Overview
We are a blank check company incorporated on August 10, 2020 for the purpose of
effecting a merger, share exchange, asset acquisition, share purchase,
reorganization or similar business combination with one or more businesses or
entities. We have not selected any business combination target and we have not,
nor has anyone on our behalf, initiated any substantive discussions, directly or
indirectly, with any business combination target. We intend to effectuate our
initial business combination using cash from the proceeds of our offering and
the sale of the private placement warrants, our shares, debt or a combination of
cash, equity and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception to September 30, 2021 were organizational
activities, those necessary to prepare for the initial public offering,
described below, and, after the initial public offering, 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
non-operating 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 in connection with completing a business
combination.
As a result of the restatement described in Note 2 of the notes to the financial
statements included herein, we classify the warrants issued in connection with
our Initial Public Offering as liabilities at their fair value and adjust the
warrant instrument to fair value at each reporting period. This liability is
subject to re-measurement at each balance sheet date until exercised, and any
change in fair value is recognized in our statement of operations.
For the nine months ended September 30, 2021, we had a net income of $5,006,392,
which consisted of general and administrative expenses of $1,617,391 offset by a
reimbursement for consulting fees of $450,000 classified as a reduction in
general and administrative expenses, the change in the fair value of the warrant
liability of $6,091,500 and interest earned on investment held in the trust
account of $82,283.
For the three months ended September 30, 2021, we had net income of $4,390,529,
which consisted of general and administrative expenses of $241,366 offset by a
reimbursement for consulting fees of $450,000 classified as a reduction in
general and administrative expenses, the change in the fair value of the warrant
liability of $4,166,100 and interest earned on investment held in the trust
account of $15,795.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, as described below, our
only source of liquidity was an initial purchase of ordinary shares by the
Sponsor and loans from our Sponsor.
On January 6, 2021, the registration statement for the Company's Initial Public
Offering was declared effective. On January 11, 2021, the Company consummated
the initial public offering of 34,500,000 units and, with respect to the class A
common stock included in the Units sold, the Public Shares, which included the
exercise in full by the underwriters of their overallotment option in the amount
of 4,500,000 Units, at $10 per unit, generating gross proceeds of $345,000,000.
Simultaneously with the closing of the Initial Public Offering, the Company
sold, in a private placement, 900,000 Private Placement Units to the Sponsor at
a price of $10.00 per Private Placement Unit, generating total proceeds of
$9,000,000.
Transaction costs amounted to $19,586,126, consisting of $6,900,000 in cash
underwriting fees, $12,075,000 of deferred underwriting fees, and $611,126 of
other offering costs. Transactions costs amounting to $635,321 were allocated to
the warrant liability and are recorded in general and administrative expenses in
the Statement of Operations for the nine months ended September 30, 2021. In
addition, cash of $2,075,000 was held outside of the Trust Account (as defined
below) and is available for the payment of offering costs and for working
capital purposes. At September 30, 2021, cash of $853,220 was available to fund
future operating costs.
23
Table of Contents
Following the closing of the Initial Public Offering on January 11, 2021, an
amount of $345,000,000 from the net proceeds of the sale of the Units in the
Initial Public Offering and the sale of the Private Placement Units was placed
in a Trust Account located in the United States at Morgan Stanley with
Continental Stock Transfer & Trust Company acting as trustee, and invested only
in 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 in any
open-ended investment company that holds itself out as a money market fund
selected by the Company meeting certain conditions of Rule 2a-7 of the
Investment Company Act, as determined by the Company, until the earlier of:
(i) the completion of a Business Combination and (ii) the distribution of the
funds held in the Trust Account.
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 in-depth 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 initial 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 completion of
our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance 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 off-balance sheet
arrangements. We have not entered into any off-balance sheet financing
arrangements, established any special purpose entities, guaranteed any debt or
commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the Sponsor
a monthly fee of $10,000 for office space, administrative and support services,
provided to the Company upon completion of our initial public offering.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Warrant Liability
We account for the warrants issued in connection with our initial public
offering in accordance with the guidance contained in ASC 815-40 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 re-measurement at each balance sheet date until
exercised, and any change in fair value is recognized in our statement of
operations. The initial fair value of the public warrants was estimated using
the closing public market price and the Modified Black Scholes Model for the
private placement warrants.
24
Table of Contents
Class A Ordinary Shares Subject to Possible Redemption
All of the 34,500,000 Class A common stock sold as part of the Units in the
Initial Public Offering contain a redemption feature which allows for the
redemption of such Public Shares in connection with the Company's liquidation,
if there is a stockholder vote or tender offer in connection with the Business
Combination and in connection with certain amendments to the Company's amended
and restated certificate of incorporation. In accordance with ASC 480,
conditionally redeemable Class A common stock (including shares of 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 the Company's control) are classified as temporary equity.
Ordinary liquidation events, which involve the redemption and liquidation of all
the entity's equity instruments, are excluded from the provisions of ASC 480.
Although the Company did not specify a maximum redemption threshold, its charter
provides that currently, the Company will not redeem its public shares in an
amount that would cause its net tangible assets to be less than $5,000,001.
However, the threshold in its charter would not change the nature of the
underlying shares as redeemable and thus public shares would be required to be
disclosed outside of permanent equity. Accordingly, 34,500,000 shares of Class A
common stock subject to possible redemption at the redemption amount were
presented at redemption value as temporary equity, outside of the stockholders'
deficit section of the Company's balance sheet.
The Company recognizes changes in redemption value immediately as they occur and
adjusts the carrying value of redeemable ordinary shares to equal the redemption
value ($10.00 per share) at the end of each reporting period. Such changes are
reflected in additional paid-in capital, or in the absence of additional
capital, in accumulated deficit.
Net Loss per Common Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share". Net income per common share is computed by dividing net
loss by the weighted average number of common shares outstanding during the
period as calculated using the two-class method. At September 30, 2021, we had
outstanding warrants to purchase up to 7,080,000 Class A common shares. The
weighted average of these shares was excluded from the calculation of diluted
net loss per common share since the exercise of the warrants is contingent upon
the occurrence of future events. Earnings and losses are shared pro rata between
the two classes of common shares.
Recent Accounting Standards
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
© Edgar Online, source Glimpses