| ☒ | 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 |
11th Floor
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 $ 334,253 $ 563,923 103,770 135,734 438,023 699,657 276,116,810 276,079,114 $ 2,054,914 $ 1,460,005 2,054,914 1,460,005 5,883,400 12,150,500 9,660,000 9,660,000 0 0 276,000,000 276,000,000 0 0 690 690 0 0 (17,044,171 ) (22,492,424 )
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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For the Three Months Ended March 31, | For the Three Months Ended March 31, | |||||||
2022 | 2021 | |||||||
Operating and formation costs | $ | 856,543 | $ | 129,793 | ||||
Loss from operations | (856,543 | ) | (129,793 | ) | ||||
Other income (expenses): | ||||||||
Change in fair value of warrant liabilities | 6,267,100 | (6,168,620 | ) | |||||
Transaction costs allocated to warrant liabilities | 0 | (526,599 | ) | |||||
Interest earned on marketable securities held in Trust Account | 35,833 | 10,465 | ||||||
Unrealized gain on marketable securities held in Trust Account | 1,863 | 8,513 | ||||||
Total other income (expense), net | 6,304,796 | (6,676,241 | ) | |||||
Net income (loss) | $ | 5,448,253 | $ | (6,806,034 | ) | |||
Basic and diluted weighted average shares outstanding, Class A common stock | 27,600,000 | 14,885,393 | ||||||
Basic and diluted net income (loss) per share, Class A common stock | $ | 0.16 | $ | (0.32 | ) | |||
Basic and diluted weighted average shares outstanding, Class B common stock | 6,900,000 | 6,485,393 | ||||||
Basic and diluted net income (loss) per share, Class B common stock | $ | 0.16 | $ | (0.32 | ) | |||
STOCKHOLDERS’ DEFICIT
Class A Common Stock | Class B Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance – January 1, 2022 | 0 | $ | 0 | 6,900,000 | $ | 690 | $ | 0 | $ | (22,492,424 | ) | $ | (22,491,734 | ) | ||||||||||||||
Net incom e | — | — | — | — | — | 5,448,253 | 5,448,253 | |||||||||||||||||||||
Balance – March 31, 2022 | 0 | $ | 0 | 6,900,000 | $ | 690 | $ | 0 | $ | (17,044,171 | ) | $ | (17,043,481 | ) | ||||||||||||||
(UNAUDITED)
| 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 A Common Stock | Class B Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Equity (Deficit) | ||||||||||||||||||||||
Balance – January 1, 2021 | 0 | $ | 0 | 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 los s | — | — | — | — | — | (6,806,034 | ) | (6,806,034 | ) | |||||||||||||||||||
Balance – March 31, 2021 | 0 | $ | 0 | 6,900,000 | $ | 690 | $ | 0 | $ | (30,844,233 | ) | $ | (30,843,543 | ) | ||||||||||||||
THREE MONTHS ENDED MARCH 31, 2021
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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| For the Three Months Ended March 31, | For the Three Months Ended March 31, | |||||||
| 2022 | 2021 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income (loss) | $ | 5,448,253 | $ | (6,806,034 | ) | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Change in fair value of warrant liabilities | (6,267,100 | ) | 6,168,620 | |||||
| Transaction costs allocated to warrant liabilities | 0 | 526,599 | ||||||
| Interest earned on marketable securities held in Trust Account | (35,833 | ) | (10,465 | ) | ||||
| Unrealized gain on marketable securities held in Trust Account | (1,863 | ) | (8,513 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | 31,964 | (21,923 | ) | |||||
| Accounts payable and accrued expenses | 594,909 | 124,257 | ||||||
| Net cash used in operating activities | (229,670 | ) | (27,459 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Investment of cash in Trust Account | 0 | (276,000,000 | ) | |||||
| Net cash used in investing activities | 0 | (276,000,000 | ) | |||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from sale of Units, net of underwriting discounts paid | 0 | 270,480,000 | ||||||
| Proceeds from sale of Private Placement Warrants | 0 | 7,270,000 | ||||||
| Proceeds from promissory notes – related party | 0 | 125,000 | ||||||
| Repayment of promissory notes – related party | 0 | (125,000 | ) | |||||
| Payment of offering costs | 0 | (384,062 | ) | |||||
| Net cash provided by in financing activities | 0 | 277,365,938 | ||||||
| Net Change in Cash | (229,670 | ) | 1,338,479 | |||||
| Cash – Beginning | $ | 563,923 | 0 | |||||
| Cash – Ending | $ | 334,253 | $ | 1,338,479 | ||||
Non-cash investing and financing activities: | ||||||||
| Offering costs included in accrued offering costs | $ | 0 | $ | 106,475 | ||||
| Remeasurement adjustment on redeemable common stock | $ | 0 | $ | 31,331,658 | ||||
| Deferred underwriting fee payable | $ | 0 | $ | 9,660,000 | ||||
2022
The
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH
