PART I. FINANCIAL INFORMATION [Item 1. Financial Statements.](index=3&type=section&id=Item%201.%20Financial%20Statements.) Presents Priveterra Acquisition Corp.'s unaudited condensed financial statements, covering balance sheets, operations, equity, cash flows, and explanatory notes [Condensed Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020](index=3&type=section&id=Condensed%20Balance%20Sheets%20as%20of%20September%2030%2C%202021%20%28unaudited%29%20and%20December%2031%2C%202020) Total assets and liabilities significantly increased due to IPO proceeds and warrant liabilities, resulting in a shift to stockholders' deficit | Metric | Sep 30, 2021 (Unaudited) | Dec 31, 2020 | Change | | :----- | :----------------------- | :----------- | :----- | | **Assets** | | | | | Cash | $663,540 | $— | +$663,540 | | Investments held in Trust Account | $276,058,470 | $— | +$276,058,470 | | Total Assets | $277,202,966 | $81,000 | +$277,121,966 | | **Liabilities** | | | | | Warrant liability | $8,497,200 | $— | +$8,497,200 | | Deferred underwriters' discount | $9,660,000 | $— | +$9,660,000 | | Total Liabilities | $22,198,695 | $59,588 | +$22,139,107 | | **Stockholders' Equity (Deficit)** | | | | | Total Stockholders' Equity (Deficit) | $(17,177,729) | $21,412 | $(17,199,141) | [Condensed Statements of Operations for the three and nine months ended September 30, 2021 (unaudited)](index=4&type=section&id=Condensed%20Statements%20of%20Operations%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202021%20%28unaudited%29) Net income for the period was primarily driven by unrealized gains on warrants, partially offset by formation and operating costs | Metric | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :----- | :------------------------------ | :----------------------------- | | Formation and operating costs | $(450,892) | $(1,050,199) | | Unrealized gain on change in fair value of warrants | $6,088,400 | $9,599,733 | | Interest income | $21,434 | $58,469 | | Net Income | $5,658,942 | $7,952,957 | | Basic net income per share, Class A common stock | $0.16 | $0.26 | | Basic net income per share, Class B common stock | $0.16 | $0.26 | [Condensed Statements of Changes in Stockholders' Deficit for the three and nine months ended September 30, 2021 (unaudited)](index=5&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholders'%20Deficit%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202021%20%28unaudited%29) Stockholders' equity shifted from positive to a significant deficit by September 30, 2021, due to Class A common stock accretion and accumulated deficits | Metric | Dec 31, 2020 | Mar 31, 2021 | Jun 30, 2021 | Sep 30, 2021 | | :----- | :----------- | :----------- | :----------- | :----------- | | Total Stockholders' Equity (Deficit) | $21,412 | $(18,843,477) | $(22,836,671) | $(17,177,729) | | Net income (loss) for the period | N/A | $6,319,210 | $(4,025,194) | $5,658,942 | | Accretion of Class A common stock to redemption value | N/A | $(26,383,166) | N/A | N/A | [Condensed Statement of Cash Flows for the nine months ended September 30, 2021 (unaudited)](index=6&type=section&id=Condensed%20Statement%20of%20Cash%20Flows%20for%20the%20nine%20months%20ended%20September%2030%2C%202021%20%28unaudited%29) Significant cash flows from financing (IPO, private placement warrants) were used for Trust Account investments, while operating activities resulted in a net cash outflow | Cash Flow Activity | Nine Months Ended Sep 30, 2021 | | :----------------- | :----------------------------- | | Net cash used in operating activities | $(1,332,155) | | Net cash used in investing activities | $(276,000,000) | | Net cash provided by financing activities | $277,995,695 | | Net Change in Cash | $663,540 | | Cash, end of period | $663,540 | [Notes to Condensed Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) Detailed notes explain condensed financial statements, covering organization, operations, financing, accounting policies, and fair value measurements [Note 1 — Organization and Business Operation](index=7&type=section&id=Note%201%20%E2%80%94%20Organization%20and%20Business%20Operation) Blank check company Priveterra Acquisition Corp. completed its IPO in February 2021, raising **$276 million** for a Trust Account and **$7.82 million** from private placement warrants - Company incorporated on November 17, 2020, as a blank check company for a Business Combination[24](index=24&type=chunk) - Consummated IPO on February 11, 2021, selling **27,600,000 units** at **$10.00 per unit**, generating **$276,000,000 gross proceeds**[26](index=26&type=chunk) - Simultaneously