UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended SeptemberJune 30, 2021
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File
ADIT EDTECH ACQUISITION CORP.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 85-3477678 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1345 Avenue of the Americas, 33rd Floor
New York, New York 10105
(Address of principal executive offices, including zip code)
(646)
291-6930(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
Units, each consisting of one share of common stock and one-half of one redeemable warrant | ADEX.U | New York Stock Exchange | ||
Common Stock, par value $0.0001 per share | ADEX | New York Stock Exchange | ||
Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share | ADEX.WS | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☒ No ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated Filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in
As of December 22, 2021,August 12, 2022, there were 34,500,000 outstanding shares of the registrant’s common stock, $0.0001 par value per share.
ADIT EDTECH ACQUISITION CORP.
Quarterly Report on Form
1 | |||||||
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2 | |||||||
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4 | |||||||
5 | |||||||
Item 2. | 21 | ||||||
Item 3. | 25 | ||||||
Item 4. | 25 | ||||||
26 | |||||||
Item 1. | 26 | ||||||
Item 1A. | 26 | ||||||
Item 2. | 26 | ||||||
Item 3. | 26 | ||||||
Item 4. | 26 | ||||||
Item 5. | 26 | ||||||
Item 6. | 27 | ||||||
28 | |||||||
PART I—I - FINANCIAL INFORMATION
Item 1. Condensed Financial Statements.
ADIT EDTECH ACQUISITION CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
|
| (Unaudited) |
|
|
|
|
| |
Assets |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash |
| $ | 123,640 |
|
| $ | 462,274 |
|
Prepaid expenses |
|
| 153,125 |
|
|
| 265,282 |
|
Total current assets |
|
| 276,765 |
|
|
| 727,556 |
|
Prepaid expenses, non-current |
|
| — |
|
|
| 14,384 |
|
Cash and securities held in Trust Account |
|
| 276,401,240 |
|
|
| 276,115,444 |
|
Total Assets |
| $ | 276,678,005 |
|
| $ | 276,857,384 |
|
Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Deficit |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accrued offering costs and expenses |
| $ | 3,613,233 |
|
| $ | 3,153,755 |
|
Due to related party |
|
| 78,986 |
|
|
| 18,986 |
|
Income taxes payable |
|
| 22,636 |
|
|
| — |
|
Working capital loan - related party |
|
| 150,000 |
|
|
| 150,000 |
|
Total current liabilities |
|
| 3,864,855 |
|
|
| 3,322,741 |
|
Warrant liability |
|
| 373,701 |
|
|
| 5,044,441 |
|
Deferred underwriting discount |
|
| 9,660,000 |
|
|
| 9,660,000 |
|
Total liabilities |
|
| 13,898,556 |
|
|
| 18,027,182 |
|
Commitments |
|
|
|
|
|
|
|
|
Common stock subject to possible redemption, 27,600,000 shares at redemption value |
|
| 276,239,154 |
|
|
| 276,000,000 |
|
Stockholders’ Deficit: |
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding |
|
| — |
|
|
| — |
|
Common stock, $0.0001 par value; 100,000,000 shares authorized; 6,900,000 shares issued and outstanding (excluding 27,600,000 shares at redemption value), respectively |
|
| 690 |
|
|
| 690 |
|
Additional paid-in capital |
|
| — |
|
|
| — |
|
Accumulated deficit |
|
| (13,460,395 | ) |
|
| (17,170,488 | ) |
Total Stockholders’ Deficit |
|
| (13,459,705 | ) |
|
| (17,169,798 | ) |
Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Deficit |
| $ | 276,678,005 |
|
| $ | 276,857,384 |
|
September 30, 2021 | December 31, 2020 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current asset – cash | $ | 535,832 | $ | 35,614 | ||||
Prepaid expenses | 273,538 | — | ||||||
Deferred offering costs | — | 469,160 | ||||||
Total current assets | 809,370 | 504,774 | ||||||
Prepaid expenses, non-current | 80,548 | — | ||||||
Cash and securities held in Trust Account | 276,083,453 | — | ||||||
Total Assets | $ | 276,973,371 | $ | 504,774 | ||||
Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit) | ||||||||
Current Liabilities: | ||||||||
Accrued offering costs and expenses | $ | 243,422 | $ | 330,300 | ||||
Due to related party | 48,986 | — | ||||||
Promissory note - related party | 150,000 | 150,000 | ||||||
Total current liabilities | 442,408 | 480,300 | ||||||
Deferred underwriting discount | 9,660,000 | — | ||||||
Total liabilities | 10,102,408 | 480,300 | ||||||
Commitments | 0 | 0 | ||||||
Common Stock subject to possible redemption, 27,600,000 and 0shares at redemption value, respectively | 276,000,000 | — | ||||||
Stockholders’ Equity (Deficit): | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized;NaN issued and outstanding | 0 | 0 | ||||||
Common stock, $0.0001 par value; 100,000,000 shares authorized; 6,900,000 shares issued and outstanding | 690 | 690 | ||||||
Additional paid-in capital | — | 24,310 | ||||||
Accumulated deficit | (9,129,727 | ) | (526 | ) | ||||
Total Stockholders’ Equity (Deficit) | (9,129,037 | ) | 24,474 | |||||
Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit) | $ | 276,973,371 | $ | 504,774 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
ADIT EDTECH ACQUISITION CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
| Three June 30, |
|
| Six June 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Formation and operating costs |
| $ | 543,520 |
|
| $ | 135,127 |
|
| $ | 1,145,653 |
|
| $ | 225,340 |
|
Loss from operations |
|
| (543,520 | ) |
|
| (135,127 | ) |
|
| (1,145,653 | ) |
|
| (225,340 | ) |
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrants |
|
| 2,923,321 |
|
|
| — |
|
|
| 4,670,740 |
|
|
| — |
|
Trust interest income |
|
| 374,346 |
|
|
| 15,538 |
|
|
| 446,796 |
|
|
| 55,797 |
|
Total other income, net |
|
| 3,297,667 |
|
|
| 15,538 |
|
|
| 5,117,536 |
|
|
| 55,797 |
|
Income (Loss) before provision for income taxes |
|
| 2,754,147 |
|
|
| (119,589 | ) |
|
| 3,971,883 |
|
|
| (169,543 | ) |
Provision for income taxes |
|
| (22,636 | ) |
|
| — |
|
|
| (22,636 | ) |
|
| — |
|
Net income (loss) |
| $ | 2,731,511 |
|
| $ | (119,589 | ) |
| $ | 3,949,247 |
|
| $ | (169,543 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, redeemable common stock |
|
| 27,600,000 |
|
|
| 27,600,000 |
|
|
| 27,600,000 |
|
|
| 25,365,746 |
|
Basic and diluted net income (loss) per share |
| $ | 0.08 |
|
| $ | (0.00 | ) |
|
| 0.11 |
|
|
| (0.01 | ) |
Basic and diluted weighted average shares outstanding, common stock |
|
| 6,900,000 |
|
|
| 6,900,000 |
|
|
| 6,900,000 |
|
|
| 6,900,000 |
|
Basic and diluted net income (loss) per share |
| $ | 0.08 |
|
| $ | (0.00 | ) |
|
| 0.11 |
|
|
| (0.01 | ) |
For the Three Months Ended September 30, 2021 | For the Nine Months Ended September 30, 2021 | |||||||
Formation and operating costs | $ | 450,588 | $ | 675,928 | ||||
Loss from operations | (450,588 | ) | (675,928 | ) | ||||
Other income: | ||||||||
Trust interest income | 27,656 | 83,453 | ||||||
Total other income | 27,656 | 83,453 | ||||||
Net loss | $ | (422,932 | ) | $ | (592,475 | ) | ||
Basic and diluted weighted average shares outstanding, common stock | 27,600,000 | 6,900,000 | ||||||
Basic and diluted net loss per share | $ | (0.01 | ) | $ | (0.02 | ) | ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
ADIT EDTECH ACQUISITION CORP.
