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UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(MARK ONE) 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarter ended September 30, 2022

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                    to                       

 

Commission file number: 001-40220

 

BUILD ACQUISITION CORP.

(Exact Name of Registrant as Specified in Its Charter) 

 

Delaware

 

86-1389419

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

3500 Jefferson Street, Suite 303

Austin, TX 78731

(Address of principal executive offices)

 

(512) 994-2983

(Issuer’s telephone number)

 

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 Class A common stock and one-third of one redeemable warrant

 

BGSX.U

 

New York Stock Exchange

Class A common stock, par value $0.0001 per share

 

BGSX

 

New York Stock Exchange

Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50

 

BGSX 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

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

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 Rule 12b-2 of the Exchange Act). Yes   No 

 

As of November 14, 2022, there were 20,000,000 shares of Class A common stock, $0.0001 par value, and 5,000,000 shares of Class B common stock, $0.0001 par value, issued and outstanding.

 

 

 

 


 

 

BUILD ACQUISITION CORP.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022 

TABLE OF CONTENTS

 

 

Page

  PART 1 – FINANCIAL INFORMATION

1

Item 1. Financial Statements

 

Condensed Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021

1

Condensed Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (Unaudited)

2

Condensed Statements of Changes in Stockholders’ Deficit for the three and nine months ended September 30, 2022 and 2021 (Unaudited)

3

Condensed Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (Unaudited)

4

Notes to Condensed Financial Statements (Unaudited)

5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk

20

Item 4. Controls and Procedures

20

PART II – OTHER INFORMATION

21

Item 1. Legal Proceedings

21

Item 1A. Risk Factors

21

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

22

Item 3. Defaults Upon Senior Securities

22

Item 4. Mine Safety Disclosures

22

Item 5. Other Information

22

Item 6. Exhibits

23

PART III - SIGNATURES

24

 

 

 

 

 


 

 

PART I - FINANCIAL INFORMATION

BUILD ACQUISITION CORP.

CONDENSED BALANCE SHEETS

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

(unaudited)

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash

 

$

294,956

 

 

$

570,333

 

Prepaid expenses

 

 

195,843

 

 

 

403,378

 

Total Current Assets

 

 

490,799

 

 

 

973,711

 

Marketable securities held in Trust Account

 

 

201,208,257

 

 

 

200,015,241

 

TOTAL ASSETS

 

$

201,699,056

 

 

$

200,988,952

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accrued expenses

 

$

495,396

 

 

$

622,863

 

Promissory note – related party

 

 

48,670

 

 

 

 

Income taxes payable

 

 

180,140

 

 

 

 

Total Current Liabilities

 

 

724,206

 

 

 

622,863

 

Warrant liabilities

 

 

746,667

 

 

 

7,364,183

 

Deferred underwriting fee payable

 

 

7,000,000

 

 

 

7,000,000

 

Total Liabilities

 

 

8,470,873

 

 

 

14,987,046

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Class A common stock subject to possible redemption, $0.0001 par value; 20,000,000 shares at redemption value of $10.00 per share

 

 

200,678,117

 

 

 

200,000,000

 

Stockholders’ Deficit

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding

 

 

 

 

 

 

Class A common stock, $0.0001 par value; 200,000,000 shares authorized; no shares issued and outstanding (excluding 20,000,000 shares subject to possible redemption)

 

 

 

 

 

 

Class B common stock, $0.0001 par value; 50,000,000 shares authorized; 5,000,000 shares issued and outstanding

 

 

500

 

 

 

500

 

Additional paid-in capital

 

 

 

 

 

 

Accumulated deficit

 

 

(7,450,434

)

 

 

(13,998,594

)

Total Stockholders’ Deficit

 

 

(7,449,934

)

 

 

(13,998,094

)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

$

201,699,056

 

 

$

200,988,952

 

 

The accompanying notes are an integral part of the unaudited condensed financial statements.