sold **5,213,333 Private Placement Warrants** at **$1.50 per warrant**, generating **$7,820,000 gross proceeds**[27](index=27&type=chunk) - **$276,000,000** from IPO and Private Placement Warrants proceeds placed in a Trust Account, to be invested in U.S. government securities or money market funds[28](index=28&type=chunk) - The company has **24 months** from the IPO closing to complete an initial Business Combination, after which public shares will be redeemed[32](index=32&type=chunk) [Note 2 — Revision of Previously Issued Financial Statements](index=10&type=section&id=Note%202%20%E2%80%94%20Revision%20of%20Previously%20Issued%20Financial%20Statements) The company revised prior financial statements to reclassify all public shares as temporary equity and adjusted earnings per share calculations - Reclassified all public shares as temporary equity, revising previous financial statements[38](index=38&type=chunk)[39](index=39&type=chunk) - Revised earnings per share calculation to allocate income and losses pro rata between Class A and Class B common stock[40](index=40&type=chunk) | Metric (as of June 30, 2021) | As Previously Reported | Revision Adjustment | As Revised | | :--------------------------- | :--------------------- | :------------------ | :--------- | | Class A common stock subject to possible redemption | $248,163,320 | $27,836,680 | $276,000,000 | | Total Stockholders' Equity (Deficit) | $5,000,009 | $(27,836,680) | $(22,836,671) | [Note 3 — Significant Accounting Policies](index=13&type=section&id=Note%203%20%E2%80%94%20Significant%20Accounting%20Policies) The company's unaudited condensed financial statements adhere to GAAP for interim reporting, with key estimates including warrant liability fair value - Financial statements prepared in accordance with GAAP for interim financial information, with certain disclosures condensed or omitted[44](index=44&type=chunk) - Company is an "emerging growth company" and has elected to delay adoption of new or revised financial accounting standards, potentially affecting comparability[46](index=46&type=chunk)[47](index=47&type=chunk) - Significant accounting estimate involves the determination of the fair value of the warrant liability[49](index=49&type=chunk) - Cash and cash equivalents: **$663,540** in cash as of September 30, 2021; no cash equivalents[50](index=50&type=chunk) - Investments held in Trust Account are classified as trading securities and measured at fair value[51](index=51&type=chunk) - Offering costs of **$15,630,212** were recognized, with **$655,046** allocated to warrants (statement of operations) and **$14,975,166** to temporary equity[52](index=52&type=chunk) - Class A common stock subject to possible redemption is classified as temporary equity at redemption value[54](index=54&type=chunk) - Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common stock outstanding, with earnings/losses shared pro rata between Class A and Class B common stock; diluted EPS is the same as basic EPS due to warrants being contingent on future events[57](index=57&type=chunk) - Warrants are determined to be derivative instruments, recorded at fair value on grant date and re-valued at each reporting date, with changes reported in the condensed statements of operations[60](index=60&type=chunk) - Fair value measurements use a three-tier hierarchy (Level 1, Level 2, Level 3), prioritizing observable inputs[61](index=61&type=chunk)[63](index=63&type=chunk) - No material unrecognized tax benefits or accrued interest/penalties as of September 30, 2021, and December 31, 2020[65](index=65&type=chunk) - Management is evaluating the impact of COVID-19, but the specific financial impact is not readily determinable[67](index=67&type=chunk) - Adopted ASU 2020-06 on January 1, 2021, which did not materially impact financial position, results of operations or cash flows[68](index=68&type=chunk) [Note 4 — Initial Public Offering](index=19&type=section&id=Note%204%20%E2%80%94%20Initial%20Public%20Offering) The company completed its IPO on February 11, 2021, selling **27,600,000 units** at **$10.00** each, including an over-allotment option, with deferred underwriting fees and specific warrant terms - IPO closed on February 11, 2021, selling **27,600,000 units** at **$10.00 per unit**, generating **$276,000,000 gross proceeds**[70](index=70&type=chunk) - Each unit included one Class A common stock and one-third of a Public Warrant, exercisable at **$11.50 per share**[71](index=71&type=chunk)[72](index=72&type=chunk) - Underwriting fees: **$5,520,000** paid at closing; **$9,660,000** deferred, payable upon