted a valuation of our warrants, which resulted in unanticipated costs and diversion of management resources and may result in potential loss of investor confidence. We cannot guarantee that we will have no further inquiries from the SEC or the NYSE regarding our financial statements or matters relating thereto.
Any future inquiries from the SEC or the NYSE will, regardless of the outcome, likely consume a significant amount of our resources in addition to those resources already consumed in connection with the revision itself.
Our warrants are accounted for as warrant liabilities and are recorded at fair value upon issuance with changes in fair value each reporting period to be reported in earnings, which may have an adverse effect on the market price of our Common Stock.
We have determined to account for our warrants as warrant liabilities and recorded at fair value upon issuance with any changes in fair value each reporting period to be reported in earnings as determined by us based on the available publicly traded warrant price or based on a valuation report obtained from an independent third party valuation firm. The impact of changes in fair value on earnings may have an adverse effect on the market price of our common stock.
We have identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As described elsewhere in this Quarterly Report, we identified a material weakness in our internal control over financial reporting related to the Company’s accounting for a significant and unusual transaction related to the warrants we issued in our IPO.complex financial instruments. As a result, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Form 10-Q present fairly in all material respects our financial position, results of this material weakness, our management concluded thatoperations and cash flows for the period presented.
To respond2021 covered by this Quarterly Report that has materially affected, or is reasonably likely to this material weakness, we have devoted, and plan to continue to devote, significant effort and resources to the remediation and improvement ofmaterially affect, our internal control over financial reporting. Whilereporting, as the circumstances that led to the restatement of our financial statement described in Note 2 to the accompanying financial statements had not yet been identified. Management has identified a material weakness in internal controls related to the accounting for our complex financial instruments (including redeemable equity instruments as described above). In light of the material weakness identified and the resulting restatement, although we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance theseour processes to identify and appropriately apply applicable accounting requirements to better evaluate our research and understanding ofunderstand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
| Item 1. | Risk Factors |
We can give no assurance that the measures we have takenmanner.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Item 6. | Exhibits |
No. | Description of Exhibit | |
| 31.1* | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2** | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS* | Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Online XBRL Document | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | The cover page from the Company’s Quarterly report on Form 10-Q for the quarter ended September 30, 2021 has been formatted in Inline XBRL and is included in Exhibits 101. | |
| * | Filed herewith. |
| ** | Furnished. |
PIVOTAL INVESTMENT CORPORATION III | ||||||
| Date: | By: | /s/ Kevin Griffin | ||||
| Name: | Kevin Griffin | |||||
| Title: | Chief Executive Officer and | |||||
| (Principal Executive Officer Officer) | ||||||
| Date: | By: | /s/ Jim Brady | ||||
| Name: | Jim Brady | |||||
| Title: | Chief Financial Officer | |||||
| (Principal Financial and Accounting Officer) | ||||||
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