1


 

BUILD ACQUISITION CORP.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three

Months Ended

September 30,

 

 

Nine

Months Ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating and formation costs

 

$

249,092

 

 

$

300,506

 

 

$

855,445

 

 

$

602,638

 

Loss from operations

 

 

(249,092

)

 

 

(300,506

)

 

 

(855,445

)

 

 

(602,638

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earned on marketable securities held in Trust Account

 

 

902,787

 

 

 

2,573

 

 

 

1,193,016

 

 

 

11,015

 

Transaction costs associated with warrant liabilities

 

 

 

 

 

 

 

 

(292,920

)

Change in FV of Derivative Liability - Convertible promissory Note

 

 

247,930

 

 

 

 

 

 

247,830

 

 

 

 

Change in fair value of warrant liabilities

 

 

320,000

 

 

 

2,560,000

 

 

 

6,617,516

 

 

 

960,000

 

Other income, net

 

 

1,470,717

 

 

 

2,562,573

 

 

 

8,058,362

 

 

 

678,095

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

1,219,959

 

 

 

2,262,067

 

 

 

7,202,917

 

 

 

75,457

 

Provision for income taxes

 

 

(172,150

)

 

 

 

 

 

(180,140

)

 

 

 

Net income

 

$

1,049,475

 

 

$

2,262,067

 

 

$

7,022,777

 

 

$

75,457

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average shares outstanding, Redeemable Class A common stock

 

 

20,000,000

 

 

 

20,000,000

 

 

 

20,000,000

 

 

 

14,552,239

 

Basic and diluted net income (loss) per share, Redeemable Class A common stock

 

$

0.04

 

 

$

0.09

 

 

$

0.28

 

 

$

0.00

 

Basic and diluted weighted average shares outstanding, Non-redeemable Class B common stock

 

 

5,000,000

 

 

 

5,000,000

 

 

 

5,000,000

 

 

 

5,000,000

 

Basic and diluted net income (loss) per share, Non-redeemable Class B common stock

 

$

0.04

 

 

$

0.09

 

 

$

0.28

 

 

$

0.00

 

 

The accompanying notes are an integral part of the unaudited condensed financial statements.

 

2


 

 

BUILD ACQUISITION CORP.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)

 

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

 

 

 

Class A

Common Stock

 

 

 

Class B

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

Balance – January 1, 2022

 

 

 

 

$

 

 

 

 

5,000,000

 

 

$

500

 

 

$

 

 

$

(13,998,594

)

 

$

(13,998,094

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,162,599

 

 

 

4,162,599

 

Balance – March 31, 2022

 

 

 

 

 

 

 

 

 

5,000,000

 

 

 

500

 

 

 

 

 

 

(9,835,995

)

 

 

(9,835,495

)

Excess of Cash received from Convertible Promissory Note over Fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

203,500

 

 

 

 

 

 

203,500

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,810,703

 

 

 

1,810,703

 

Balance – June 30, 2022

 

 

 

 

 

 

 

 

 

5,000,000

 

 

 

500

 

 

 

203,500

 

 

 

(8,025,292

)

 

 

(7,821,292

)

Change in value of common stock subject to redemption

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(203,500

)

 

 

(474,617

)

 

 

(678,117

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,049,475

 

 

 

1,049,475

 

Balance – September 30, 2022

 

 

 

 

$

 

 

 

 

5,000,000

 

 

$

500

 

 

$

 

 

$

(7,450,434

)

 

$

(7,449,934

)

 

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

 

 

 

Class A

Common Stock

 

 

 

Class B

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

Balance – January 1, 2021

(Commencement of Operations)

 

 

 

 

$

 

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

Issuance of Class B common stock

 

 

 

 

 

 

 

 

 

5,750,000

 

 

 

575

 

 

 

24,425

 

 

 

 

 

 

25,000

 

Remeasurement of Class A Common Stock to redemption amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,024,425

)

 

 

(13,144,084

)

 

 

(16,168,509

)

Cash paid in excess of fair value for Private Placement Warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,000,000

 

 

 

 

 

 

3,000,000

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

58,558

 

 

 

58,558

 

Balance – March 31, 2021

 

 

 

 

 

 

 

 

 

5,750,000

 

 

 

575

 

 

 

 

 

 

(13,085,526

)

 

 

(13,084,951

)

Remeasurement of Class A Common Stock to redemption amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(75

)

 

 

75

 

 

 

 

Forfeiture of Founder Shares

 

