Warrants |
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| Warrants |
Note 9: Warrants
As of December 31, 2023 and 2022, there were an aggregate of 81.9 million and 11.2 million warrants outstanding, respectively, which include the public warrants, private placement warrants, VGS Warrants (as defined below), and the March 2023 Warrants. No warrants were exercised during the years ended December 31, 2023 and 2022.
Liability-classified
Public and Private Placement Warrants
Each public and private placement warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share. The public warrants will expire five years after the completion of the Business Combinations. The Company has the right to redeem the public warrants when the price per share of Class A common stock equals or exceeds $18.00 for 20 days within a 30-day trading period. The private placement warrants are identical to the public warrants, except that the private placement warrants are subject to certain transfer restrictions, are not redeemable by the Company if they are held by sponsors, and are exercisable on a cashless basis.
The public and private placement warrants are recorded as a liability on the consolidated balance sheets with a balance of $1.1 million and $1.5 million as of December 31, 2023 and 2022, respectively. The Company recorded gains of $0.4 million and $9.9 million from the change in fair value of the warrants during the years ended December 31, 2023 and 2022, respectively.
Equity-classified
VGS Warrants
In connection with the Unsecured Promissory Note issued in December 2022 (see Note 11 “Debt”), the Company and VGS entered into a warrant agreement (the “VGS Warrant Agreement”) pursuant to which the Company issued warrants to purchase 0.4 million shares of Class A common stock of the Company at an exercise price of $4.26 per share to VGS (the “VGS Warrants”). The number of shares of common stock for which the VGS Warrants is exercisable and the exercise price may be adjusted upon any event involving subdivisions, combinations, distributions, recapitalizations, and similar transactions. Pursuant to the VGS Warrant Agreement, the warrants and the right to purchase securities upon the exercise of the warrants will terminate upon the earliest to occur of the following: (a) December 13, 2027; and (b) the
consummation of (i) a sale, conveyance, consolidation with any other corporation (other than a wholly owned subsidiary corporation) or (ii) any other transaction or series of related transactions in which more than 50% of the voting power of which the Company or P3 LLC is disposed. The Company recorded the fair value of the VGS Warrants of $0.6 million as an increase to additional paid in capital during the year ended December 31, 2022.
The key Level 3 inputs into the option pricing model related to the VGS Warrants were as follows:
March 2023 Warrants
In connection with the Purchase Agreement dated March 2023 (see Note 13 “Capitalization”), the Company issued warrants to purchase an aggregate of 59.9 million shares of Class A common stock (the “Common Warrants”), and pre-funded warrants to purchase an aggregate of 10.8 million shares of Class A common stock (the “Pre-Funded Warrants” and, together with the Common Warrants, the “March 2023 Warrants”) to the Purchasers (as defined in Note 13 “Capitalization”). Pursuant to the warrant agreements, the March 2023 Warrants and the right to purchase securities upon the exercise of the March 2023 Warrants will terminate upon the earliest to occur of the following: (a) April 5, 2028, with respect to the Common Warrants only; and (b) the consummation of (i) a sale, conveyance, disposal, or encumbrance of all or substantially all of the Company’s property or business or the Company’s merger into or consolidation with any other corporation (other than a wholly owned subsidiary corporation) or (ii) any other transaction or series of related transactions in which more than 50% of the voting power of which the Company is disposed and the proceeds thereof are paid to the then-existing stockholders of the Company.
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