CONDENSED STATEMENTCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)DEFICIT
(UNAUDITED)
THREE AND SIX MONTHS ENDED JUNE 30, 2022
|
| Common Stock |
|
| Additional |
|
| Accumulated |
|
| Total Stockholders’ |
| ||||||||
|
| Shares |
|
| Amount |
|
| Paid-in Capital |
|
| Deficit |
|
| Deficit |
| |||||
Balance as of January 1, 2022 |
|
| 6,900,000 |
|
| $ | 690 |
|
| $ | - |
|
| $ | (17,170,488 | ) |
| $ | (17,169,798 | ) |
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,217,736 |
|
|
| 1,217,736 |
|
Balance as of March 31, 2022 |
|
| 6,900,000 |
|
| $ | 690 |
|
| $ | - |
|
| $ | (15,952,752 | ) |
| $ | (15,952,062 | ) |
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,731,511 |
|
|
| 2,731,511 |
|
Accretion of carrying value to redemption value |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (239,154 | ) |
|
| (239,154 | ) |
Balance as of June 30, 2022 |
|
| 6,900,000 |
|
| $ | 690 |
|
| $ | - |
|
| $ | (13,460,395 | ) |
| $ | (13,459,705 | ) |
THREE AND SIX MONTHS ENDED JUNE 30, 2021
|
| Common Stock |
|
| Additional |
|
| Accumulated |
|
| Total Stockholders’ |
| ||||||||
|
| Shares |
|
| Amount |
|
| Paid-in Capital |
|
| Deficit |
|
| Equity (Deficit) |
| |||||
Balance as of January 1, 2021 |
|
| 6,900,000 |
|
| $ | 690 |
|
| $ | 24,310 |
|
| $ | (526 | ) |
| $ | 24,474 |
|
Proceeds allocated to Private Placement Warrants |
|
|
|
|
|
|
|
|
|
| 7,270,000 |
|
|
|
|
|
|
| 7,270,000 |
|
Subsequent remeasurement under ASC 480-10-S99 |
|
|
|
|
|
|
|
|
|
| (7,294,310 | ) |
|
| (8,521,776 | ) |
|
| (15,816,086 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (49,954 | ) |
|
| (49,954 | ) |
Balance as of March 31, 2021 |
|
| 6,900,000 |
|
| $ | 690 |
|
| $ | - |
|
| $ | (8,572,256 | ) |
| $ | (8,571,566 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (119,589 | ) |
|
| (119,589 | ) |
Balance as of June 30, 2021 |
|
| 6,900,000 |
|
| $ | 690 |
|
| $ | - |
|
| $ | (8,691,845 | ) |
| $ | (8,691,155 | ) |
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholder’s Equity (Deficit) | |||||||||||||||||
Shares | Amount | |||||||||||||||||||
Balance as of December 31, 2020 | 6,900,000 | $ | 690 | $ | 24,310 | $ | (526 | ) | $ | 24,474 | ||||||||||
Sale of 27,600,000 Units, net of underwriting discount and offering expenses | 27,600,000 | 2,760 | — | — | 2,760 | |||||||||||||||
Common stock subject to possible redemption | (27,600,000 | ) | (2,760 | ) | — | — | (2,760 | ) | ||||||||||||
Sale of 7,270,000 Private Placement Warrants through over-allotment | — | — | 7,270,000 | — | 7,270,000 | |||||||||||||||
Subsequent remeasurement under ASC 480-10-S99 | — | — | (7,294,310 | ) | (8,521,776 | ) | (15,816,086 | ) | ||||||||||||
Net loss | — | — | — | (49,954 | ) | (49,954 | ) | |||||||||||||
Balance as of March 31, 2021, as restated | 6,900,000 | $ | 690 | $ | — | $ | (8,572,256 | ) | $ | (8,571,566 | ) | |||||||||
Net loss | — | — | — | (119,589 | ) | (119,589 | ) | |||||||||||||
Balance as of June 30, 2021, as restated | 6,900,000 | $ | 690 | $ | — | $ | (8,691,845 | ) | $ | (8,691,155 | ) | |||||||||
Offering costs charged to additional paid-in capital | — | — | (14,950 | ) | — | (14,950 | ) | |||||||||||||
Reduce negative additional paid-in capital to zero | — | — | 14,950 | (14,950 | ) | — | ||||||||||||||
Net loss | — | — | — | (422,932 | ) | (422,932 | ) | |||||||||||||
Balance as of September 30, 2021 | 6,900,000 | $ | 690 | $ | — | $ | (9,129,727 | ) | $ | (9,129,037 | ) | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
ADIT EDTECH ACQUISITION CORP.
CONDENSED STATEMENTCONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
| For the Six Months Ended June 30, 2022 |
|
| For the Six Months Ended June 30, 2021 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | 3,949,247 |
|
| $ | (169,543 | ) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Change in fair value of warrants |
|
| (4,670,740 | ) |
|
| — |
|
Interest earned on cash and marketable securities held in Trust Account |
|
| (446,796 | ) |
|
| (55,797 | ) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expenses |
|
| 126,541 |
|
|
| (422,752 | ) |
Income taxes payable |
|
| 22,636 |
|
|
| — |
|
Accrued offering costs and expenses |
|
| 459,478 |
|
|
| 165,885 |
|
Due to related party |
|
| 60,000 |
|
|
| 213 |
|
Net cash used in operating activities |
|
| (499,634 | ) |
|
| (481,994 | ) |
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Investment held in Trust Account |
|
| — |
|
|
| (276,000,000 | ) |
Cash withdrawn from Trust Account to pay franchise tax and income taxes |
|
| 161,000 |
|
|
| — |
|
Net cash provided by (used in) investing activities |
|
| 161,000 |
|
|
| (276,000,000 | ) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from Initial Public Offering, net of underwriters’ fees |
|
| — |
|
|
| 270,480,000 |
|
Proceeds from private placement |
|
| — |
|
|
| 7,270,000 |
|
Payments of offering costs |
|
| — |
|
|
| (636,086 | ) |
Net cash provided by financing activities |
|
| — |
|
|
| 277,113,914 |
|
Net change in cash |
|
| (338,634 | ) |
|
| 631,920 |
|
Cash, beginning of the period |
|
| 462,274 |
|
|
| 35,614 |
|
Cash, end of the period |
| $ | 123,640 |
|
| $ | 667,534 |
|
Supplemental disclosure of noncash investing and financing activities: |
|
|
|
|
|
|
|
|
Deferred underwriting commissions charged to additional paid-in capital |
| $ | — |
|
| $ | 9,660,000 |
|
Initial value of common stock subject to possible redemption |
| $ | — |
|
| $ | 276,000,000 |
|
Accretion of carrying value to redemption value |
| $ | 239,154 |
|
| $ | — |
|
Deferred offering costs paid by Sponsor loan |
| $ | — |
|
| $ | 18,773 |
|
For the Nine Months Ended September 30, 2021 | ||||
Cash flows from operating activities: | ||||
Net loss | $ | (592,475 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||
Interest earned on cash and marketable securities held in Trust Account | (83,453 | ) | ||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | (354,086 | ) | ||
Accrued offering costs and expenses | 401,055 | |||
Due to related party | 30,214 | |||
Net cash used in operating activities | (598,746 | ) | ||
Cash flows from investing activities: | ||||
Investment held in Trust Account | (276,000,000 | ) | ||
Net cash used in investing activities | (276,000,000 | ) | ||
Cash flows from financing activities: | ||||
Proceeds from Initial Public Offering, net of underwriters’ fees | 270,480,000 | |||
Proceeds from private placement | 7,270,000 | |||
Payments of offering costs | (651,036 | ) | ||
Net cash provided by financing activities | 277,098,964 | |||
Net change in cash | 500,218 | |||
Cash, beginning of the period | 35,614 | |||
Cash, end of the period | $ | 535,832 | ||
Supplemental disclosure of noncash investing and financing activities: | ||||
Deferred underwriting commissions charged to additional paid-in capital | $ | 9,660,000 | ||
Initial value of common stock subject to possible redemption | $ | 276,000,000 | ||
Deferred offering costs paid by Sponsor loan | $ | 18,773 | ||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
ADIT EDTECH ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 — Organization and Business Operations
Organization and General
Adit EdTech Acquisition Corp. (the “Company”) was incorporated in Delaware on October 15, 2020. The Company is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”). Although the Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination, the Company intends to focus its search for a business that would benefit from its founders’ and management team’s experience and ability to identify, acquire and manage a business in the education, training and education technology industries.