completion of a Business Combination[72](index=72&type=chunk) - Warrants become exercisable on the later of **12 months** from IPO closing or **30 days** after initial Business Combination, expiring **five years** after the Business Combination[74](index=74&type=chunk) - Company may call warrants for redemption at **$0.01 per warrant** if Class A common stock closing price equals or exceeds **$18.00** for **20 trading days** within a **30-trading day period**[76](index=76&type=chunk)[77](index=77&type=chunk) [Note 5 — Private Placement](index=23&type=section&id=Note%205%20%E2%80%94%20Private%20Placement) The Sponsor purchased **5,213,333 Private Placement Warrants** for **$7,820,000** concurrently with the IPO, which are non-redeemable, have transfer restrictions, and can be exercised on a cashless basis - Sponsor purchased **5,213,333 Private Placement Warrants** at **$1.50 per warrant** for **$7,820,000**[80](index=80&type=chunk) - Private Placement Warrants are not redeemable by the company, have transfer restrictions, and can be exercised on a cashless basis by the Sponsor[81](index=81&type=chunk) - Sponsor waived redemption rights for founder shares and public shares, and rights to liquidating distributions from the Trust Account if a Business Combination is not completed within the Combination Period[81](index=81&type=chunk) [Note 6 — Related Party Transactions](index=23&type=section&id=Note%206%20%E2%80%94%20Related%20Party%20Transactions) The Sponsor acquired **6,900,000 Class B common stock** (Founder Shares) for **$25,000**, provided promissory notes for IPO expenses, and may provide Working Capital Loans, while the company pays administrative service fees - Sponsor acquired **6,900,000 Class B common stock** (Founder Shares) for **$25,000**, following a stock split and full over-allotment exercise[82](index=82&type=chunk) - Founder Shares are subject to a lock-up period until **one year** after Business Combination or certain liquidity events, with an early release condition if Class A common stock price exceeds **$12.00**[83](index=83&type=chunk) - Promissory notes from Sponsor for IPO expenses (**$75,000** initially, then additional **$50,000**) were non-interest bearing, unsecured, and repaid upon IPO closing[84](index=84&type=chunk)[86](index=86&type=chunk) - Working Capital Loans from Sponsor or affiliates may be provided; **$100,000** outstanding in June 2021 was converted into **66,667 Working Capital Warrants**[87](index=87&type=chunk) - Company pays up to **$25,000 per month** for administrative services, including **$10,000** to the Sponsor for office space and services[88](index=88&type=chunk) - **$3,495** remains payable to a related party as of September 30, 2021, for incurred expenses[89](index=89&type=chunk) [Note 7 — Commitments and Contingencies](index=25&type=section&id=Note%207%20%E2%80%94%20Commitments%20and%20Contingencies) The company has a deferred underwriting fee of **$9,660,000** payable upon business combination and grants registration rights to certain security holders - Deferred underwriting fee of **$9,660,000** is payable to underwriters upon completion of a Business Combination[90](index=90&type=chunk) - Holders of founder shares, Private Placement Warrants, and Working Capital Warrants have registration rights for their securities[91](index=91&type=chunk) [Note 8 — Stockholders' Deficit](index=25&type=section&id=Note%208%20%E2%80%94%20Stockholders'%20Deficit) The company is authorized to issue preferred, Class A, and Class B common stock, with **6,900,000 Class B shares** outstanding that convert to Class A upon business combination - Authorized **1,000,000 preferred shares** (**$0.0001 par value**), none issued or outstanding[92](index=92&type=chunk) - Authorized **280,000,000 Class A common stock** (**$0.0001 par value**), none issued or outstanding (excluding **27,600,000 shares** subject to redemption)[92](index=92&type=chunk) - Authorized **20,000,000 Class B common stock** (**$0.0001 par value**), with **6,900,000 shares** issued and outstanding[94](index=94&type=chunk) - Class B common stock automatically converts to Class A common stock upon Business Combination, subject to adjustments to maintain **20%** of total Class A common stock post-conversion[95](index=95&type=chunk) [Note 9 — Recurring Fair Value Measurements](index=27&type=section&id=Note%209%20%E2%80%94%20Recurring%20Fair%20Value%20Measurements) The company's warrant liability, valued at **$8,497,200** as of September 30, 2021, is a derivative instrument re-measured at fair value, with Public Warrants as Level 1 and Private Placement