Business context and reporting period
This is Isos Acquisition Corporation’s unaudited Form 10-Q for the quarter ended March 31, 2021—not a filing by Lucky Strike Entertainment Corp. Isos was a newly formed SPAC seeking a business combination; as of quarter-end it had not selected a target or begun substantive discussions with one. It completed its IPO and partial over-allotment in March 2021.
Financial performance and position
- Revenue and margins: No operating revenue; Isos had not commenced operations. Margins are not meaningful.
- Loss: Net loss was $1.419 million, including $94,827 of formation and operating costs, $638,847 of warrant issuance costs, and fair-value losses of $434,137 on warrants and $250,923 on the forward purchase agreement. Basic and diluted loss per nonredeemable share was $0.18.
- Cash flow: Operating cash use was $323,469; investing cash use was $254.838 million, principally funds placed in trust; financing cash provided was $257.232 million. Quarter-end operating cash was $2.071 million.
- Liquidity and assets: Working capital was approximately $2.4 million. Total assets were $257.283 million, including $254.838 million in trust-account securities.
- Debt and liabilities: The $125,267 sponsor promissory note was repaid March 15; no working-capital loans were outstanding. Quarter-end liabilities included $18.856 million of warrant liabilities, $196,969 of forward-purchase-agreement liability, and $8.919 million of deferred underwriting discount. Deferred discount is payable upon a completed business combination.
- Temporary equity: 22.431 million redeemable Class A shares were recorded outside shareholders’ equity at $224.310 million. Shareholders’ equity was $5.000 million.
Changes versus prior period
The quarter includes Isos’s formation and March IPO activity; the filing provides no comparable prior-year operating period. Compared with December 31, 2020, cash rose from zero to $2.071 million, trust investments from zero to $254.838 million, and total assets from $47,500 to $257.283 million, primarily reflecting the IPO and private placement.
Outlook, risks and unusual items
- Management said available working capital and borrowing capacity should fund needs through the earlier of a business combination or one year from the filing. The company must complete a business combination within 24 months of the IPO closing or redeem public shares and wind up.
- On April 12, 2021, SEC staff guidance prompted Isos to revise its accounting: warrants previously classified as equity were reclassified as derivative liabilities measured at fair value, with changes recognized in earnings. This generated noncash volatility and led to revision of the previously reported March 5 balance sheet.
- Management identified a material weakness in internal control over financial reporting related to warrant accounting; disclosure controls were ineffective as of March 31. Isos described planned remediation but gave no assurance it would be successful.
- Other risks include uncertainty in finding and completing a target transaction, possible dilution or debt-related constraints, and COVID-19 effects on markets and deal execution. The sponsor’s trust-account indemnity may be limited by its ability to pay.
Important facts for investors to verify
- Confirm the issuer identity: this filing is for Isos Acquisition Corporation, not Lucky Strike Entertainment Corp.
- Review the warrant-liability valuation, earnings impact, and revised March 5, 2021 balance sheet.
- Assess the material weakness, remediation progress, and any subsequent control disclosures.
- Verify the trust balance, redeemable-share terms, deferred underwriting fees, and business-combination deadline.
- Check subsequent filings for a target transaction, financing commitments, or material changes to liquidity and risks.