The Company has 1 wholly owned subsidiary, ADEX Merger Sub, LLC, a Delaware limited liability company incorporated on November 24, 2021. There has been no activity since inception.
The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
The Company has selected December 31 as its fiscal year end.
As of September June 30, 2021,2022, the Company had not commenced any operations. All activity for the period from October 15, 2020 (inception) through September June 30, 20212022 relates to the Company’s formation and the initial public offering (“IPO”), which is described below, and since the closing of the IPO, the search for a prospective initial Business Combination.Combination (see Note 7). The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate
The Company’s sponsor is Adit EdTech Sponsor, LLC, a Delaware limited liability company (the “Sponsor”).
Financing
The registration statements for the Company’s IPO were declared effective on January 11, 2021. On January 14, 2021, the Company consummated the IPO of 24,000,000 units (the “Units” and, with respect to the shares of common stock included in the Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $240,000,000.
Simultaneously with the closing of the IPO, the Company consummated the sale of 6,550,000 Private Placement Warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating total gross proceeds of $6,550,000.
The Company granted the underwriters in the IPO
Transaction costs amounted to $13,836,086 consisting of $4,800,000 of underwriting discount, $8,400,000 of deferred underwriting discount, and $636,086 of other offering costs.
Trust Account
Following the closing of the IPO on January 14, 2021 and the underwriters’ full exercise of their over-allotment option on January 19, 2021, $276,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO, the sale of Over-allotment Units and the sale of the Private Placement Warrants were placed in a Trust Account, which are held as cash or invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of
5
180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule
Initial Business Combination
The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Public Shares subject to redemption will be arerecorded at redemption value and classified as temporary equity upon the completion of the IPO in accordance with the FASBFinancial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.”
The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 immediately prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the then outstanding shares of common stock present and entitled to vote at the meeting to approve the Business Combination are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC containing substantially the same information as would be included in a proxy statement prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 6)5) and any Public Shares it purchased during or after the IPO in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction or do not vote at all.
Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The Sponsor and the Company’s officers, directors and industry advisors have agreed (a) to waive redemption rights with respect to the Founder Shares and Public Shares held by them in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination and certain amendments to the Amended and Restated Certificate of Incorporation or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision relating to stockholders’ rights or
The Company will have until January 14, 2023 to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period and stockholders do not approve an amendment to the Amended and Restated Certificate of Incorporation to extend this date, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a
6
Company’s board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
The holders of the Founder Shares have agreed to waive liquidation rights with respect to such shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the IPO, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 7) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the IPO price per Unit ($10.00).
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of trust assets, in each case net of the interest which may be withdrawn to pay the Company’s tax obligation and up to $100,000 for liquidation expenses, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account (even if such waiver is deemed to be unenforceable) and except as to any claims under the Company’s indemnity of the underwriters of IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity and Capital Resources
As of SeptemberJune 30, 2021,2022, the Company had approximately $0.5$0.1 million in its operating bank account, and a working capitaldeficit of $3.4 million, excluding approximately $0.4 million.
Prior to the completion of the IPO, the Company’s liquidity needs had been satisfied through a payment from the Sponsor of $25,000 (see Note 6)5) for the Founder Shares to cover certain offering costs, and the loan under an unsecured promissory note from the Sponsor of $150,000 (see Note 6)5). Subsequent to the consummation of the IPO and sale of Private Placement Warrants, the Company’s liquidity needs have been satisfied through the proceeds from the consummation of the sale of Private Placement Warrants not held in the Trust Account.
In addition, in order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or the Company’s officers and directors or their affiliates may, but are not obligated to, provide the Company Working Capital Loans (as defined below) (see Note 6)5).
Going Concern Consideration
The Company anticipates that the approximately $0.1 million in its operating bank account as of June 30, 2022 will not be sufficient to allow the Company will have sufficient working capitalto operate for at least the next 12 months, assuming that a business combination is not consummated during that time. The Company has incurred and borrowing capacityexpects to meetcontinue to incur significant costs in pursuit of its needs throughfinancing and acquisition plans. These conditions raise substantial doubt about the earlier of the consummation ofCompany’s ability to continue as a Business Combination orgoing concern one year from the issuance date of the condensed financial statements. Management plans to address this filing. Over this time period,uncertainty through loans from its Sponsor, officers, directors, or third parties. None of the CompanySponsor, officers or directors are under any obligation to advance funds to, or to invest in, the Company. There is no assurance that the Company’s plans to raise capital or to consummate a business combination will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Unaudited Balance Sheet as of March 31, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
Common stock subject to possible redemption | $ | 262,428,430 | $ | 13,571,570 | $ | 276,000,000 | ||||||
Common stock | 826 | (136 | ) | 690 | ||||||||
Additional paid-in capital | 5,049,658 | (5,049,658 | ) | 0 | ||||||||
Accumulated deficit | (50,480 | ) | (8,521,776 | ) | (8,572,256 | ) | ||||||
Total stockholders’ equity (deficit) | $ | 5,000,004 | $ | (13,571,570 | ) | $ | (8,571,566 | ) | ||||
Number of shares subject to redemption | 26,242,843 | 1,357,157 | 27,600,000 | |||||||||
Unaudited Statement of Operations for the three months ended March 31, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
Basic and diluted weighted average shares outstanding, common stock subject to redemption | 19,231,241 | 3,875,426 | 23,106,667 | |||||||||
Basic and diluted net loss per share | $ | 0 | $ | (0.00 | ) | $ | (0.00 | ) | ||||
Basic and diluted weighted average shares outstanding, common stock | 13,815,426 | (6,915,426 | ) | 6,900,000 | ||||||||
Basic and diluted net loss per share | $ | (0.00 | ) | $ | 0 | $ | (0.00 | ) | ||||
Unaudited Statement of Changes in Stockholders’ Equity (Deficit) for the three months ended March 31, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
Sale of 27,600,000 Units, net of underwriting discount and offering expenses | $ | 267,453,914 | $ | (267,451,154 | ) | $ | 2,760 | |||||
Change in common stock subject to possible redemption | (262,428,430 | ) | 262,428,430 | — | ||||||||
Common stock subject to possible redemption | — | (2,760 | ) | (2,760 | ) | |||||||
Sale of 7,270,000 Private Placement Warrants through over-allotment | — | 7,270,000 | 7,270,000 | |||||||||
Subsequent remeasurement under ASC 480-10-S99 | $ | — | $ | (15,816,086 | ) | $ | (15,816,086 | ) | ||||
Unaudited Statement of Cash Flows for the three months ended March 31, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
Initial value of common stock subject to possible redemption | $ | 227,738,380 | $ | 48,261,620 | $ | 276,000,000 | ||||||
Change in value of common stock subject to possible redemption | $ | 34,690,050 | $ | (34,690,050 | ) | $ | — | |||||
Unaudited Balance Sheet as of June 30, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
Common stock subject to possible redemption | $ | 262,308,840 | $ | 13,691,160 | $ | 276,000,000 | ||||||
Common stock | 827 | (137 | ) | 690 | ||||||||
Additional paid-in capital | 5,169,247 | (5,169,247 | ) | — | ||||||||
Accumulated deficit | (170,069 | ) | (8,521,776 | ) | (8,691,845 | ) | ||||||
Total stockholders’ equity (deficit) | $ | 5,000,005 | $ | (13,691,160 | ) | $ | (8,691,155 | ) | ||||
Number of shares subject to redemption | 26,230,884 | 1,369,116 | 27,600,000 | |||||||||
Unaudited Statement of Operations for the three months ended June 30, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
Basic and diluted weighted average shares outstanding, common stock subject to redemption | 26,242,843 | 1,357,157 | 27,600,000 | |||||||||
Basic and diluted net loss per share | $ | 0 | $ | (0.00 | ) | $ | (0.00 | ) | ||||
Basic and diluted weighted average shares outstanding, common stock | 8,257,157 | (1,357,157 | ) | 6,900,000 | ||||||||
Basic and diluted net loss per share | $ | (0.01 | ) | $ | 0.01 | $ | (0.00 | ) | ||||
Unaudited Statement of Operations for the six months ended June 30, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
Basic and diluted weighted average shares outstanding, common stock subject to redemption | 22,756,411 | 2,609,335 | 25,365,746 | |||||||||
Basic and diluted net loss per share | $ | 0 | $ | (0.01 | ) | $ | (0.01 | ) | ||||
Basic and diluted weighted average shares outstanding, common stock | 12,830,882 | (5,930,882 | ) | 6,900,000 | ||||||||
Basic and diluted net loss per share | $ | (0.01 | ) | $ | 0 | $ | (0.01 | ) | ||||
| �� | ||||||||||||
Unaudited Statement of Changes in Stockholders’ Equity (Deficit) for the three months ended June 30, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
Change in common stock subject to possible redemption | 119,590 | (119,590 | ) | 0 | ||||||||
Unaudited Statement of Changes in Stockholders’ Equity (Deficit) for the six months ended June 30, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
