References in this Quarterly Report on Form 10-Q (the "Quarterly Report") to
"we," "us," "our" or the "Company" refer to Fortistar Sustainable Solutions
Corp. References to our "management" or our "management team" refer to our
officers and directors, and references to the "Sponsor" refer to FSSC Sponsor
LLC. References to our "Initial Public Offering" are to our initial public
offering pursuant to the Registration Statement on Form S-1, declared effective
on January 26, 2021 and consummated on January 29, 2021. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the financial statements and the
notes thereto contained elsewhere in this Quarterly Report. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act
that are not historical facts and involve risks and uncertainties that could
cause actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Quarterly
Report including, without limitation, statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the completion of the proposed Business Combination (as defined
below), the Company's financial position, business strategy and the plans and
objectives of management for future operations, are forward-looking statements.
Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek"
and variations and similar words and expressions are intended to identify such
forward-looking statements. Such forward-looking statements relate to future
events or future performance, but reflect management's current beliefs, based on
information currently available. A number of factors could cause actual events,
performance or results to differ materially from the events, performance and
results discussed in the forward-looking statements, including that the
conditions of the proposed Business Combination are not satisfied. For
information identifying important factors that could cause actual results to
differ materially from those anticipated in the forward-looking statements,
please refer to the Risk Factors section of the Company's Annual Report on Form
10-K filed with the U.S. Securities and Exchange Commission (the "SEC") on March
30, 2022 and Item 1A of Part II of this Quarterly Report. The Company's
securities filings can be accessed on the EDGAR section of the SEC's website at
www.sec.gov. Except as expressly required by applicable securities law, the
Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on
August 25, 2020 for the purpose of entering into a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses (a "Business Combination"). We intend to
effectuate our Business Combination using cash from the proceeds of the Initial
Public Offering and the sale of the Private Placement Warrants, our capital
stock, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from August 25, 2020 (inception) through June 30, 2022 were
organizational activities, those necessary to prepare for the Initial Public
Offering, described below, and identifying a target company for a Business
Combination. We do not expect to generate any operating revenues until after the
completion of our Business Combination. We generate non-operating income in the
form of interest income on marketable securities held in the Trust Account and
changes in fair value of the warrant liabilities. We incur expenses as a result
of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as for due diligence expenses.
For the three months ended June 30, 2022, we had a net income of $3,852,364,
which consists of changes in fair value of warrant liabilities of $3,621,297,
reduction of deferred underwriter fee of $146,712 and interest earned on
marketable securities held in the Trust Account of $343,005, offset by operating
costs of $239,419 and provision for income taxes of $19,231.
For the six months ended June 30, 2022, we had a net income of $9,536,329, which
consists of changes in fair value of warrant liabilities of $9,687,332,
reduction of deferred underwriter fee of $146,712 and interest earned on
marketable securities held in the Trust Account of $367,607, offset by operating
costs of $646,091 and provision for income taxes of $19,231.
For the three months ended June 30, 2021, we had a net loss of $8,717,022, which
consists of operating costs of $278,985 and changes in fair value of warrant
liability of $8,447,250, offset by interest earned on marketable securities held
in the Trust Account of $9,213.
For the six months ended June 30, 2021, we had a net loss of $9,029,789, which
consists of operating costs of $468,485, transaction costs of $536,079 and
changes in fair value of warrant liability of $8,045,000, offset by interest
earned on marketable securities held in the Trust Account of $19,775.
Liquidity and Capital Resources
On January 29, 2021, we consummated the Initial Public Offering of 25,875,000
Units at $10.00 per Unit, generating gross proceeds of $258,750,000, which is
described in Note 3 to the condensed financial statements. Simultaneously with
the closing of the Initial Public Offering, we consummated the sale of 7,175,000
Private Placement Warrant at a price of $1.00 per Private Placement Warrant in a
private placement to the Sponsor, generating gross proceeds of $7,175,000, which
is described in Note 4.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Units, a total of $258,750,000 was placed in
the Trust Account. We incurred $14,667,474 in Initial Public Offering related
costs, including $5,175,000 of underwriting fees $9,056,250 of deferred
underwriting fees and $436,224 of other offering costs.
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For the six months ended June 30, 2022, cash used in operating activities was
$583,670. Net income of $9,536,329 was affected by interest earned on marketable
securities held in the Trust Account of $367,607, costs associated with the
reduction of deferred underwriter fee of $146,712 and changes in fair value of
warrant liability of $9,687,332. Changes in operating assets and liabilities
provided $81,652 of cash for operating activities.
For the six months ended June 30, 2021, cash used in operating activities was
$782,400. Net loss of $9,029,789 was affected by interest earned on marketable
securities held in the Trust Account of $19,775, changes in warrant liability of
$8,045,000 and transaction costs allocable to warrant liability of $536,079.
Changes in operating assets and liabilities used $313,915 of cash for operating
activities.