 

 

 

 

 

 

 

 

(750,000

)

 

 

(75

)

 

 

75

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,245,168

)

 

 

(2,245,168

)

Balance – June 30, 2021

 

 

 

 

 

 

 

 

 

5,000,000

 

 

 

500

 

 

 

 

 

 

(15,330,619

)

 

 

(15,330,119

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,262,067

 

 

 

2,262,067

 

Balance – September 30, 2021

 

 

 

 

$

 

 

 

 

5,000,000

 

 

$

500

 

 

$

 

 

 

(13,068,552

)

 

 

(13,068,052

)

 

The accompanying notes are an integral part of the unaudited condensed financial statements.

3


 

BUILD ACQUISITION CORP.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

For the Nine

Months Ended

September 30,

 

 

 

2022

 

 

2021

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

7,022,777

 

 

$

75,457

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

 

 

Interest earned on marketable securities held in Trust Account

 

 

(1,193,016

)

 

 

(11,015

)

Change in fair value of warrant liabilities

 

 

(6,617,516

)

 

 

(960,000

)

Change in fair value of promissory notes

 

 

(247,830

)

 

 

 

Transaction costs associated with warrant liabilities

 

 

 

 

 

292,920

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

207,535

 

 

 

(490,113

)

Income taxes payable

 

 

180,140

 

 

 

Accrued expenses

 

 

(127,467

)

 

 

255,300

 

Net cash used in operating activities

 

$

(775,377

)

 

$

(837,451

)

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Investment of cash in Trust Account

 

 

 

 

 

(200,000,000

)

Net cash used in investing activities

 

$

 

 

$

(200,000,000

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from sale of Units, net of underwriting discounts paid

 

 

 

 

 

196,000,000

 

Proceeds from sale of Private Placement Warrants

 

 

 

 

 

6,000,000

 

Proceeds from promissory note – related party

 

 

500,000

 

 

 

62,118

 

Repayment of promissory note – related party

 

 

 

 

 

(62,118

)

Payment of offering costs

 

 

 

 

 

(436,429

)

Net cash provided by financing activities

 

 

500,000

 

 

$

201,563,571

 

 

 

 

 

 

 

 

 

 

Net Change in Cash

 

$

(275,377

)

 

$

726,120

 

Cash – Beginning of period

 

 

570,333

 

 

 

 

Cash – End of period

 

$

294,956

 

 

$

726,120

 

 

 

 

 

 

 

 

 

 

Non-Cash investing and financing activities:

 

 

 

 

 

 

 

 

Offering costs paid directly by Sponsor in exchange for the issuance of Class B common stock

 

$

 

 

$

25,000

 

Initial classification of Class A common stock subject to possible redemption

 

$

 

 

$

200,000,000

 

Change in value of Class A common stock subject to possible redemption

 

 

678,117

 

 

 

 

 

Change in fair value of promissory note charged to additional paid-in capital

 

$

203,500

 

 

$

 

Deferred underwriting fee payable

 

$

 

 

$

7,000,000

 

 

The accompanying notes are an integral part of the unaudited condensed financial statements. 

 

 

4


 

 

BUILD ACQUISITION CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

(Unaudited) 

 

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

Build Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on December 23, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or other similar business combination with one or more businesses (the “Business Combination”). 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.

As of September 30, 2022, the Company has not commenced any operations. All activity through September 30, 2022, relates to the Company’s formation, initial public offering (the “Initial Public Offering”), which is described below, and identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the marketable securities held in the Trust Account (as defined below). The Company has selected December 31 as its fiscal year end.

The registration statement for the Company’s Initial Public Offering was declared effective on March 16, 2021. On March 19, 2021, the Company completed the Initial Public Offering of 20,000,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $200,000,000, which is described in Note 3.

Simultaneously with the closing of the Initial Public Offering, the Company completed the sale of 4,000,000 warrants (the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to Build Acquisition Sponsor LLC (the “Sponsor”), generating gross proceeds of $6,000,000, which is described in Note 4.

Transaction costs amounted to $11,461,429, consisting of $4,000,000 of underwriting fees, net of reimbursement, $7,000,000 of deferred underwriting fees and $461,429 of other offering costs.