Sale of 27,600,000 Units, net of underwriting discount and offering expenses | $ | 267,453,914 | $ | (267,451,154 | ) | $ | 2,760 | |||||
Change in common stock subject to possible redemption | (262,308,840 | ) | 262,308,840 | — | ||||||||
Common stock subject to possible redemption | — | (2,760 | ) | (2,760 | ) | |||||||
Sale of 7,270,000 Private Placement Warrants through over-allotment | — | 7,270,000 | 7,270,000 | |||||||||
Subsequent remeasurement under ASC 480-10-S99 | $ | — | $ | (15,816,086 | ) | $ | (15,816,086 | ) | ||||
Unaudited Statement of Cash Flows for the six months ended June 30, 2021 | As Previously Reported | Adjustment | As Restated | |||||||||
Initial value of common stock subject to possible redemption | $ | 227,738,380 | $ | 48,261,620 | $ | 276,000,000 | ||||||
Change in value of common stock subject to possible redemption | $ | 34,570,460 | $ | (34,570,460 | ) | $ | — | |||||
Note 32 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the balances and results for the periods presented. Operating results for the three and nine six months ended September June 30, 20212022 are not necessarily indicative of the results that may be expected through December 31, 2021.
The accompanying unaudited condensedconsolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Form
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, ADEX Merger Sub, LLC. There has been no intercompany activity since inception.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financialconsolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
8
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of SeptemberJune 30, 20212022 and December 31, 2020.
Cash and Securities Held in Trust Account
Cash and securities held in Trust Account consist of United States Treasurytreasury securities. The Company classifies its United States Treasury securities as “Investments—, “Investments—Debt and Equity Securities.”
A decline in the market value of
Premiums and discounts are amortized or accreted over the life of the related
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers 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.
The fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed balance sheet.sheets. The fair values of cash and cash equivalents, prepaid expenses, accrued offering costs and expenses, due to related party, and promissory note to related party are estimated to approximate the carrying values as of SeptemberJune 30, 2022 and December 31, 2021 due to the short maturities of such instruments.
The following tables presentfair value of the Private Placement Warrants is based on a Monte Carlo valuation model utilizing management judgment and pricing inputs from observable and unobservable markets with less volume and transaction frequency than active markets. Significant deviations from these estimates and inputs could result in a material change in fair value. The fair value of the Private Placement Warrants is classified as Level 3. See Note 6 for additional information about the Company’son assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2021, and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
September 30, 2021 | Quoted Prices In Active Markets (Level 1) | Quoted Prices In Active Markets (Level 1) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
Assets: | ||||||||||||||||
U.S. Money Market held in Trust Account | $ | 231 | $ | 231 | $ | — | $ | 0 | ||||||||
U.S. Treasury Securities | 276,083,222 | 276,083,222 | — | 0 | ||||||||||||
| $ | 276,083,453 | $ | 276,083,453 | $ | — | $ | 0 | |||||||||
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. At SeptemberJune 30, 20212022 and December 31, 2020,2021, the Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Common Stock Subject to Possible Redemption
All of the 27,600,000 shares of common stock subjectsold as part of the Units (see Note 3) contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with a Business Combination and in connection with certain amendments to possible redemption inthe Company’s amended and restated articles of incorporation. In accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory480-10-S99, redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are eitherprovisions not solely within the control of the holder or subject to redemption upon the occurrenceCompany require shares of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity,to be classified outside of the stockholders’ equity section of the Company’s balance sheet.
The Company has not consideredrecognizes changes in redemption value immediately as they occur upon the effectIPO and will adjust the carrying value of the warrants sold in the Initial Public Offering and the private placement to purchase an aggregate of 21,070,000 shares in the calculation of diluted loss per share, since the inclusion of such warrants would be anti-dilutive. Accretion associated with the redeemable shares of common stock is excluded from earnings per share asto equal the redemption value approximates fair value. As a result, diluted income perat the end of each reporting period. Increases or decreases in the carrying amount of redeemable shares of common stock isare recorded as charges against additional paid-in capital and accumulated deficit.
Net Income (Loss) Per Share of Common Stock
The Company has two categories of shares, which are referred to as redeemable shares of common stock and non-redeemable shares of common stock. Earnings and losses are shared pro rata between the same astwo categories of shares. The table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share of common stock.for each category for the three and six months ended June 30, 2022 and 2021:
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| Three Months Ended |
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| Six Months Ended |
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| 2022 |
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| 2021 |
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| 2022 |
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| 2021 |
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| Redeemable common |
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| Non- |
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| Redeemable common |
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| Non- |
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| Redeemable common |
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| Non- |
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| Redeemable common |
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| Non- |
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Basic and diluted net income (loss) per share: |
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Numerator: |
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Allocation of net income (loss) |
| $ | 2,150,495 |
|
| $ | 537,624 |
|
| $ | (95,671 | ) |
|
| (23,918 | ) |
| $ | 3,124,684 |
|
| $ | 781,171 |
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| $ | (133,286 | ) |
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| (36,257 | ) |
Denominator: |
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Weighted Average Shares Outstanding including common stock subject to redemption |
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| 27,600,000 |
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| 6,900,000 |
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|
| 27,600,000 |
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|
| 6,900,000 |
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| 27,600,000 |
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| 6,900,000 |
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| 25,365,746 |
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| 6,900,000 |
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Basic and diluted net income (loss) per share |
| $ | 0.08 |
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| $ | 0.08 |
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| $ | (0.00 | ) |
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| (0.00 | ) |
| $ | 0.11 |
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| $ | 0.11 |
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| $ | (0.01 | ) |
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| (0.01 | ) |
For the three months ended September 30, 2021 | Redeemable | Non-Redeemable | ||||||
Allocation of net loss including shares of common stock subject to possible redemption | $ | (338,346 | ) | $ | (84,586 | ) | ||
Weighted Average redeemable common stock outstanding | 27,600,000 | 6,900,000 | ||||||
Basic and Diluted net loss per share of common stock | $ | (0.01 | ) | $ | (0.01 | ) | ||
For the nine months ended September 30, 2021 | Redeemable | Non-Redeemable | ||||||
Allocation of net loss including shares of common stock subject to possible redemption | $ | (468,664 | ) | $ | (123,811 | ) | ||
Weighted Average redeemable common stock outstanding | 26,118,681 | 6,900,000 | ||||||
Basic and Diluted net loss per share of common stock | $ | (0.02 | ) | $ | (0.02 | ) | ||
Offering Costs associated with the Initial Public Offering
The Company complies with the requirements of the ASC
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC
At June 30, 2022 and December 31, 2021, the Company has evaluated both the publicPublic Warrants (as defined below) and private warrantsPrivate Placement Warrants under ASC 480 and ASC
Income Taxes
The Company follows the asset and liability method of accountingaccounts for income taxes under ASC 740, “Income Taxes.” DeferredASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities are recognized for both the estimated future tax consequences attributable toexpected impact of differences between the unaudited condensed financial statements carrying amountsand tax basis of existing assets and liabilities and their respectivefor the expected future tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are 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 will not be realized. As of June 30, 2022 and liabilitiesDecember 31, 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it. The Company’s effective tax rate was 2.40% and 0.00% for the three months ended June 30, 2022 and 2021, respectively, and 1.66% and 0.00% for the six months ended June 30, 2022 and 2021, respectively. The effective tax rate differs from the statutory tax rate of a change21% for the three and six months ended March 31, 2022 and 2021, due to changes in fair value in warrant liability, changes in fair value in the PIPE derivative liability, and the valuation allowance on the deferred tax rates isassets.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of SeptemberJune 30, 20212022 and December 31, 2020.2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company has identified the United States as its only “major” tax jurisdiction. The Company is subject to income tax examinationstaxation by major taxing authorities since inception.