(Unaudited)
NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENT
The2022, the Company previously accounted forhad $334,253 in its outstanding Public Warrants (as definedoperating bank accounts, $276,116,810 in Note 4) and Private Placement Warrants (collectively, with the Public Warrants, the “Warrants”) issued in connection with its Initial Public Offering as components of equity instead of as derivative liabilities. The warrant agreement governing the Warrants includes a provision that provides for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant. In addition, the warrant agreement includes a provision thatsecurities held in the event ofTrust Account to be used for a tender offerBusiness Combination or exchange offer made to and accepted by holders of more than 50% of the outstanding shares of a single class of stock, all holders of the Warrants would be entitled to receive cash for their Warrants (the “tender offer provision”).
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, 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 with management, concluded that the Company’s Private Placement Warrants are not indexed to the Company’srepurchase or redeem its common stock in the manner contemplated by ASC Section 815-40-15 because the holderconnection therewith and working capital deficit of $1,500,081, net of interest on trust. As of March 31, 2022, approximately $116,810 of the instrumentamount on deposit in the Trust Account represented interest income, which is not an input intoavailable to pay the pricingCompany’s tax obligations.
As a result of the above,working capital needs. Accordingly, the Company should have classified the Warrants as derivative liabilities in its previously issued financial statement as of February 11th, 2021. Under this accounting treatment,may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to measuretake additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the fair valuepursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time, which is considered to be one year from the issuance date of the Warrants atfinancial statements. These financial statements do not include any adjustments relating to the end of each reporting period as well as re-evaluate the treatmentrecovery of the warrants and recognize changes in the fair in the Company’s operating results.
In accordance with ASC Topic 340, Other Assets and Deferred Costs, as a result ofrecorded assets or the classification of the warrants as derivative liabilities that might be necessary should the Company expensed a portion of the offering costs originally recordedbe unable to continue as a reduction in equity. The portion of offering costs that was expensed was determined based on the relative fair value of the Public Warrants and shares of Class A common stock included in the Units.
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 effect of the restatement on the below financial statement line items as of February 11, 2021:
| As Previously Reported | Adjustments | As Restated | ||||||||||
Balance sheet as of February 11, 2021 (audited) | ||||||||||||
Warrant Liabilities | $ | — | $ | 20,604,690 | $ | 20,604,690 | ||||||
Class A Common Stock Subject to Possible Redemption | 262,598,610 | (20,604,690 | ) | 241,993,920 | ||||||||
Class A Common Stock | 134 | 206 | 340 | |||||||||
Additional Paid-in Capital | 5,000,029 | 4,968,363 | 9,968,392 | |||||||||
Accumulated Deficit | (851 | ) | (4,968,569 | ) | (4,969,420 | ) | ||||||
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
2021.
All of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the condensed balance sheets 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 statements of operations. Offering costs associated with the Class A common stock issued were charged to temporary equity upon the completion of the Initial Public Offering. Offering costs amounting to $15,168,938 were charged to stockholders’ deficit upon the completion of the Initial Public Offering and $526,599 were expensed as of the date of the Initial Public Offering.
sheets.
Liabilities
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the condensed balance sheets and measured at fair value at inception (on the date of issuance,the Initial Public Offering) and at each balance sheetreporting date thereafter. Changes in the estimatedaccordance with ASC 820, with changes in fair value of the warrants are recognized as a non-cash gain or loss onin the statements of operations. The fair valueoperations in the period of the warrants was estimated using a Monte Carlo simulation approach (see Note 10).
change.
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
2022.