Following the closing of the Initial Public Offering on March 19, 2021, an amount of $200,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”), which are invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended, (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account to the Company’s stockholders, as described below.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. New York Stock Exchange rules provide that the Business Combination must be with one or more target businesses or assets that together have a fair market value equal to at least 80% of the balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the signing of a definitive agreement to enter a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a 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 $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 Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted 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 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 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 other 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 5) and any Public Shares purchased during or after the Initial Public Offering 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 at all.

5


BUILD ACQUISITION CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

(Unaudited) 

 

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 Company’s Sponsor and the other holders of the Founder Shares prior to the Initial Public Offering (the “initial stockholders”), directors and officers have agreed (a) to waive their redemption rights with respect to any Founder Shares and Public Shares held by them, as applicable, 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 Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination within 24 months from the closing of the Initial Public Offering or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

The Company will have until March 19, 2023, to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, 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 per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case 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 initial stockholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders or any of the Company’s directors, officers or affiliates acquire Public Shares in or after the Initial Public Offering, 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 6) 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 Initial Public Offering 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 third party 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 (1) $10.00 per Public Share or (2) the actual 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 the trust assets, in each case net of the interest which may be withdrawn to pay the Company’s taxes. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering 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 (except the Company’s independent registered public accounting firm), 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.

Risks and Uncertainties

In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result, various nations, including the United States, have imposed economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and the related sanctions on the world economy, and the specific impacts on the Company’s financial position, results of operations and its ability to identify and complete an initial business combination are not determinable as of the date of these condensed financial statements.

Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of the condensed financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Inflation Reduction Act of 2022

 

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which

6


BUILD ACQUISITION CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

(Unaudited) 

 

shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.

 

Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.

 

Going Concern

 

In connection with the Company’s assessment of going concern considerations in accordance with FASB’s Accounting Standards Codification Subtopic 205-40, “Presentation of Financial Statements—Going Concern,” management has determined that if the Company is unable to raise additional funds to alleviate liquidity needs, obtain approval for another extension of the deadline or complete a Business Combination by March 19, 2023, then the Company will cease all operations except for the purpose of liquidating. The Company intends to complete a Business Combination before the mandatory liquidation date or obtain approval for an extension, however, it is uncertain whether the Company will be able to do so. If a Business Combination is not consummated by this date and an extension not requested by the Sponsor, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the liquidity condition and the mandatory liquidation, should a Business Combination not occur and an extension is not requested by the Sponsor, and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after March 19, 2023.

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 30, 2022. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods.

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 non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s condensed financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

7


BUILD ACQUISITION CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

(Unaudited) 

 

Use of Estimates

The preparation of the condensed 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 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 condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these condensed financial statements is the determination of the fair value of the warrant liabilities. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.

Marketable Securities Held in Trust Account

 

As of September 30, 2022 and December 31, 2021, substantially all of the assets held in the Trust Account were held in money market funds which are invested primarily in U.S. Treasury securities. All of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying condensed statements of operations. The estimated fair values of investments held in Trust Account are determined using available market information.

 

Offering Costs

 

Offering costs consist of underwriting, legal, accounting and other expenses incurred through the Initial Public Offering that are directly related to the Initial Public Offering. Offering costs amounting to $11,461,429 were incurred, of which $11,168,509 were charged to stockholders’ equity upon the completion of the Initial Public Offering and $292,920 of the offering costs were immediately expensed through the Statement of Operations in connection with the warrant liability.

 

Class A Common Stock Subject to Possible Redemption

The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence 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 Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, as of September 30, 2022 and December 31, 2021, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheets.

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.