11
Risks and Uncertainties
Management continues to evaluate the impact of the
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”)FASB issued Accounting Standards Update (“ASU”)(“ (“ASU
the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statement.
Note 43 — Initial Public Offering
Pursuant to the IPO on January 14, 2021, the Company sold 24,000,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of common stock and one-half of one warrant to purchase one share of common stock (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment.
On January 14, 2021, an aggregate of $10.00 per Unit sold in the IPO was held in the Trust Account and will be held as cash or invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule
On January 19, 2021, the underwriters exercised the over-allotment option in full to purchase 3,600,000 Units.
Following the closing of the IPO on January 14, 2021 and the underwriters’ full exercise of over-allotment option on January 19, 2021, $276,000,000 was held in the Trust Account.
Gross proceeds from public issuance |
| $ | 276,000,000 |
|
Less: |
|
|
|
|
Proceeds allocated to public warrants |
|
| (16,771,351) |
|
Common stock issuance costs |
|
| (14,849,933 | ) |
Plus: |
|
|
|
|
Accretion of carrying value to redemption value |
|
| 31,621,284 |
|
Common stock subject to possible redemption, December 31, 2021 |
|
| 276,000,000 |
|
Plus: |
|
|
|
|
Accretion of carrying value to redemption value |
|
| 239,154 |
|
Common stock subject to possible redemption, June 30, 2022 |
| $ | 276,239,154 |
|
Gross proceeds from public issuance | $ | 276,000,000 | ||
Less: | ||||
Proceeds allocated to public warrants | — | |||
Shares of the common stock issuance costs | (15,816,086 | ) | ||
Plus: | ||||
Accretion of carrying value to redemption value | 15,816,086 | |||
Contingently redeemable common stock | $ | 276,000,000 | ||
Note 54 — Private Placement
Simultaneously with the closing of the IPO on January 14, 2021, the Sponsor purchased an aggregate of 6,550,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $6,550,000, in a private placement (the “Private Placement”).
On January 19, 2021, the underwriters exercised the over-allotment option in full to purchase 3,600,000 Units. Simultaneously with the closing of the exercise of the overallotment option, the Company completed the private sale of an aggregate of 720,000 Private Placement Warrants to the Sponsor at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds of $720,000.
Each Private Placement Warrant will entitle the holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment. The proceeds from the Private Placement Warrants were added to the proceeds from the IPO held in the Trust Account on January 14, 2021.Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.
Note 65 — Related Party Transactions
Founder Shares
In October 2020, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration of 5,750,000 shares of the Company’s common stock (the “Founder Shares”). On October 27, 2020, the Sponsor transferred 10,000 Founder Shares to each of the Company’s independent directors and 7,500 Founder Shares to each of the Company’s industry advisors at their original purchase price (the Sponsor, independent directors and industry advisors being defined herein collectively as the “initial stockholders”). On January 11, 2021, the Company effected a stock dividend of 1,150,000 shares with respect to the common stock, resulting in the initial stockholders holding an aggregate of 6,900,000 Founder Shares (up to 900,000 of which are subject to forfeiture by the Sponsor depending on the extent to which the underwriters’ over-allotment option is exercised). As such, the initial stockholders collectively own 20% of the Company’s issued and outstanding shares of common stock after the IPO. On January 19, 2021, the underwriter exercised its over-allotment option in full, hence, the 900,000 Founder Shares are no longer subject to forfeiture.
The initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A)
one yearafter the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the last sale price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within anyTransactions with Company Officers
On April 17, 2021, Griid Holdco LLC, a Delaware limited liability company (“GRIID”), entered into an engagement letter and an incentive unit award agreement (together, the “consulting agreements”) with Deucalion Partners, LLC, an entity affiliated with John D’Agostino, the Company’s Chief Financial Officer. Pursuant to the consulting agreements, GRIID agreed to pay to such entity $
13
400,000 and grant such entity units representing a 0.5% profits interest in GRIID. The cash payment will become due and payable on the earlier to occur of: (i) April 26, 2022 and (ii) the date on which GRIID consummates a merger with a special purpose acquisition company, qualified initial public offering, or other change of control transaction (each, a “qualifying transaction”). The units will vest as to one-fourth on April 16, 2022, and 1/36th on the 17th day of each month thereafter, subject to such entity’s continued service through such vesting dates; provided, however, that any unvested units shall fully vest upon a qualifying transaction.
Due to Related Parties
As of SeptemberJune 30, 2022 and December 31, 2021, one related party paid an aggregate of $18,773approximately $80,000 and $20,000, respectively, on behalf of the Company to pay for offering and operating costs.
Promissory Note — Related Party
On October 23, 2020, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $150,000. The Promissory Note was
On August 6, 2021, the Company issued a new unsecured promissory note to the Sponsor in connection with a Working Capital Loan (as defined below) made by the Sponsor to the Company pursuant to which the Company may borrow up to $300,000 in the aggregate (the “New Promissory Note”). The note isSeptemberJune 30, 2022 and December 31, 2021, the Company borrowed $150,000 under the note.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the initial stockholders, the Sponsor or an affiliate of the Sponsor, or the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $2,000,000 of the notes may be converted upon completion of a Business Combination into warrants at a price of $1.00 per warrant. Such warrants would be identical to the Private Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. As of SeptemberJune 30, 2022 and December 31, 2021, a Working Capital Loan was outstanding in the amount of $150,000 under the New Promissory Note, as detailed under the heading “Promissory Note – Related Party.”
Administrative Service Fee
The Company entered into an agreement whereby, commencing on January 11, 2021, the Company has agreed to pay the Sponsor or an affiliate of the Sponsor an amount up to a total of $10,000 per month for office space, utilities, secretarial support and administrative services. UnderDuring each of the three and six months ended June 30, 2022 and 2021, under such agreement, the Company paid $90,000 incurred $30,000 and $60,000, respectively, in total for, which is included in due to related party on the nine months ended Septemberaccompanying balance sheet as of June 30, 2021.2022. Upon completion of the initial Business Combination or liquidation, the Company will cease paying these monthly fees.
