Share Dilution

SLAM CORP. Management’s discussion and analysis of financial condition and results of operations. (Form 10-Q)

References to “Company”, “Slam Corp.,” “Slam”, “our”, “we” or “us” refers to
Slam 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 interim financial statements and accompanying notes contained elsewhere in this report. Certain information contained in the discussion and analysis presented below includes forward-looking statements that involve risks and uncertainties.

Caution 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 of 1933, as amended, 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. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other SEC filings.

Insight

We are a blank check company incorporated on December 18, 2020 like a Cayman Islands exempt corporation for the purpose of effecting a merger, stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities. We have not selected any business combination targets. We intend to complete our initial business combination using cash from the proceeds of our IPO and private placement warrant offering, proceeds from the sale of our shares under our initial business combination (pursuant to any forward purchase agreement or collateral agreement we may enter into), shares issued to the owners of the target, debt issued to a bank or other lenders or to the owners of the target, or a combination of the above or other sources.

Issuance of additional shares as part of a business combination:

     •    may significantly dilute the equity interest of investors in our IPO,
          which dilution would increase if the anti-dilution provisions in the
          Class B ordinary shares resulted in the issuance of Class A ordinary
          shares on a greater than
          one-to-one
          basis upon conversion of the Class B ordinary shares;



     •    may subordinate the rights of holders of Class A ordinary shares if
          preference shares are issued with rights senior to those afforded our
          Class A ordinary shares;



     •    could cause a change in control if a substantial number of our Class A
          ordinary shares are issued, which may affect, among other things, our
          ability to use our net operating loss carry forwards, if any, and could
          result in the resignation or removal of our present officers and
          directors;



     •    may have the effect of delaying or preventing a change of control of us
          by diluting the share ownership or voting rights of a person seeking to
          obtain control of us;



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     •    may adversely affect prevailing market prices for our units, Class A
          ordinary shares and/or warrants; and



  •   may not result in adjustment to the exercise price of our warrants.


Similarly, if we issue debt or otherwise incur significant debt, it could result
in:

     •    default and foreclosure on our assets if our operating revenues after an
          initial business combination are insufficient to repay our debt
          obligations;



     •    acceleration of our obligations to repay the indebtedness even if we make
          all principal and interest payments when due if we breach certain
          covenants that require the maintenance of certain financial ratios or
          reserves without a waiver or renegotiation of that covenant;



     •    our immediate payment of all principal and accrued interest, if any, if
          the debt is payable on demand;



     •    our inability to obtain necessary additional financing if the debt
          contains covenants restricting our ability to obtain such financing while
          the debt is outstanding;



  •   our inability to pay dividends on our Class A ordinary shares;



     •    using a substantial portion of our cash flow to pay principal and
          interest on our debt, which will reduce the funds available for dividends
          on our Class A ordinary shares if declared, expenses, capital
          expenditures, acquisitions and other general corporate purposes;



     •    limitations on our flexibility in planning for and reacting to changes in
          our business and in the industry in which we operate;



     •    increased vulnerability to adverse changes in general economic, industry
          and competitive conditions and adverse changes in government regulation;
          and



     •    limitations on our ability to borrow additional amounts for expenses,
          capital expenditures, acquisitions, debt service requirements, execution
          of our strategy and other purposes and other disadvantages compared to
          our competitors who have less debt.



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As shown in the accompanying unaudited condensed financial statements, at
March 31, 2022we had about $61,000 in our operating bank account. In addition, we expect to incur significant costs in pursuing our initial business combination. We cannot assure you that our plans to raise capital or complete our initial business combination will be successful.

Liquidity and Going Concern Considerations

From March 31, 2022we had about $61,000 in our operating bank account and working capital of approximately $561,000

The Company’s liquidity needs through March 31, 2022 were met thanks to a contribution from $25,000 from the Sponsor to purchase Founder Shares (as defined in Note 5), the loan of approximately $196,000 of the Limited Partner under the Note (as defined in Note 5), and the proceeds of completion of the Private Placement not held in the Trust Account. The Company fully redeemed the note on
February 25, 2021. In addition, in order to fund transaction costs associated with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain officers and directors of the Company may, but are not obligated to, provide the Company with Working Capital Loans (as defined in Note 5). From March 31, 2022 and December 31, 2021there was $400,000 outstanding on the working capital loan.

In connection with our assessment of going concern considerations in accordance
with FASB ASU
2014-15,
"Disclosures of Uncertainties about an Entity's Ability to Continue as a Going
Concern," management has determined that the liquidity condition, the date for
mandatory liquidation and dissolution raise substantial doubt about our ability
to continue as a going concern through February 25, 2023, our scheduled
liquidation date if we do not complete the Business Combination prior to such
date. We intend to complete a Business Combination by February 25, 2023 but
cannot guarantee such event. No adjustments have been made to the carrying
amounts of assets or liabilities should the Company be required to liquidate
after February 25, 2023.

