References to the "Company," "FAST Acquisition Corp.," "our," "us" or "we" refer
to FAST Acquisition Corp. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the unaudited condensed consolidated financial statements and the notes thereto
contained elsewhere in this report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. We have based these forward-looking statements on our current expectations
and projections about future events. These forward-looking statements are
subject to known and unknown risks, uncertainties and assumptions about us that
may cause our actual results, levels of activity, performance or achievements to
be materially different from any future results, levels of activity, performance
or achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"should," "could," "would," "expect," "plan," "anticipate," "believe,"
"estimate," "continue," or the negative of such terms or other similar
expressions. 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 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.
Overview
We are a blank check company incorporated in Delaware on June 4, 2020 for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one or more
businesses. We are an emerging growth company and, as such, we are subject to
all of the risks associated with emerging growth companies.
Our Sponsor is FAST Sponsor, LLC, a Delaware limited liability company. The
registration statement for our Initial Public Offering was declared effective on
August 20, 2020. On August 25, 2020, we consummated our Initial Public Offering
of 20,000,000 Units, at $10.00 per Unit, generating gross proceeds of $200.0
million, and incurring offering costs of approximately $11.5 million, inclusive
of $7.0 million in deferred underwriting commissions. The underwriters were
granted a 45-day option from the date of the final prospectus relating to the
Initial Public Offering to purchase up to 3,000,000 additional Units to cover
over-allotments, if any, at $10.00 per Unit. The over-allotment expired
unexercised on October 5, 2020.
Simultaneously with the closing of the Initial Public Offering, we consummated
the Private Placement of 6,000,000 Private Placement Warrants to our Sponsor,
each exercisable to purchase one share of Class A common stock at $11.50 per
share, at a price of $1.00 per Private Placement Warrant, generating gross
proceeds to us of $6.0 million. If the over-allotment option was exercised, our
Sponsor could have purchased an additional amount of up to 600,000 Private
Placement Warrants at a price of $1.00 per Private Placement Warrant. The
over-allotment expired unexercised on October 5, 2020.
Upon the closing of the Initial Public Offering and the Private Placement,
$200.0 million ($10.00 per Unit) of the net proceeds of the sale of the Units in
the Initial Public Offering and the Private Placement were placed in the Trust
Account located in the United States at JP Morgan Chase Bank, N.A. with
Continental Stock Transfer & Trust Company acting as trustee, and will be
invested only in U.S. "government securities," within the meaning of Section
2(a)(16) of the Investment Company Act having a maturity of 185 days or less or
in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act which invest only in direct U.S. government
treasury obligations, as determined by the Company, until the earlier of: (i)
the completion of a Business Combination and (ii) the distribution of the Trust
Account as described below.
Our management has broad discretion with respect to the specific application of
the net proceeds of the Initial Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating a Business Combination.
If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or August 25, 2022, we 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 (net of permitted withdrawals and 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 remaining stockholders
and the board of directors, liquidate and dissolve, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law.
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Proposed Business Combination
On February 1, 2021, the Company entered into an agreement and plan of merger
(as amended, the "Merger Agreement") with Fertitta Entertainment, Inc., a Texas
corporation ("FEI"), FAST Merger Corp., a Texas corporation and direct
subsidiary of the Company ("FAST Merger Corp.") and FAST Merger Sub Inc., a
Texas corporation and direct subsidiary of FAST Merger Corp. ("Merger Sub"),
pursuant to which (i) the Company will change its jurisdiction of incorporation
to Texas by merging with and into FAST Merger Corp., with FAST Merger Corp.
surviving the merger (the "reincorporation"), and (ii) Merger Sub will merge
with and into FEI with FEI surviving the merger (the "Merger"). Upon
consummation of the transactions contemplated by the Merger Agreement (the
"Business Combination"), FEI will become a wholly owned subsidiary of FAST
Merger Corp., which is referred to herein as "New FEI." On June 30, 2021, the
Company, FEI, FAST Merger Corp. and Merger Sub entered into an Amendment No. 1
to the Merger Agreement ("Amendment No. 1"), pursuant to which the Merger
Agreement was amended to, among other things, (i) increase the number of shares
of Class A common stock of New FEI to be issued to the sole stockholder of FEI
such that the value of the aggregate consideration to be received by the sole
stockholder increased from approximately $1.97 billion to approximately $3.84
billion in consideration for the inclusion of certain high quality assets to New
FEI including Mastro's, Catch and Vic & Anthony's restaurants, Cadillac Bar and
Fish Tales casual concepts and certain specialty entertainment assets, including
Fisherman's Wharf and Pleasure Pier in Galveston and three aquariums, (ii)
provide that the shares of Class B units of Golden Nugget Online Gaming, Inc.