Note 76 — Fair Value Measurements
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
|
| June 30, |
|
| Quoted Prices In Active Markets |
|
| Significant Other Observable Inputs |
|
| Significant Other Unobservable Inputs |
| ||||
|
| 2022 |
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
| ||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability – Private Placement Warrants |
| $ | 373,701 |
|
| $ | — |
|
| $ | — |
|
| $ | 373,701 |
|
|
| $ | 373,701 |
|
| $ | — |
|
| $ | — |
|
| $ | 373,701 |
|
|
| December 31, |
|
| Quoted Prices In Active Markets |
|
| Significant Other Observable Inputs |
|
| Significant Other Unobservable Inputs |
| ||||
|
| 2021 |
|
| (Level 1) |
|
| (Level 2) |
|
| (Level 3) |
| ||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liability – Private Placement Warrants |
| $ | 5,044,441 |
|
| $ | — |
|
| $ | — |
|
| $ | 5,044,441 |
|
|
| $ | 5,044,441 |
|
| $ | — |
|
| $ | — |
|
| $ | 5,044,441 |
|
Cash and Securities Heldsecurities held in Trust Account
As of SeptemberJune 30, 2022, investment in the Company’s Trust Account consisted of approximately $2,281 in U.S. Money Market funds and approximately $276.4 million, in U.S. treasury securities. As of December 31, 2021, investment in the Company’s Trust Account consisted of $231approximately $1,000 in U.S. Money Market funds and $276,083,222,approximately $276.1 million, in U.S. Treasury Securities.treasury securities. The Company classifies its United States TreasuryU.S. treasury securities as
The carrying value, excluding gross unrealized holding loss and fair value of held to maturity securities on SeptemberJune 30, 2022 and December 31, 2021 are as follows:
|
| Carrying Value/Amortized Cost |
|
| Gross Unrealized Gains |
|
| Gross Unrealized Losses |
|
| Fair Value as of June 30, 2022 |
| ||||
U.S. Money Market |
| $ | 2,281 |
|
| $ | — |
|
| $ | — |
|
| $ | 2,281 |
|
U.S. Treasury Securities |
|
| 276,398,959 |
|
|
| — |
|
|
| 25,149 |
|
|
| 276,373,810 |
|
|
| $ | 276,401,240 |
|
| $ | — |
|
| $ | 4,218 |
|
| $ | 276,376,091 |
|
|
| Carrying Value/Amortized Cost |
|
| Gross Unrealized Gains |
|
| Gross Unrealized Losses |
|
| Fair Value as of December 31, 2021 |
| ||||
U.S. Money Market |
| $ | 979 |
|
| $ | — |
|
| $ | — |
|
| $ | 979 |
|
U.S. Treasury Securities |
|
| 276,114,465 |
|
|
| 4,535 |
|
|
| — |
|
|
| 276,119,000 |
|
|
| $ | 276,115,444 |
|
| $ | 4,535 |
|
| $ | — |
|
| $ | 276,119,979 |
|
Warrant liability - Private Placement Warrants
The estimated fair value of the Private Placement Warrants was determined using Level 3 inputs. Inherent in a Monte-Carlo simulation model are assumptions related to expected stock-price volatility (pre-merger and post-merger), expected term, dividend yield and risk-free interest rate. The Company estimates the volatility of its common stock based on management’s understanding of the volatility associated with instruments of other similar entities. The risk-free interest rate is based on the U.S. Treasury Constant Maturity similar to the expected remaining life of the Private Placement Warrants. The expected life of the Private Placement Warrants is simulated based on management assumptions regarding the timing and likelihood of completing a Business Combination. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. The assumptions used in calculating the estimated fair values represent the Company’s best estimate. However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially different.
The key inputs into the Monte Carlo simulation model for the Private Placement Warrants were as follows at December 23, 2021:
Input |
| December 23, 2021 |
| |
Expected term (years) |
|
| 5.43 |
|
Expected volatility |
|
| 13.20 | % |
Risk-free interest rate |
|
| 1.21 | % |
Stock price |
| $ | 9.88 |
|
Dividend yield |
|
| 0.00 | % |
Exercise price |
| $ | 11.50 |
|
The key inputs into the Monte Carlo simulation model for the Private Placement Warrants were as follows at June 30, 2022 and December 31, 2021:
Input |
| June 30, 2022 |
|
| December 31, 2021 |
| ||
Expected term (years) |
|
| 5.25 |
|
|
| 5.40 |
|
Expected volatility |
|
| 4.5 | % |
|
| 11.70 | % |
Risk-free interest rate |
|
| 3.01 | % |
|
| 1.20 | % |
Stock price |
| $ | 9.84 |
|
| $ | 9.90 |
|
Dividend yield |
|
| 0.00 | % |
|
| 0.00 | % |
Exercise price |
| $ | 11.50 |
|
| $ | 11.50 |
|
Carrying Value/Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of September 30, 2021 | |||||||||||||
U.S. Money Market | $ | 231 | $ | 0 | $ | 0 | $ | 231 | ||||||||
U.S. Treasury Securities | 276,083,222 | 0 | (2,017 | ) | 276,085,239 | |||||||||||
| $ | 276,083,453 | $ | 0 | $ | (2,017 | ) | $ | 276,085,470 | ||||||||
The following table sets forth a summary of the changes in the Level 3 fair value classification:
|
| Warrant Liability |
| |
Fair value as of December 31, 2021 |
| $ | 5,044,441 |
|
Change in fair value |
|
| (1,747,419 | ) |
Fair value as of March 31, 2022 |
| $ | 3,297,022 |
|
Change in fair value |
|
| (2,923,321 | ) |
Fair value as of June 30, 2022 |
| $ | 373,701 |
|
Note 87 — Commitments and Contingencies
Registration Rights
The holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of the Working Capital Loans (and any shares of common stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of Working Capital Loans) are entitled to registration rights pursuant to a registration rights agreement signed on January 11, 2021, requiring the Company to register such securities for resale. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the
16
Securities Act. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters were paid a cash underwriting discount of 2.0% of the gross proceeds of the IPO, or $5,520,000 in the aggregate. In addition, the underwriters are entitled to a deferred fee of 3.5% of the gross proceeds of the IPO, or $8,400,000 (or up$9,660,000.
Business Combination Agreement
On November 29, 2021, the Company entered into an agreement and plan of merger (the “Merger Agreement”) by and among the Company, ADEX Merger Sub, LLC, a Delaware limited liability company and a wholly owned direct subsidiary of the Company (“Merger Sub”), and GRIID. On December 23, 2021 the parties to $9,660,000the Merger Agreement amended the Merger Agreement. The Merger Agreement, as amended, provides, among other things, that on the terms and subject to the conditions set forth therein, Merger Sub will merge with and into GRIID (the “Merger”), the separate limited liability company existence of Merger Sub will cease and GRIID, as the surviving company of the Merger, will continue its existence under the Limited Liability Company Act of the State of Delaware as a wholly owned subsidiary of the Company.
The Merger Agreement and the transactions contemplated thereby were unanimously approved by the board of directors of the Company and the board of managers of GRIID.
At the closing of the Merger (the “Closing”), the limited liability company membership interests of Merger Sub will be converted into an equivalent limited liability company membership interest in GRIID and each limited liability company membership unit of GRIID that is issued and outstanding immediately prior to the effective time of the merger will automatically be converted into and become the right to receive such unit’s proportionate share, as determined in accordance with the Merger Agreement, of 308,100,000 shares of the Company’s common stock.
The parties to the Merger Agreement have agreed to customary representations and warranties for transactions of this type. Additionally, under the Merger Agreement, the obligations of the parties to consummate the Merger are subject to the satisfaction or waiver of certain customary closing conditions.
The Merger Agreement includes a remedy of specific performance for the parties. The Merger Agreement may be terminated under certain customary circumstances at any time prior to the Closing, including, (i) by mutual written consent of GRIID and the Company, or (ii) by the Company or GRIID, if (a) the Closing has not occurred by May 29, 2022 (subject to extension for 60 days or 90 days in certain circumstances), (b) the other party has breached any of its representations, warranties, covenants or agreements in the Merger Agreement and such breach has caused the failure of the closing condition related to the accuracy of such other party’s representations and warranties or such other party’s compliance with its covenants (subject to a cure period), (c) any governmental entity has issued a final, non-appealable order or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by the Merger Agreement, (d) the Company’s stockholder meeting to vote on the Merger has been held and the ADEX Stockholder Approval has not been obtained or (e) the GRIID Written Consent has not been obtained in the time period set forth in the Merger Agreement.
If the Merger Agreement is validly terminated, none of the parties to the Merger Agreement will have any liability or any further obligation under the Merger Agreement other than customary confidentiality obligations, except in the case of Willful Breach or Fraud (each, as defined in the Merger Agreement).
