Sierra Lake Acquisition Corp. - Quarter Report: 2021 September (Form 10-Q)

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

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

Delaware		86-1765431
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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, par value $0.0001 per share, and one-half of one Redeemable Warrant		SIERU		The Nasdaq Stock Market LLC
Shares of Class A common stock, par value $0.0001 per share, included as part of the Units		SIER		The Nasdaq Stock Market LLC
Redeemable Warrants, each exercisable for one share of Class A common stock for $11.50 per share, included as part of the Units		SIERW		The Nasdaq Stock Market LLC

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☒		Smaller reporting company		☒
				Emerging growth company		☒

ASSETS
Current assets:
Cash		$	1,503,570
Prepaid expenses			25,350
Total Current Assets			1,528,920
Marketable securities held in Trust Account			301,482,707
TOTAL ASSETS		$	303,011,627
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accrued expenses		$	25,316
Accrued offering costs			6,180
Total Current Liabilities			31,496
Warrant liabilities			17,540,000
Deferred underwriting fee payable			15,000,000
TOTAL LIABILITIES			32,571,496
Commitments and Contingencies (Note 6)
Class A common stock subject to possible redemption, 30,000,000 shares at redemption value			301,482,707
Stockholders’ Deficit
Preferred Stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding			—
Class A common stock, $0.0001 par value; 300,000,000 shares authorized			—
Class B common stock, $0.0001 par value; 30,000,000 shares authorized; 8,625,000 shares issued and outstanding (1)			863
Additional paid-in capital			—
Accumulated deficit			(31,043,439	)
Total Stockholders’ Deficit			(31,042,576	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	303,011,627

(1)	Includes up to 1,125,000 shares of Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriter (see Note 5).

(1)	Excluded an aggregate of 1,125,000 shares subject to forfeiture at September 30, 2021 (see Note 5).

(1)	Included an aggregate of 1,125,000 shares subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters (see Note 5).

Cash Flows from Operating Activities:
Net income		$	5,432,135
Adjustments to reconcile net income to net cash used in operating activities:
Change in fair value of warrants liabilities			(9,435,000	)
Other expense relating to fair value exceeding amount paid for warrants			1,425,000
Transaction costs allocable to warrant liabilities			2,531,494
Interest earned on marketable securities held in Trust Account			(2,399	)
Unrealized loss on marketable securities held in Trust Account			19,692
Changes in operating assets and liabilities:
Prepaid expenses			(25,350	)
Accrued expenses			25,316
Net cash used in operating activities			(29,112	)
Cash Flows from Investing Activities:
Investment of cash in Trust Account			(301,500,000	)
Net cash used in investing activities			(301,500,000	)
Cash Flows from Financing Activities:
Proceeds from sale of Units, net of underwriting discounts paid			294,000,000
Proceeds from sale of Private Placement Warrants			9,500,000
Advances to related party			832
Repayment of advances to related party			(832	)
Proceeds from promissory note – related party			162,164
Repayment of promissory note – related party			(162,164	)
Payment of offering costs			(467,318	)
Net cash provided by financing activities			303,032,682
Net Change in Cash			1,503,570
Cash – Beginning of period			—
Cash – End of period		$	1,503,570
Non-Cash investing and financing activities:
Offering costs included in accrued offering costs		$	6,180
Offering costs paid by Sponsor in exchange for the issuance of Founder Shares		$	25,000
Initial classification of common stock subject to possible redemption		$	301,500,000
Change in value of common stock subject to possible redemption		$	(17,293	)
Deferred underwriting fee payable		$	15,000,000

Gross proceeds		$	300,000,000
Less:
Proceeds allocated to Public Warrants			(16,050,000	)
Class A common stock issuance costs			(20,331,551	)
Plus:
Accretion of carrying value to redemption value			37,864,258
Class A common stock subject to possible redemption		$	301,482,707

		Three Months Ended September 30, 2021								For the period from January 26, 2021 (inception) Through September 30, 2021
		Class A				Class B				Class A				Class B
Basic and diluted net income per common share
Numerator:
Allocation of net income, as adjusted		$	1,975,751			$	3,457,563			$	954,294			$	4,477,841
Denominator:
Basic and diluted weighted average shares outstanding			4,285,714				7,500,000				1,598,361				7,500,000
Basic and diluted net income per common share		$	0.46			$	0.46			$	0.60			$	0.60

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Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

•

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

•

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

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in whole and not in part;

•

at a price of $0.01 per Public Warrant;

•

upon not less than 30 days’ prior written notice of redemption to each warrant holder; and

•

if, and only if, the last reported sale price of the shares of Class A common stock for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends to the notice of redemption to the warrant holders equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like).

		Description				Level		September 30, 2021
Assets:
Marketable securities held in Trust Account						1		$	301,482,707
Liabilities:
Warrant liability – Public Warrants						3		$	9,750,000
Warrant liability – Private Placement Warrants						3		$	7,790,000

Input		September 17, 2021				September 30, 2021
Stock price		$	10.00				9.96
Exercise price		$	11.50				11.50
Expected term (in years)			6.0				5.96
Volatility			16.6	%			11.7	%
Risk-free rate			0.93	%			1.14	%
Dividend yield			0.0	%			0.0	%

		Private Placement Warrants				Public Warrants				Warrant Liabilities
Fair value as of January 26, 2021 (inception)		$	—			$	—			$	—
Initial measurement on September 17, 2021			10,925,000				16,050,000				26,975,000
Changes in fair value			(3,135,000	)			(6,300,000	)			(9,435,000	)
Fair value as of September 30, 2021		$	7,790,000			$	9,750,000			$	17,540,000

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 Form including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the completion of the 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. 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 final prospectus for its Initial Public Offering filed with the U.S. Securities and Exchange Commission (the “SEC”). 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.

We have neither engaged in any operations nor generated any revenues to date. Our only activities from January 26, 2021 (inception) through September 30, 2021 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 income in the form of interest income on marketable securities held in the Trust Account. 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.

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.

We have no obligations, assets or liabilities, which would be considered sheet arrangements as of September 30, 2021. 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 sheet arrangements. We have not entered into any sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any assets.

We account for the warrants issued in connection with our Initial Public Offering in accordance with the guidance contained in ASC under which the Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the Warrants as liabilities at their fair value and adjust the Warrants to fair value at each reporting period. This liability is subject to at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations.

Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. The Company applies the method in calculating income (loss) per common share. Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value.

In August 2020, the FASB issued ASU Debt—Debt with Conversion and Other Options (Subtopic and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. We adopted ASU on January 1, 2021. Adoption of the ASU did not have an impact our financial position, results of operations or cash flows.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2021, as such term is defined in Rules and under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective at a reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

There was no change in our internal control over financial reporting that occurred during the fiscal quarter of 2020 covered by this Quarterly Report on Form that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form