("GNOG") issued in connection with the $2.2 million contribution made by LF LLC
(a subsidiary of FEI) on March 31, 2021 and any additional shares acquired by LF
LLC prior to the closing of the Business Combination (the "Closing") as a result
of contractually required contributions will be included as part of the
transaction and (iii) extend the "Termination Date" under the Merger Agreement
from November 1, 2021 to December 1, 2021.
Upon the Closing, each share of common stock of the Company will be converted
into one share of Class A common stock of New FEI and all of the outstanding
equity interests of FEI will be acquired for aggregate consideration that is
currently valued at approximately $3.84 billion. Such consideration will be paid
to Tilman J. Fertitta, the sole stockholder of FEI, by the issuance of a number
of shares of Class B common stock of New FEI, calculated based on the aggregate
closing date transaction value, as determined pursuant to the Merger Agreement,
and a $10 per share price of the Class B common stock. The value of the
aggregate consideration will change between now and the Closing based on (i) the
difference between the net debt of FEI at the Closing and the current target net
debt of $4.6 billion and (ii) (x) the difference between the 60-day average
closing stock price of a share of GNOG as of the day prior to the Closing and
$18.46, the closing stock price of GNOG on January 28, 2021, multiplied by (y)
31,350,625 (subject to adjustment by reason of any stock dividend, subdivision,
reclassification, reorganization, recapitalization, split, combination or
exchange of shares, or any other similar event between the date of the Merger
Agreement and the Closing). In addition, in connection with the Business
Combination, FEI will complete an internal reorganization and spin out certain
assets which are not intended to be part of the Business Combination (the
"Restructuring").
The shares of Class B common stock of New FEI will have the same economic terms
as the shares of Class A common stock of New FEI, but the shares of Class B
common stock of New FEI will have 10 votes per share. The outstanding shares of
Class B common stock of New FEI will be subject to a "sunset" provision if Mr.
Fertitta and other permitted holders of New FEI Class B common stock
collectively cease to beneficially own at least 20% of the number of shares of
Class B common stock of New FEI collectively held by Mr. Fertitta and other
permitted transferees as of the effective date of the Business Combination.
On August 9, 2021, DraftKings Inc. ("DraftKings") and GNOG announced that they
have entered into a definitive agreement pursuant to which DraftKings will
acquire GNOG in an all-stock transaction (the "DraftKings Transaction"). The
Company currently expects that the Business Combination will close in the fourth
quarter of 2021, prior to the expected closing of the DraftKings Transaction.
The Merger Agreement does not prohibit FEI from selling the stock of GNOG and
the Company's consent was not required for the DraftKings Transaction. The
Merger Agreement provides that the Merger Consideration (as defined therein)
payable to FEI's sole stockholder will be adjusted by (a)(i) an amount equal to
the difference between the 60-day average closing stock price of a share of GNOG
as of the day prior to the closing of the Business Combination, multiplied by
(ii) the number of shares of stock of GNOG owned by FEI as of the Closing, and
(b)(i) $13.00, multiplied by (ii) 31,494,175. The Merger Consideration payable
to the sole stockholder of FEI will increase or decrease to the extent GNOG's
stock price increases or decreases as a result of the announcement of the
DraftKings Transaction in relation to the $13.00 reference price in the Merger
Agreement.
A subsidiary of FEI, as a holder of GNOG common stock, will receive the merger
consideration in the DraftKings Transaction. In the DraftKings Transaction, GNOG
stockholders, including such subsidiary of FEI, will receive a fixed ratio of
0.365 shares of Class A common stock of a new holding company formed by
DraftKings in connection with the Transaction ("New DraftKings"), for each share
of common stock of GNOG. The Company is not a party to the DraftKings
Transaction.