Vendor Agreements
On August 17, 2021, the Company entered into a master services agreement (the “Evolve Agreement”) with Evolve Security, LLC (“Evolve”) for cybersecurity due diligence services related to the Merger. Under the Evolve Agreement, the Company paid Evolve $55,000.
On August 17, 2021, the Company entered into an engagement letter (the “Edelstein Letter”) with Edelstein & Company, LLP (“Edelstein”) for accounting due diligence services related to the Merger. Under the Edelstein Letter, Edelstein estimated its fees payable by the Company to be $16,000.
On August 17, 2021, the Company entered into an engagement letter (the “Lincoln Letter”) with Lincoln International LLC (“Lincoln”) for fairness opinion services related to the Merger. Under the Lincoln Letter, Lincoln will be entitled to receive a contingent fee in the amount of $500,000 plus expenses upon the consummation of the Merger.
17
On August 18, 2021, the Company entered into a consulting agreement (the “Consulting Agreement”) with Arthur D. Little LLC (“ADL”) for technical and commercial due diligence services related to the Merger. Under the Consulting Agreement, ADL will receive a contingent fee in the amount of $250,000 plus expenses upon the consummation of the Merger.
On September 13, 2021, the Company entered into an engagement letter (the “M&A Engagement Letter”) with Wells Fargo Securities, LLC (“Wells”), pursuant to which Wells would serve as financial advisor in connection with contemplated acquisitions made by the Company. Under the M&A Engagement Letter, Wells would receive $3,500,000 upon the consummation of a business combination, and would be entitled to 30% of any break-up fee the Company receives upon the termination of a business combination agreement.
On September 14, 2021, the Company entered into engagement letters relating to a private investment in public equity (“PIPE”) financing (the “PIPE Engagement Letter”) and capital markets advisory services (the “Capital Markets Engagement Letter”), each with Wells. Under the PIPE Engagement Letter, Wells would receive a contingent fee equal to 4% of the gross proceeds of securities sold in the PIPE plus expenses. The Company will be obligated to pay an additional $1,500,000 if the underwriters’ over-allotmentgross proceeds of securities sold in a PIPE is exercised in full).
Note 98 — Stockholders’ Equity (Deficit)
Preferred Stock
Common Stock
Public Warrants
The Company will not be obligated to deliver any shares of common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. NaN warrant will be exercisable and the Company will not be obligated to issue any shares of common stock upon exercise of a warrant unless common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
If the Company’s common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to maintain in effect a registration statement, but it will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
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 to each warrant holder; and |
• | if, and only if, the reported last sale price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like), for any 20 trading days within a 30 trading day period commencing once the warrants become exercisable and ending commencing once the warrants become exercisable and ending three business days before the Company sends the notice of redemption to the warrant holders. |
18
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. 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 Company has established the last of the redemption criterioncriteria discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and the Company issues a notice of redemption of the warrants, each warrant holder will be entitled to exercise its warrant prior to the scheduled redemption date. However, the price of the common stock may fall below the $18.00 redemption trigger price as well as the $11.50 (for whole shares) warrant exercise price after the redemption notice is issued.
If the Company calls the warrants for redemption as described above, the management will have the option to require any holder that wishes to exercise its warrant including the holders (other than the original holders) of the Private Placement Warrants to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless basis,” the management will consider, among other factors, the Company’s cash position, the number of warrants that are outstanding and the dilutive effect on the stockholders of issuing the maximum number of shares of common stock issuable upon the exercise of the warrants. If the management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” for this purpose shall mean the average reported last sale price of the 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. If the management takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of shares of common stock to be received upon exercise of the warrants, including the “fair market value” in such case. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption. If the Company calls the warrants for redemption and the management does not take advantage of this option, the holders of the Private Placement Warrants and their permitted transferees would still be entitled to exercise their Private Placement Warrants for cash or on a cashless basis using the same formula described above that other warrant holders would have been required to use had all warrant holders been required to exercise their warrants on a cashless basis.
The exercise price and number of shares of 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 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.
In addition, if (x) the Company issues additional common stock or equity-linked securities for capital raising purposes in connection with the closing of a 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 or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the common stock during the 10 trading day period starting on the trading day prior the day on which the Company consummates a Business Combination (such price, the “Market Value”) is below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
Note 109 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed consolidated financial statements were issued. Other than as described below and in these financial statements,Based upon this review, the Company did not identify any subsequent events other than noted below that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,” “ADIT EDTECH ACQUISITION CORP.“Adit EdTech Acquisition Corp.,” “our,” “us” or “we” refer to ADIT EDTECH ACQUISITION CORP.Adit EdTech Acquisition Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form10-Q/A.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on
Overview
We are a blank check company incorporated in Delaware and formed for the purpose of effecting an initial
The issuance of additional shares of our capitalcommon stock in a Business Combination:
• | may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock; | |
• | may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock; |
• | could cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present management team; | |
• | may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and |
• | may adversely affect prevailing market prices for our common stock and/or warrants. | |
Similarly, if we issue debt securities, it could result in:
• | default and foreclosure on our assets if our operating revenues after an initial Business Combination are insufficient to repay our debt obligations; | |
• | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; | |
• | our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; | |
• | our inability to obtain necessary additional financing if the debt security contains covenants; | |
• | restricting our ability to obtain such financing while the debt security is outstanding; |
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• | our inability to pay dividends on our common stock; | |
• | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes; | |
• | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; | |
• | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; | |
• | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and | |
• | other purposes and other disadvantages compared to our competitors who have less debt. |
On January 14, 2021, we completed our IPO of 24,000,000 Units. Each Unit consists of one share of Common Stock, and
On January 14, 2021, simultaneously with the consummation of the IPO, we completed a private placement of an aggregate of 6,550,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $6,550,000.
On January 15, 2021, the underwriters exercised their over-allotment option in full, and on January 19, 2021, the underwriters purchased an additional 3,600,000 Units at an offering price of $10.00 per Unit, generating gross proceeds of $36,000,000. Simultaneously with the closing of the sale of additional Units, the Companywe sold an additional 720,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $720,000. As of January 19, 2021, an aggregate amount of $276,000,000 of the net proceeds from the IPO (including the additional 3,600,000 Units and additional 720,000 Private Placement Warrants) were deposited in the Company’sour trust account established in connection with the IPO.
We paid a total of $5,520,000approximately $5.5 million in underwriting discounts and commissions and $636,086approximately $0.6 million for other costs and expenses related to the IPO.
Results of Operations
Our entire activity since inception up to SeptemberJune 30, 20212022 relates to our formation, the Initial Public Offering and, since the closing of the Initial Public Offering, a search for a Business Combination candidate. We will not be generating any operating revenues until the closing and completion of our initial Business Combination, at the earliest.
For the three months ended SeptemberJune 30, 2021,2022, we had net lossincome of $422,932,approximately $2.7 million, which consisted of $450,588change in fair value of warrant liability of approximately $2.9 million and interest earned on marketable securities held in the Trust Account of approximately $0.4 million, offset by approximately $0.5 million in formation and operating costs offset by $27,656and provision for income taxes of approximately $23,000.
For the six months ended June 30, 2022, we had net income of approximately $3.9 million, which consisted of change in fair value of warrant liability of approximately $4.7 million and approximately $0.4 million in interest earned on marketable securities held in the Trust Account.
For the ninethree months ended SeptemberJune 30, 2021, we had net loss of $592,475$119,589, which consisted of $675,928$135,127 in formation and operating costs, offset by $83,453$15,538 in interest earned on marketable securities held in the Trust Account.
For the six months ended June 30, 2021, we had net loss of $169,543, which consisted of $225,340 in formation and operating costs, offset by $55,797 in interest earned on marketable securities held in the Trust Account.
Liquidity and Capital Resources
As of June 30, 2022, we had approximately $0.5$0.1 million in our operating bank account, and a working capitaldeficit of approximately $0.4 million.