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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For the Three Months Ended March 31, | For the Three Months Ended March 31, | |||||||||||||||
2022 | 2021 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted net income (loss) per common stock | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income (loss), as adjusted | $ | 4,358,602 | $ | 1,089,651 | $ | (4,740,607 | ) | $ | (2,065,427 | ) | ||||||
Denominator: | ||||||||||||||||
Basic and diluted weighted average shares outstanding | 27,600,000 | 6,900,000 | 14,885,393 | 6,485,393 | ||||||||||||
Basic and diluted net income (loss) per common stock | $ | 0.16 | $ | 0.16 | $ | (0.32 | ) | $ | (0.32 | ) | ||||||
Fair Value Measurements
Fair value is defined as the price that would be receivednature, except 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. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets orwarrant liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements)(see Note 8). These tiers include:
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Recent
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Promissory Note —
Advances
Company.
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH
(Unaudited)
Underwriting
Consulting Agreement
On February 22, 2021, the Company entered into an agreement with a consultant for services related to a potential Business Combination. The agreement specifies that the consultant will provide the Company with advice on due diligence, deal structuring, documentation and obtaining shareholder approval for a cost
Class
outstanding.
PIVOTAL INVESTMENT CORPORATION III
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
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 | December 31, 2021 | March 31, 2022 | ||||||||||
Assets: | ||||||||||||
Marketable securities held in Trust Account | 1 | $ | 276,079,114 | $ | 276,116,810 | |||||||
Liabilities: | ||||||||||||
Warrant Liability – Private Placement Warrants | 1 | 6,906,500 | 3,344,200 | |||||||||
Warrant Liability – Public Warrants | 2 | 5,244,000 | 2,539,200 | |||||||||
The following table provides quantitative information regarding At December 31, 2021 the Private Warrants transferred to Level 32 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 | % | ||||
of $0.46 per warrant.
| 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 | |||||||||
|
|
|
|
|
| |||||||
Fair value as of March 31, 2021 | $ | 12,693,420 | 9,637,920 | 22,331,340 | ||||||||
|
|
|
|
|
| |||||||
|
Private Placement | Public | Warrant Liabilities | ||||||||||
Fair value as of December 31, 2021 | $ | 6,906,500 | $ | 5,244,000 | $ | 12,150,500 | ||||||
Change in valuation inputs or other assumptions | (3,562,300 | ) | (2,704,800 | ) | (6,267,100 | ) | ||||||
Fair value as of March 31, 2022 | $ | 3,344,200 | $ | 2,539,200 | $ | 5,883,400 | ||||||
2022
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
As of
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.
We accountLiabilities
change.
value approximates fair value.
In August 2020,
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
As of March 31, 2021, we were not subject to any market or interest rate risk. Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with a maturity of 185 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
effective, due to the material weakness in our internal control over financial reporting related to the Company’s accounting for complex financial instruments and related party transactions. As a result, we performed additional analysis as deemed necessary to ensure
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 related 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.
| Item |
Risk Factors |
None.
|
Except as set forth below, as
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.
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 haveidentified 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 aadditional material weakness in our internal control over financial reporting.reporting relating to our complex financial instruments and related party transactions. 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.
To respond to thisClass A common stock. Management concluded that the foregoing constituted a material weakness as of March 31, 2022. Management also identified errors in our identification and disclosure of related party transactions.
Any failure to maintain such internal control could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Failure to timely file will cause us to be ineligible to utilize short form registration statements on Form S-3 or Form S-4, which may impair our ability to obtain capital in a timely fashion to execute our business strategies or issue shares to effect an acquisition. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses or revision of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengtheningstrengthened our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
| 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 March 31, 2022 has been formatted in Inline XBRL and is included in Exhibits 101. | |
| * | Filed herewith. |
| ** | Furnished. |
PIVOTAL INVESTMENT CORPORATION III | ||||||
| Date: May | By: | /s/ Kevin Griffin | ||||
| Name: | Kevin Griffin | |||||
| Title: | Chief Executive Officer and | |||||
| (Principal Executive Officer Officer) | ||||||
| Date: May | By: | /s/ Jim Brady | ||||
| Name: | Jim Brady | |||||
| Title: | Chief Financial Officer | |||||
| (Principal Financial and Accounting Officer) | ||||||
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