 

As of September 30, 2022 and December 31, 2021, the Class A common stock subject to redemption reflected in the condensed balance sheets is reconciled in the following table:

 

Gross proceeds

 

$

200,000,000

 

Less:

 

 

 

 

Proceeds allocated to Public Warrants

 

 

(5,000,000

)

Class A common stock issuance costs

 

 

(11,168,509

)

Plus:

 

 

 

 

Remeasurement of carrying value to redemption value

 

 

16,168,509

 

Class A common stock subject to possible redemption, December 31, 2021

 

 

200,000,000

 

Plus:

 

 

 

 

Remeasurement of carrying value to redemption value

 

 

678,117

 

Class A common stock subject to possible redemption, September 30, 2022

 

$

200,678,117

 

 

8


BUILD ACQUISITION CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

(Unaudited) 

 

 

Warrant Liabilities

 

The Company accounts for the Public Warrants (as defined in Note 4) and Private Placement Warrants (together, with the Public Warrants, the “Warrants”) in accordance with the guidance contained in ASC 815-40 under which the Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Warrants as liabilities at their fair value and adjust 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 statements of operations. The Private Placement Warrants and the Public Warrants for periods where no observable traded price was available were valued using a lattice model, specifically a binomial lattice model incorporating the Cox-Ross-Rubenstein methodology. For periods subsequent to the detachment of the Public Warrants from the Units, the Public Warrant quoted market price was used as the fair value as of each relevant date.

 

Convertible Promissory Note

 

The Company accounts for its convertible promissory note under ASC 815, Derivatives and Hedging (“ASC 815”). Under 815-15-25, the election can be made at the inception of a financial instrument to account for the instrument under the fair value option under ASC 825, Financial Instruments (“ASC 825”). The Company has made such election for its convertible promissory note. Using the fair value option, the convertible promissory note is required to be recorded at its initial fair value on the date of issuance, and each balance sheet date thereafter. Differences between the face value of the convertible promissory note and fair value at issuance are recognized as either an expense in the statement of operations (if issued at a premium) or as a capital contribution (if issued at a discount). Any changes in the estimated fair value of the convertible promissory note are recognized as non-cash gains or losses in the condensed statements of operations.

 

Income Taxes

The Company accounts for income taxes under ASC 740, “Income Taxes.” ASC 740, Income Taxes, requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the unaudited condensed financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived 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 a portion of deferred tax assets will not be realized. As of September 30, 2022 and December 31, 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it.

 

Our effective tax rate was 14.11% and 0.0% for the three months ended September 30, 2022 and 2021, respectively, and 2.50% and 0.0% for the nine months ended September 30, 2022 and 2021, respectively. The effective tax rate differs from the statutory tax rate of 21% for the three months and nine months ended September 30, 2022 and 2021, due to changes in fair value in warrant liability and the valuation allowance on the deferred tax assets.

 

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

 

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 September 30, 2022 and December 31, 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 taxation by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

 

Net Income (Loss) per share of Common Stock

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income per share of common stock is calculated by dividing net income by the weighted average number of shares of common stock outstanding for the respective period. Remeasurement associated with the redeemable shares of Class A common stock is excluded from income per share of common stock as the redemption value approximates fair value.

The calculation of diluted income per share of common stock does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase 10,666,667 shares of Class A common stock in the aggregate. As of September 30, 2022 and 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted net income per share of common stock is the same as basic net income per share of common stock for the period presented.

9


BUILD ACQUISITION CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

(Unaudited) 

 

The following table reflects the calculation of basic and diluted net income per share of common stock (in dollars, except per share amounts):

 

 

 

Three Months Ended

September 30, 2022

 

 

Three Months Ended

September 30, 2021

 

 

Nine Months Ended

September 30, 2022

 

 

Nine Months Ended

September 30, 2021

 

 

 

Class A

 

 

Class B

 

 

Class A

 

 

Class B

 

 

Class A

 

 

Class B

 

 

Class A

 

 

Class B

 

Basic and diluted net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allocation of net income, as adjusted

 

$

839,580

 

 

$

209,895

 

 

$

1,809,654

 

 

 

452,413

 

 

$

5,618,222

 

 

$

1,404,555

 

 

$

56,161

 

 

$

19,296

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average shares outstanding

 

 

20,000,000

 

 

 

5,000,000

 

 

 

20,000,000

 

 

 

5,000,000

 

 

 

20,000,000

 

 

 

5,000,000

 

 

 

11,704,545

 

 

 

5,000,000

 

Basic and diluted net income per common share

 

$

0.04

 

 

$

0.04

 

 

$

0.09

 

 

$

0.09

 

 

$

0.28

 

 

$

0.28