Prior to the completion of the Initial Public Offering, our liquidity needs had been satisfied through a capital contribution from the Sponsor of $25,000 in exchange for Founder Shares, to cover certain offering costs, for the Founder Shares, and thea loan under an unsecured promissory note from the Sponsor of $150,000. Subsequent to the consummation of the Initial Public Offering and Private Placement, our liquidity needs have been satisfied through the proceeds from the consummation of the Private Placement Warrants not held in the Trust Account.
In addition, in order to finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, provide us Working Capital Loans.
On August 6, 2021, the Companywe issued an unsecured promissory note to the Sponsor in connection with a Working Capital Loan made by the Sponsor to the Companyus pursuant to which the Companywe may borrow up to $300,000 in the aggregate. The note is
Going Concern Consideration
We anticipate that the foregoing, management believesapproximately $0.1 million in the operating bank account as of June 30, 2022 will not be sufficient to allow us to operate for at least the next 12 months, assuming that we willa business combination is not consummated during that time. We have sufficient working capitalincurred and borrowing capacityexpect to meetcontinue to incur significant costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about our needs through the earlier of the consummation ofability to continue as a Business Combination orgoing concern one year from the issuance date of the financial statements. Management plans to address this filing. Over this time period, weuncertainty through loans from the Sponsor, officers, directors, or third parties. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in us. There is no assurance that the plans to raise capital or to consummate a business combination will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selectingsuccessful. The financial statements do not include any adjustments that might result from the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Off-Balance
As of SeptemberJune 30, 2021,2022, we did not have any
On November 29, 2021, Adit EdTech Acquisition Corp., a Delaware corporation (“ADEX”),we entered into an agreement and plan of merger (the “Merger Agreement”) by and among ADEX, ADEXthe Merger Sub, LLC, a Delaware limited liability company and a wholly owned direct subsidiary of ADEX (“Merger Sub”), and Griid Holdco LLC, a Delaware limited liability company (“Griid”).Agreement. The Merger Agreement provides, among other things, that on the terms and subject to the conditions set forth therein, Merger Sub will merge with and into Griid (the “Merger”),GRIID, the separate limited liability company existence of Merger Sub will cease and Griid,GRIID, as the surviving company of the merger,Merger, will continue its existence under the Limited Liability Company Act of the State of Delaware as a wholly owned subsidiary of ADEX.
The Merger Agreement and the transactions contemplated thereby were unanimously approved by the board of directors of ADEX and the board of managers of Griid.
Contractual Obligations
At SeptemberJune 30, 2021,2022, we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not
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publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of
Critical Accounting Policies
Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our unaudited condensed consolidated financial information. We describe our significant accounting policies in Note 3—2 - Significant Accounting Policies, of the Notes to Financial Statements included in this Quarterly Report on Form10-Q.
We have identified the following as our critical accounting policies:
Common Stock Subject to Possible Redemption
All of the 27,600,000 shares of common stock subjectsold as part of the Units contain a redemption feature which allows for the redemption of such Public Shares in connection with our liquidation, if there is a stockholder vote or tender offer in connection with a Business Combination and in connection with certain amendments to possible redemption inour amended and restated articles of incorporation. In accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity.” Common stock subject to mandatory480-10-S99, redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are eitherprovisions not solely within the control of the holder or subject to redemption upon the occurrenceCompany require shares of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented atto be classified outside of permanent equity. Therefore, all 27,600,000 shares of common stock were classified outside of permanent equity as of June 30, 2022 and December 31, 2021.
We recognizes change in redemption value immediately as temporary equity, outsidethey occur upon the IPO and will adjust the carrying value of redeemable shares of common stock to equal the stockholders’ equity sectionredemption value at the end of each reporting period. Increases or decreases in the Company’s balance sheets.
Net Income (Loss) Per Share of Common Stock
We have two categories of shares, which are referred to as redeemable shares of common stock is computed by dividing net income (loss) by the weighted average number of common share outstanding for each of the periods. The warrants are exercisable to purchase 21,070,000and non-redeemable shares of common stock. Earnings and losses are shared pro rata between the two categories of shares for the three and six months ended June 30, 2022 and 2021.
Derivative Financial Instruments
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-40, “Derivatives and Hedging – Contracts inEntity’s Own Stock (“ASC 815-40”).” The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
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At June 30, 2022, we have evaluated both the Public Warrants and Private Placement Warrants under ASC 480 and ASC 815-40. Such guidance provides that because the Private Placement Warrants do not meet the criteria for equity treatment thereunder, each Private Placement Warrant must be recorded as a liability. Accordingly, we classified each warrant as a liability at its fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in our statements of operations. The Private Placement Warrants had met the aggregate.
Item
As of inception) through SeptemberJune 30, 2021 relates2022, we were not subject to our formation,any market or interest rate risk. Following the preparation forconsummation of our IPO, and the search for targets fornet proceeds of our initial Business Combination. We did notIPO, including amounts in the trust account, have any financial instrumentsbeen invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in certain money market funds that were exposedinvest solely in U.S. treasuries. Due to market risks on September 30, 2021.
Item 4. Controls and Procedures.
Disclosurecontrols and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under Securities Exchange Actof 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by RulesMarch 31, 2021, June 30, 2021 or September 30, 2021 (the “Affected Periods”),2022, due to the material weakness in accounting for complex financial instruments. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited interim financial statements were prepared in accordance with U.S. generally accepted accounting principles.
Management has identified a material weakness in internal controls related to the accounting for complex financial statements do not impact the amounts previously reported for our cash and cash equivalents or total assets. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited interim financial statements were prepared in accordance with U.S. generally accepted accounting principles.
Management has implemented remediation steps to improve our internal control over financial reporting. Specifically, we expanded and improved our review process for complex financial instruments and related accounting standards. We plan to further improve this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the Affected Periodsquarter ended of June 30, 2022 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1.Legal Proceedings.
From time to time, we are subject to claims in legal proceedings arising in the normal course of our business. We do not believe that we are currently party to any pending legal actions that could reasonably be expected to have a material adverse effect on our business, financial condition, results of operations, or cash flows.
Item 1A. RiskRisk Factors.
We have included in Part I, Item 1A of the date of this Quarterly Report on Form
Blockchain Access UK Limited (“Blockchain”) has asserted an alleged event of default under GRIID’s credit agreement and inhas provided a timely manner.
On June 9 and 11, 2022, GRIID received letters from Blockchain asserting that GRIID is allegedly in default of its obligations under the Third Amended and Restated Credit Agreement between GRIID and Blockchain, dated November 19, 2021 (the “credit agreement”), and purporting to cancel Blockchain’s commitments under the credit agreement and accelerate GRIID’s indebtedness thereunder. In lighta letter dated June 12, 2022, GRIID rejected Blockchain’s assertions. GRIID is in discussions with Blockchain regarding these issues. GRIID is also in discussions with other lenders, and it is unclear whether any additional financing will be consummated. If GRIID is unable to resolve its dispute with Blockchain or secure additional new financing, it will be likely unable to repay the amounts due and payable under the credit agreement, which would likely render it insolvent and likely result in a bankruptcy filing, the Merger Agreement being terminated, the closing of the material weakness, we have enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand 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 2.Unregistered Sales of EquityEquity Securities and Use of Proceeds.
None
Item 3.Defaults UponUpon Senior Securities.
None.
Item 4.Mine SafetySafety Disclosures.
Not Applicable.
Item 5.Other Information.
Not Applicable.
Item 6. | Exhibits. |
Exhibit | Description | |
31.1* | ||
31.2* | ||
32.1* | ||
32.2* | ||
101.INS** | ||
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline 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 Label Linkbase Document | |
101.PRE** | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | ||
The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101 | ||
* | Filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Quarterly Report on Form
Adit EdTech Acquisition Corp. | ||
Dated: August 15, 2022 | ||
/s/ David L. Shrier | ||
David L. Shrier Chief Executive Officer and Chairman (Principal Executive Officer) | ||
Dated: | /s/ John J. D’Agostino | |
John J. D’Agostino Chief Financial Officer (Principal Financial Officer and Accounting Officer) |
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