Warrants as Level 3 - Warrant liability valued at **$8,497,200** as of September 30, 2021, classified as a derivative instrument and re-measured at fair value[96](index=96&type=chunk) - Public Warrants classified as Level 1 (active market quoted prices); Private Placement Warrants classified as Level 3 (unobservable inputs, valued using a modified Black-Scholes model)[97](index=97&type=chunk)[99](index=99&type=chunk) - Investments held in Trust Account (U.S. Treasury Securities) are classified as Level 1[97](index=97&type=chunk) | Asset/Liability | Level 1 | Level 2 | Level 3 | | :-------------- | :------ | :------ | :------ | | Investments held in Trust Account – U.S. Treasury Securities | $276,058,470 | $— | $— | | Private Placement Warrants | $— | $— | $3,115,200 | | Public Warrants | $5,382,000 | $— | $— | | Input (for Private Placement Warrants valuation) | September 30, 2021 | | :----------------------------------------------- | :----------------- | | Risk-free interest rate | 0.98 % | | Expected term (years) | 5.0 | | Expected volatility | 11.85 % | | Dividend rate | 0.0 % | | Exercise price | $11.50 | | Change in Fair Value (Level 3) | Amount | | :----------------------------- | :----- | | Fair value at issuance February 11, 2021 | $18,028,933 | | Public Warrants reclassified to level 1 | $(9,200,000) | | Issuance of Private Placement Warrants upon conversion of Working Capital Loans | $68,000 | | Change in fair value | $(5,781,733) | | Fair Value at September 30, 2021 | $3,115,200 | [Note 10 — Subsequent Events](index=29&type=section&id=Note%2010%20%E2%80%94%20Subsequent%20Events) No subsequent events were identified requiring adjustment or disclosure in the condensed financial statements - No subsequent events identified requiring adjustment or disclosure in the condensed financial statements[103](index=103&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the company's financial condition, liquidity, and operational results as a blank check company, focusing on net income drivers and critical accounting policies [Overview](index=30&type=section&id=Overview) Priveterra Acquisition Corp., a blank check company formed in November 2020, completed its IPO in February 2021, raising **$276 million** for a Trust Account, with **24 months** to complete a business combination - Blank check company incorporated on November 17, 2020, for a Business Combination[107](index=107&type=chunk) - Consummated IPO on February 11, 2021, raising **$276,000,000 gross proceeds**, with **$276,000,000** placed in a Trust Account[107](index=107&type=chunk)[108](index=108&type=chunk) - Has **24 months** from IPO closing (until February 11, 2023) to complete a Business Combination, or it will liquidate and redeem public shares[110](index=110&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2021, the company had **$663,540** in cash and **$954,716** in working capital, with management believing current resources are sufficient for operations through a business combination | Metric | As of Sep 30, 2021 | | :----- | :----------------- | | Cash | $663,540 | | Working Capital | $954,716 | - Liquidity needs prior to IPO were met by Sponsor's **$25,000** capital contribution and **$73,295** in unsecured promissory notes, which were repaid[112](index=112&type=chunk) - Management believes sufficient working capital and borrowing capacity exist to meet needs through a Business Combination or one year from filing[113](index=113&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) The company generated no operating revenues, with net income for the three and nine months ended September 30, 2021, primarily from unrealized gains on warrants and interest income, offset by costs - No operating revenues generated; activity focused on formation, IPO, and searching for a Business Combination[114](index=114&type=chunk) | Metric | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :----- | :------------------------------ | :----------------------------- | | Net Income | $5,658,942 | $7,952,957 | | Unrealized gains on warrants | $6,088,400 | $9,599,733 | | Interest income from Trust Account | $21,434 | $58,469 | | Formation and operating costs | $(450,892) | $(1,050,199) | | Warrant issue costs | N/A | $(655,046) | [Contractual Obligations](index=33&type=section&id=Contractual%20Obligations) The company has an administrative services agreement for up to **$25,000 per month** and a deferred underwriting fee of **$9,660,000** payable upon business combination, along with registration rights for certain security holders - Administrative services agreement: up to **$25,000 per