As of June 30, 2022, we had marketable securities held in the Trust Account of
$259,146,180 (including $396,180 of interest income) consisting of U.S. Treasury
Bills with a maturity of 185 days or less. Interest income on the balance in the
Trust Account may be used by us to pay taxes. Through June 30, 2022, we have not
withdrawn any interest earned from the Trust Account.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (less
income taxes payable), to complete our Business Combination. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to
complete our Business Combination, the remaining proceeds held in the Trust
Account will be used as working capital to finance the operations of the target
business or businesses, make other acquisitions and pursue our growth
strategies.
As of June 30, 2022, we had cash of $77,605. We intend to use the funds held
outside the Trust Account primarily to identify and evaluate target businesses,
perform business due diligence on prospective target businesses, travel to and
from the offices, plants or similar locations of prospective target businesses
or their representatives or owners, review corporate documents and material
agreements of prospective target businesses, and structure, negotiate and
complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, or certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete a Business Combination, we would repay such
loaned amounts. In the event that a Business Combination does not close, we may
use a portion of the working capital held outside the Trust Account to repay
such loaned amounts but no proceeds from our Trust Account would be used for
such repayment. Up to $1,000,000 of such loans may be convertible into warrants
at a price of $1.00 per warrant, at the option of the lender. The warrants would
be identical to the Private Placement Warrants.
Liquidity and Going Concern
We will need to raise additional capital through loans or additional investments
from our sponsor, stockholders, officers, directors, or third parties. Our
officers, directors and sponsor may, but are not obligated to, loan us funds,
from time to time or at any time, in whatever amount they deem reasonable in
their sole discretion, to meet our working capital needs. Accordingly, we may
not be able to obtain additional financing. If we are unable to raise additional
capital, we may be required to take additional measures to conserve liquidity,
which could include, but not necessarily be limited to, curtailing operations,
suspending the pursuit of a potential transaction, and reducing overhead
expenses. We cannot provide any assurance that new financing will be available
to us on commercially acceptable terms, if at all. These conditions raise
substantial doubt about our ability to continue as a going concern through
January 23, 2023, the date that we will be required to cease all operations,
except for the purpose of winding up, if a business combination is not
consummated. These financial statements do not include any adjustments relating
to the recovery of the recorded assets or the classification of the liabilities
that might be necessary should the Company be unable to continue as a going
concern.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of June 30, 2022. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of one of our executive officers a monthly fee of $10,000 for office
space, utilities and secretarial and administrative support. We began incurring
these fees on January 26, 2021 and will continue to incur these fees monthly
until the earlier of the completion of the Business Combination and our
liquidation.
The underwriters were entitled to a deferred fee of $0.35 per Unit, or
$9,056,250 in the aggregate at the closing of the Initial Public Offering. On
June 30, 2022, one of the underwriters waived its entitlement to the payment of
any deferred fee to be paid under the terms of the underwriting agreement and is
no longer serving in an advisor capacity. As a result, we recognized $146,712 of
income and $3,928,601 was recorded to additional paid-in capital in relation to
the reduction of the deferred underwriter fee in the accompanying condensed
financial statements. As of June 30, 2022 and December 31, 2021, the deferred
underwriting fee payable is $4,980,937 and $9,056,250, respectively. The
deferred fee will become payable to the underwriters from the amounts held in
the Trust Account solely in the event that the Company completes a Business
Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies/Estimates
The preparation of condensed financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
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Warrant Liabilities
The Company accounts for its warrants in accordance with the guidance contained
in ASC 815-40-15-7D and 7F, under which the warrants do not meet the criteria
for equity treatment and must be recorded as liabilities. Accordingly, the
Company's classifies the warrants as liabilities at their fair value and adjusts
the warrants to fair value at each reporting period. This liability is subject
to re-measurement at each balance sheet date until exercised, and any change in
fair value is recognized in our condensed statements of operations.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in ASC 480. Shares of Class A common stock subject
to mandatory redemption are classified as a liability instrument and are
measured at fair value. Conditionally redeemable common stock (including common
stock that features redemption rights that are either within the control of the
holder or subject to redemption upon the occurrence of uncertain events not
solely within our control) is classified as temporary equity. At all other
times, common stock is classified as stockholders' equity. Our Class A common
stock features certain redemption rights that are considered to be outside of
our control and subject to occurrence of uncertain future events. Accordingly,
shares of Class A common shares subject to possible redemption are presented as
temporary equity, outside of the stockholders' deficit section of our condensed
balance sheets.
Net Income (Loss) Per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by
the weighted average number of common shares outstanding during the period. We
apply the two-class method in calculating net income (loss) per common share.
Remeasurement associated with the redeemable shares of Class A common stock is
excluded from net income (loss) per common share as the redemption value
approximates fair value.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed financial statements.
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update No. ("ASU") 2020-06 - "Contracts in Entity's Own
Equity (Subtopic 815-40) ("ASU 2020-06")", to simplify accounting for certain
financial instruments. ASU 2020-06 eliminates 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 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective for fiscal years beginning after December 15, 2023,
including interim periods within those fiscal years, with early adoption
permitted. The Company is currently assessing the impact, if any, that ASU
2020-06 would have on its financial position, results of operations or cash
flows.
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FORTISTAR SUSTAINABLE SOLUTIONS CORP. 