Results of operations and known trends or future events

We have neither engaged in any operations nor generated any revenues to date.
Our only activities since inception have been organizational activities and
those necessary to prepare for our IPO. Following the IPO, we will not generate
any operating revenues until after completion of our initial business
combination. We will generate
non-operating
income in the form of interest income on cash and cash equivalents after our
IPO. There has been no significant change in our financial or trading position
and no material adverse change has occurred since the date of our audited
financial statements. After our IPO, we have incurred increased expenses as a
result of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as for due diligence expenses.

For the three months ended March 31, 2022we had a net income of about
$4.3 millioncomposed of approximately $47,000 investment income held in a trust account and approximately $5.3 million
non-operating gain resulting from the change in fair value of the warrant derivative liabilities, offset by approximately $1.0 million in general and administrative costs.

For the three months ended March 31, 2021we had a net loss of approximately
$7.1 millioncomposed of approximately $3,000 income from investments held in trust, offset by approximately $4.7 million
non-operating loss resulting from the change in fair value of derivative liabilities related to warrants and approximately $618,000 in general and administrative expenses, and approximately $1.8 million in the offering costs associated with derivative warrant liabilities.

Contractual obligations

Registration and rights of shareholders

Holders of Founder’s Shares, Private Placement Warrants and Warrants issuable upon conversion of the Working Capital Loans (and all Class A Common Shares issuable upon exercise of private placement warrants and warrants issuable upon conversion of working capital loans) were granted registration rights pursuant to a Registration and Shareholder Rights Agreement executed at the effective date of IPO

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Offer. Holders of these titles had the right to make up to three requests, excluding simplified requests, that we register these titles. In addition, holders have certain “additional” registration rights with respect to registration statements filed after the completion of the Initial Business Combination. We will pay for expenses incurred in filing such registration statements.

Subscription agreement

We granted the underwriters a
45-day
option from the date of the prospectus to purchase up to 7,500,000 additional
Units at the Initial Public Offering price less the underwriting discounts and
commissions. On February 25, 2021, the underwriter fully exercised its
over-allotment option.

Subscribers were entitled to a subscription discount of $0.20 per unit, or
$11.5 million in aggregate, paid upon closing of the IPO. Besides, $0.35 per unit, i.e. approximately $20.1 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred commission will become payable to the underwriters from amounts held in the trust account only in the event that the Company completes a business combination, subject to the terms of the underwriting agreement.

Critical accounting policies

Liabilities related to derivative warrants

We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to FASB ASC
Topic 480 and FASB ASC Topic 815, "Derivatives and Hedging". 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 Public Warrants and the Private Placement Warrants are recognized as
derivative liabilities in accordance with FASB ASC Topic 815. Accordingly, we
recognize the warrant instruments as liabilities at fair value and adjusts 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 our statements of operations. The estimated fair value of the
Public Warrants and Private Placement Warrants are measured at fair value using
a Black-Scholes option pricing model, using directly or indirectly observable
significant inputs from the listed Public Warrants. The determination of the
fair value of the warrant liability may be subject to change as more current
information becomes available, and accordingly the actual results could differ
significantly. Derivative warrant liabilities are classified as
non-current
liabilities, as their liquidation is not reasonably expected to require the use
of current assets or require the creation of current liabilities.

Class A common shares redeemable

We account for our Class A common stock redeemable in accordance with the guidelines of ASC Topic 480 “Distinguishing Liabilities from Equity”. Class A common shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares with redemption rights that are either under the control of the holder or subject to redemption in the event of uncertain events not solely within our control ) are classified as temporary equity. At all other times, Class A common shares are classified as equity. Our Class A common shares have certain redemption rights that are considered beyond our control and subject to the occurrence of uncertain future events. As a result, 575,000,000 redeemable Class A ordinary shares are presented at their redemption value as temporary shareholders’ equity, outside the shareholders’ equity section of our condensed balance sheets.

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.

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Net earnings (loss) per common share

We comply with the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. We have two classes of shares, called Class A common shares and Class B common shares. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the relevant period.

The calculation of diluted net income (loss) does not take into account the effect of the warrants underlying the Units sold in the Initial Public Offering (including the realization of the Over-allotment) and the warrants private placement subscription for the purchase of an aggregate of 25,708,333 Common Shares of Class A shares in the calculation of diluted earnings (loss) per share, because in the calculation of diluted earnings (loss) ) per share, because their exercise depends on future events and their inclusion would be anti-dilutive under the treasury stock method. Therefore, the diluted net earnings (loss) per share is identical to the basic net earnings (loss) per share for the three months ended March 31, 2022 and 2021. The accretion associated with redeemable Class A common shares is excluded from earnings per share as redemption value approximates fair value.

Recent accounting pronouncements

Management does not believe that the recently issued but not yet effective accounting standards, if currently adopted, would have a material impact on the Company’s unaudited summary financial statements.

Off-balance sheet

Sheet layouts

From March 31, 2022 and December 31, 2021we had no off-balance sheet arrangements as defined in Section 303(a)(4)(ii) of Regulation SK.

Employment 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, our unaudited condensed 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 of the
Sarbanes-Oxley Act, (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
PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's
report providing additional information about the audit and the unaudited
condensed 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 principal executive officer's compensation to median employee compensation.
These exemptions will apply for a period of five years following the completion
of our IPO or until we are no longer an "emerging growth company," whichever is
earlier.

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