month** payable to Sponsor and officers, ceasing upon Business Combination or liquidation[116](index=116&type=chunk) - Deferred underwriting fee of **$9,660,000** payable upon completion of an Initial Business Combination[118](index=118&type=chunk) - Initial stockholders and Private Placement Warrant holders have registration rights[117](index=117&type=chunk) [Critical Accounting Policies](index=33&type=section&id=Critical%20Accounting%20Policies) Key accounting policies include treating warrants as derivative financial instruments, allocating IPO proceeds, classifying Trust Account investments as trading securities, and classifying redeemable Class A common stock as temporary equity - Warrants are treated as derivative financial instruments, recorded at fair value with changes reported in statements of operations[119](index=119&type=chunk) - IPO proceeds are allocated between Class A common stock and warrants using the residual method[120](index=120&type=chunk) - Investments in Trust Account (U.S. government securities/money market funds) are classified as trading securities and presented at fair value[122](index=122&type=chunk) - Class A common stock subject to possible redemption is classified as temporary equity at redemption value[123](index=123&type=chunk) - Net income (loss) per share calculation involves pro rata sharing of earnings/losses between Class A and Class B common stock; diluted EPS equals basic EPS as warrants are contingent[124](index=124&type=chunk) - Adoption of ASU 2020-06 on January 1, 2021, did not materially impact financial statements[125](index=125&type=chunk) [Off-Balance Sheet Arrangements](index=35&type=section&id=Off-Balance%20Sheet%20Arrangements) As of September 30, 2021, the company had no off-balance sheet arrangements - No off-balance sheet arrangements as of September 30, 2021[127](index=127&type=chunk) [Inflation](index=35&type=section&id=Inflation) The company believes inflation did not materially impact its business, revenues, or operating results during the reported period - Inflation did not have a material impact on business, revenues, or operating results[127](index=127&type=chunk) [JOBS Act](index=37&type=section&id=JOBS%20Act) As an "emerging growth company" under the JOBS Act, the company has elected to delay the adoption of new accounting standards, potentially affecting comparability - As an "emerging growth company," the company elected to delay adoption of new or revised accounting standards, potentially affecting comparability[129](index=129&type=chunk) - Evaluating benefits of other reduced reporting requirements under the JOBS Act, such as exemptions from auditor attestation, certain compensation disclosures, and PCAOB rules[130](index=130&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, Priveterra Acquisition Corp. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, not required to provide quantitative and qualitative disclosures about market risk[131](index=131&type=chunk) [Item 4. Controls and Procedures.](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective as of September 30, 2021[132](index=132&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter[134](index=134&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings.](index=38&type=section&id=Item%201.%20Legal%20Proceedings.) The company reported no legal proceedings - No legal proceedings to report[135](index=135&type=chunk) [Item 1A. Risk Factors.](index=38&type=section&id=Item%201A.%20Risk%20Factors.) There have been no material changes to the risk factors previously disclosed in the company's Quarterly Report on Form 10-Q and IPO prospectus - No material changes to risk factors previously disclosed in the June 30, 2021, Form 10-Q and IPO prospectus[136](index=136&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The Sponsor purchased **6,900,000 Class B common stock** and **5,213,333 Private Placement Warrants**, with **$100,000** of Working Capital Loans converted into **66,6666 warrants**, all under Section 4(a)(2) of the Securities Act - Sponsor purchased **5,750,000 founder shares** for **$25,000**, later adjusted to **6,900,000 Class B common stock**[137](index=137&type=chunk) - Sponsor purchased **5,213,333 Private Placement Warrants** for **$7,820,000** concurrently with the IPO[139](index=139&type=chunk) - **$100,000** of Working Capital Loans converted into **66,6666 warrants** on June 28, 2021[140](index=140&type=chunk) - All unregistered sales were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933[139](index=139&type=chunk)[140](index=140&type=chunk) [Item 3. Defaults upon Senior Securities.](index=38&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities.) The company reported no defaults upon senior securities - No defaults upon senior securities[140](index=140&type=chunk) [Item 4. Mine Safety Disclosures.](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company - Not applicable[140](index=140&type=chunk) [Item 5. Other Information.](index=38&type=section&id=Item%205.