Liquidity and Going Concern
The accompanying condensed consolidated financial statements have been prepared
assuming we will continue as a going concern, which contemplates, among other
things, the realization of assets and satisfaction of liabilities in the normal
course of business. As of September 30, 2021, we had approximately $0.2 million
in our operating bank account and a working capital deficit of approximately
$2.0 million (not taking into account approximately $79,000 of tax obligations
that may be paid using investment income classified in the Trust Account). We
have incurred and expect to incur additional significant costs in pursuit of our
financing and acquisition plans. These conditions raise substantial doubt about
our ability to continue as a going concern within one year after the date that
the accompanying condensed consolidated financial statements are issued.
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In connection with our assessment of going concern considerations in accordance
with FASB ASC 205-40, "Basis of Presentation - Going Concern," management has
determined that the working capital deficit and mandatory liquidation and
subsequent dissolution raise substantial doubt about our ability to continue as
a going concern. No adjustments have been made to the carrying amounts of assets
or liabilities should we be required to liquidate after August 25, 2022. The
unaudited condensed consolidated financial statements do not include any
adjustment that might be necessary if we are unable to continue as a going
concern.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has
concluded that the specific impact is not readily determinable as of the date of
these unaudited condensed consolidated financial statements. The unaudited
condensed consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Results of Operations
Our entire activity since inception up to September 30, 2021, was in preparation
for our formation, the Initial Public Offering, and since the closing of our
Initial Public Offering, a search for business combination candidates. We will
not generate any operating revenues until the closing and completion of our
initial Business Combination.
For the three months ended September 30, 2021, we had a net loss of
approximately $47.3 million which consisted of approximately $46.6 million in
change in the fair value of derivative warrant liabilities, approximately $0.6
million in general and administrative expenses, $45,000 of general and
administrative expenses - related party, approximately $53,000 of franchise
taxes, partially offset by approximately $24,000 income from our investments
held in the Trust Account.
For the nine months ended September 30, 2021, we had a net loss of approximately
$70.5 million which consisted of approximately $67.2 million in change in the
fair value of derivative warrant liabilities, approximately $3.0 million in
general and administrative expenses, $135,000 of general and administrative
expenses - related party, approximately $150,000 of franchise taxes, partially
offset by approximately $46,000 income from our investments held in the Trust
Account.
For the period from June 4, 2020 (inception) through September 30, 2020, we had
a net loss of approximately $281,000 which consisted of approximately $86,000 in
general and administrative expenses, 15,000 of general and administrative
expenses - related party, approximately $64,000 in franchise tax expense, and
approximately $474,000 of financing costs - derivative warrant liabilities,
partially offset by $340,000 change in fair value of derivative warrant
liabilities, and approximately $19,000 income from our investments held in the
Trust Account.
Related Party Transactions
Founder Shares
On June 19, 2020, we issued 7,187,500 Founder Shares to our Sponsor for a
payment of $25,000. On August 4, 2020, we effected a share capitalization
resulting in an aggregate of 5,750,000 Class B common stock outstanding. All
shares and associated amounts have been retroactively restated to reflect the
share capitalization. The initial stockholders agreed to forfeit up to 750,000
Founder Shares to the extent that the over-allotment option was not exercised in
full by the underwriters. The forfeiture would have been adjusted to the extent
that the over-allotment option was not exercised in full by the underwriters so
that the Founder Shares will represent 20.0% of the Company's issued and
outstanding shares after the Initial Public Offering. The over-allotment expired
unexercised on October 5, 2020, resulting in the forfeiture of such shares
resulting in the forfeiture of 750,000 Founder Shares.
The initial stockholders agreed, subject to limited exceptions, not to transfer,
assign or sell any of the Founder Shares until the earlier to occur of: (i) one
year after the completion of the initial Business Combination and (ii) the date
following the completion of the initial Business Combination on which the
Company completes a liquidation, merger, capital stock exchange or other similar
transaction that results in all of the Company's stockholders having the right
to exchange their common stock for cash, securities or other property.