%20Other%20Information.) The company reported no other information - No other information to report[140](index=140&type=chunk) [Item 6. Exhibits.](index=40&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL interactive data files - Includes certifications from CEO and CFO (Sections 302 and 906 of Sarbanes-Oxley Act) and XBRL interactive data files[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Q1 2021 financial statements reflect post-IPO status, detailing initial funding, redeemable equity, net income from warrant fair value changes, and a key reclassification of warrants to liabilities [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) As of March 31, 2021, the post-IPO balance sheet shows $278.1 million in assets (mostly trust cash), $21.0 million in liabilities (warrant, deferred discount), and $252.0 million in redeemable common stock Condensed Balance Sheet Summary (As of March 31, 2021) | Category | Amount (USD) | | :--- | :--- | | **Assets** | | | Cash | 1,441,499 | | Cash and marketable securities held in Trust Account | 276,008,319 | | **Total Assets** | **278,146,648** | | **Liabilities** | | | Warrant liability | 10,862,133 | | Deferred underwriters' discount | 9,660,000 | | Total current liabilities | 467,992 | | **Total Liabilities** | **20,990,125** | | **Equity** | | | Common stock subject to possible redemption | 251,956,520 | | Total stockholder's equity | 5,000,001 | [Condensed Statement of Operations](index=5&type=section&id=Condensed%20Statement%20of%20Operations) For Q1 2021, the company reported $6.3 million net income, primarily from a $7.2 million unrealized gain on warrant liability fair value, offset by $0.2 million in operating costs and $0.7 million in transaction costs Statement of Operations Highlights (For the three months ended March 31, 2021) | Item | Amount (USD) | | :--- | :--- | | Formation and operating costs | (200,863) | | **Loss from operations** | **(200,863)** | | Unrealized gain on change in fair value of warrants | 7,166,800 | | Transaction costs | (655,046) | | Interest income | 8,319 | | **Net Income** | **6,319,210** | [Condensed Statement of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Statement%20of%20Changes%20in%20Stockholders%27%20Equity) For Q1 2021, stockholders' equity increased to $5.0 million, driven by $264.6 million from IPO unit sales and $6.3 million net income, offset by offering costs and a $252.2 million reclassification for redemption - The company's equity was significantly impacted by the IPO proceeds, net income, and the reclassification of funds for potential share redemptions, resulting in a final balance of **$5,000,001**[16](index=16&type=chunk) [Condensed Statement of Cash Flows](index=7&type=section&id=Condensed%20Statement%20of%20Cash%20Flows) For Q1 2021, cash increased by $1.4 million, driven by $278.0 million from financing (IPO, warrant sales), offset by $276.0 million invested in the Trust Account and $0.6 million used in operations Cash Flow Summary (For the three months ended March 31, 2021) | Cash Flow Activity | Amount (USD) | | :--- | :--- | | Net cash used in operating activities | 554,518 | | Net cash used in investing activities | (276,000,000) | | Net cash provided by financing activities | 277,996,017 | | **Net Change in Cash** | **1,441,499** | [Notes to Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) The notes detail the company's formation, February 2021 IPO, accounting policies, and a key revision to reclassify warrants as liabilities due to SEC guidance, also covering related party transactions, commitments, and warrant fair value - The company is a blank check company formed in November 2020 for the purpose of effecting a business combination. All activity through March 31, 2021, relates to its formation and the IPO[21](index=21&type=chunk)[22](index=22&type=chunk) - On February 11, 2021, the company completed its IPO of **27,600,000 units** at **$10.00 per unit**, generating gross proceeds of **$276,000,000**[23](index=23&type=chunk) - Following an SEC statement on April 12, 2021, the company re-evaluated its accounting for warrants, concluding they should be recorded as derivative liabilities at fair value on the balance sheet, rather than as equity. This prompted a revision of its financial statements[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the company's blank check status, noting $1.4 million operating cash and $276 million in trust as of March 31, 2021, with $6.3 million net income primarily from a non-cash unrealized gain on warrant liabilities, and sufficient working capital for its search - The company is a blank check company that consummated its IPO on February 11, 2021, raising **$276 million** in gross proceeds, which was placed in a trust account[98](index=98&type=chunk)[99](index=99&type=chunk) - As of March 31, 2021, the company had approximately **$1.4 million** in cash and **$1.7 million** in working capital to fund its search for a business combination[102](index=102&type=chunk) - For the three months ended March 31, 2021, the company reported net income of **$6,319,210**, driven by a non-cash unrealized gain of **$7,166,800** on its warrant liability[106](index=106&type=chunk) - A critical accounting policy involves treating warrants as derivative financial instruments recorded at fair value, with changes reported in the statement of operations[111](index=111&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[125](index=125&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded disclosure controls were ineffective as of March 31, 2021, due to a material weakness in internal control over financial reporting regarding improper warrant classification, with a remediation plan underway - Management concluded that disclosure controls and procedures were not effective as of March 31, 2021, due to a material weakness[126](index=126&type=chunk) - The material weakness stemmed from the improper classification of warrants as equity on the balance sheet, which should have been classified as liabilities. This was identified after an SEC Staff Statement on the topic[129](index=129&type=chunk) - The company plans to remediate this weakness by enhancing access to accounting literature and increasing communication with personnel and third-party professionals on complex accounting applications[130](index=130&type=chunk) [PART II - OTHER INFORMATION](index=37&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings.) The company reported no legal proceedings - There are no legal proceedings to report[131](index=131&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors.) New material risks relate to warrant accounting as liabilities, potentially causing financial fluctuations, and a disclosed material weakness in internal control over financial reporting could adversely affect investor confidence and lead to litigation - A new risk factor is that warrants are accounted for as liabilities measured at fair value, which may cause quarterly financial results to fluctuate based on factors outside the company's control[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - The company has identified a material weakness in its internal control over financial reporting as of March 31, 2021, which could impact its ability to accurately report financial results[134](index=134&type=chunk) - The company faces potential litigation and other risks as a result of the material weakness and the change in accounting for the warrants[137](index=137&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This section details two unregistered equity sales: the Sponsor's purchase of 6.9 million founder shares for $25,000, and 5.2 million Private Placement Warrants for $7.8 million concurrent with the IPO, both exempt from registration - The Sponsor purchased **6,900,000 Class B founder shares** for **$25,000** in an unregistered sale[138](index=138&type=chunk) - The company completed a private sale of **5,213,333 Private Placement Warrants** to the Sponsor at **$1.50 per warrant**, for total proceeds of **$7,820,000**[141](index=141&type=chunk) [Defaults upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities.) The company reported no defaults upon senior securities - None[142](index=142&type=chunk) [Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company - Not applicable[142](index=142&type=chunk) [Other Information](index=40&type=section&id=Item%205.%20Other%20Information.) The company reported no other information - None[142](index=142&type=chunk) [Exhibits](index=41&type=section&id=Item%206.%20Exhibits.) Exhibits filed with Form 10-Q include CEO and CFO certifications under Sarbanes-Oxley Act of 2002 and XBRL data files - The exhibits filed include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, along with XBRL instance and taxonomy documents[143](index=143&type=chunk)