Notwithstanding the foregoing, if (1) the last reported sales price of the Class
A common stock equals or exceeds $12.00 per share (as adjusted for stock splits,
stock capitalizations, reorganizations, recapitalizations and the like) for any
20 trading days within any 30-trading day period commencing at least 150 days
after the initial Business Combination or (2) if we consummate a transaction
after the initial Business Combination which results in the our stockholders
having the right to exchange their shares for cash, securities or other
property, the Founder Shares will be released from the lock-up.
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Related Party Loans
In addition, in order to fund working capital deficiencies or finance
transaction costs in connection with a Business Combination, the Sponsor or an
affiliate of the Sponsor, or certain of our officers and directors may, but are
not obligated to, loan us Working Capital Loans. If we complete a Business
Combination, we may repay the Working Capital Loans out of the proceeds of the
Trust Account released to us. Otherwise, the Working Capital Loans would be
repaid only out of funds held outside the Trust Account. In the event that a
Business Combination does not close, we may use a portion of proceeds held
outside the Trust Account to repay the Working Capital Loans but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. The
Working Capital Loans would either be repaid upon consummation of a Business
Combination or, at the lenders' discretion, up to $1.5 million of such Working
Capital Loans may be convertible into warrants of the post Business Combination
entity at a price of $1.00 per warrant. The warrants would be identical to the
Private Placement Warrants. Except for the foregoing, the terms of such Working
Capital Loans, if any, have not been determined and no written agreements exist
with respect to such loans. To date, we had no borrowings under the Working
Capital Loans.
Contractual Obligations
Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may
be issued upon conversion of Working Capital Loans, if any (and any shares of
Class A common stock issuable upon the exercise of the Private Placement
Warrants and warrants that may be issued upon conversion of Working Capital
Loans and upon conversion of the Founder Shares), are entitled to registration
rights pursuant to a registration rights agreement. These holders will be
entitled to certain demand and "piggyback" registration rights. We will bear the
expenses incurred in connection with the filing of any such registration
statements.
Underwriting Agreement
The underwriters were entitled to an underwriting discount of $0.20 per unit, or
$4.0 million in the aggregate, paid upon the closing of the Initial Public
Offering. In addition, $0.35 per unit, or $7.0 million in the aggregate will be
payable to the underwriters for deferred underwriting commissions. The deferred
fee will become payable to the underwriters from the amounts held in the Trust
Account solely in the event that we complete a Business Combination, subject to
the terms of the underwriting agreement.
Administrative Services Agreement
Commencing on the date that our securities were first listed on the New York
Stock Exchange and continuing until the earlier of the consummation of a
Business Combination or our liquidation, we agreed to pay the Sponsor a total of
$15,000 per month for office space, utilities, secretarial and administrative
support services provided to members of our management team. We incurred
$45,000, $135,000, and $15,000 for such services for the three- and nine-month
periods ended September 30, 2021, and for the period from June 4, 2020
(inception) through September 30, 2020, respectively, included as general and
administrative expenses - related parties on the condensed consolidated
statement of operations. At September 30, 2021, $15,000 was included as prepaid
expenses on the unaudited condensed consolidated balance sheets. At December 31,
2020, there were no prepaid or accrued expenses on the unaudited condensed
consolidated balance sheets.
The Sponsor, officers and directors, or any of their respective affiliates will
be reimbursed for any out-of-pocket expenses incurred in connection with
activities performed on our behalf such as identifying potential target
businesses and performing due diligence on suitable Business Combinations.
Critical Accounting Policies
Investments Held in the Trust Account
Our portfolio of investments is comprised of U.S. government securities, within
the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a
maturity of 185 days or less, or investments in money market funds that invest
in U.S. government securities and generally have a readily determinable fair
value, or a combination thereof. When the Company's investments held in the
Trust Account are comprised of U.S. government securities, the investments are
classified as trading securities. When our investments held in the Trust Account
are comprised of money market funds, the investments are recognized at fair
value. Trading securities and investments in money market funds 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 these securities is included
in income on investments held in the Trust Account in the accompanying unaudited
condensed statement of operations. The estimated fair values of investments held
in the Trust Account are determined using available market information.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate our financial instruments, including issued
stock purchase warrants, to determine if such instruments are derivatives or
contain features that qualify as embedded derivatives, pursuant ASC 480 and FASB
ASC Topic 815, Derivatives and Hedging ("ASC 815"), paragraph 15 Embedded
Derivatives ("ASC 815-15"). The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as
equity, is re-assessed at the end of each reporting period.
The warrants issued in connection with the Initial Public Offering (the "Public
Warrants") and the Private Placement Warrants are recognized as derivative
liabilities in accordance with ASC 815, paragraph 40, Contracts in Entity's Own
Equity ("ASC 815-40"). Accordingly, we recognize the warrant instruments as
liabilities at fair value and adjust the instruments to fair value at each
reporting period. The liabilities are subject to re-measurement at each balance
sheet date until exercised, and any change in fair value is recognized in the
Company's statement of operations. The fair value of the Public Warrants issued
in connection with the Public Offering and Private Placement Warrants were
initially measured at fair value using a Monte Carlo simulation model and
subsequently, the fair value of the Private Placement Warrants have been
estimated using a Monte Carlo simulation model each measurement date. The fair
value of Public Warrants issued in connection with the Initial Public Offering
have subsequently been measured based on the listed market price of such
warrants.
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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 Topic 480 "Distinguishing Liabilities from
Equity." Shares of Class A common stock subject to mandatory redemption (if any)
are classified as liability instruments and are measured at fair value. Shares
of conditionally redeemable Class A common stock (including Class A common stock
that feature 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) are classified as temporary equity. At all other times,
shares of Class A common stock are 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 the occurrence of uncertain future events.
Accordingly, at September 30, 2021 and December 31, 2020, 20,000,000 shares of
Class A common stock subject to possible redemption, respectively, are presented
as temporary equity, outside of the stockholders' equity section of our
condensed consolidated balance sheet.
Effective with the closing of the Initial Public Offering, we recognized the
accretion from initial book value to redemption amount, which resulted in
charges against additional paid-in capital (to the extent available) and
accumulated deficit.
Net Income (Loss) Per Common Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." We have 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 (loss) per common share is
calculated by dividing the net income (loss) by the weighted average shares of
common stock outstanding for the respective period.
We did not consider the effect of the warrants issued in connection with the
Initial Public Offering and the Private Placement to purchase an aggregate of
16,000,000 shares of common stock in the calculation of diluted income (loss)
per share because their exercise is contingent upon future events and since
their inclusion would be anti-dilutive under the treasury stock method. As a
result, diluted net loss per share is the same as basic net loss per share for
the three months ended September 30, 2021, and 2020, and for the nine months
ended September 30, 2021, and the period from June 4, 2020 (inception) through
September 30, 2020. Accretion associated with the redeemable Class A common
stock is excluded from earnings per share as the redemption value approximates
fair value.
Recent Issued Accounting Standards
In August 2020, the FASB issued Accounting Standards Update ("ASU") No. 2020-06,
Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for
Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"),
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. The guidance may be early adopted for fiscal
years beginning after December 15, 2020, and interim periods within those fiscal
years. We are currently evaluating the impact of this standard on its condensed
consolidated financial statements and related disclosures.
Our management does not believe that any other recently issued, but not yet
effective, accounting pronouncements, if currently adopted, would have a
material impact on our financial statements.
Off-Balance Sheet Arrangements
As of September 30, 2021, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain
reporting requirements for qualifying public companies. We qualify as an
"emerging growth company" and under the JOBS Act are allowed to comply with new
or revised accounting pronouncements based on the effective date for private
(not publicly traded) companies. We are electing to delay the adoption of new or
revised accounting standards, and as a result, we may not comply with new or
revised accounting standards on the relevant dates on which adoption of such
standards is required for non-emerging growth companies. As a result, the
financial statements may not be comparable to companies that comply with new or
revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection
Act, (iii) comply with any requirement that may be adopted by the Public Company
Accounting Oversight Board regarding mandatory audit firm rotation or a
supplement to the auditor's report providing additional information about the
audit and the financial statements (auditor discussion and analysis) and (iv)
disclose certain executive compensation related items such as the correlation
between executive compensation and performance and comparisons of the CEO's
compensation to median employee compensation. These exemptions will apply for a
period of five years following the completion of our Initial Public Offering or
until we are no longer an "emerging growth company," whichever is earlier.
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