NOTES TO
CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note
1 — Organization and Business Operations
Organization
and General
New
Vista Acquisition Corp (the “Company”) was incorporated as a Cayman Islands exempted company on December 21, 2020. The Company
was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar
business combination with one or more businesses (the “Business Combination”). The Company has not yet selected any specific
Business Combination target.
The
Company’s sponsor is New Vista Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”).
As
of September 30, 2021, the Company had not commenced any operations. All activity for the period from December 21, 2020 (inception) through
September 30, 2021 relates to the Company’s formation and the initial public offering (“IPO”) described below, and,
since the closing of the IPO, the search for a prospective initial Business Combination. The Company will not generate any operating
revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income
in the form of interest income on cash and marketable securities from the proceeds derived from the IPO and will recognize changes in
the fair value of warrant liability as other income (expense). The Company has selected December 31 as its fiscal year end.
Financing
The
registration statement for the Company’s IPO was declared effective on February 16, 2021 (the “Effective Date”). On
February 19, 2021, the Company consummated the IPO of 27,600,000 units, including the issuance of 3,600,000 units as a result of the
underwriters’ full exercise of their over-allotment option (the “Units” and, with respect to the ordinary shares included
in the Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $276,000,000, which is
discussed in Note 4. Each Unit consisted of one Public Share and one-third of one redeemable warrant (the “Public Warrants”).
Each whole Public Warrant entitles the holder to purchase one Public Share for $11.50 per share, subject to adjustment (see Note 4).
Simultaneously
with the closing of the IPO, the Company consummated a private placement (the “Private Placement”) of 5,680,000 warrants
(the “Private Placement Warrants,” and together with the Public Warrants, the “Warrants”) at a price of $1.50
per Private Placement Warrant to the Sponsor, generating gross proceeds of $8,520,000, which is discussed in Note 5.
Transaction
costs amounted to $15,629,812, consisting of $5,520,000 of underwriting discount, $9,660,000 of deferred underwriting discount, and $449,812
of other offering costs.
Trust
Account
Following
the closing of the IPO on February 19, 2021, $276,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO
and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”), which is invested only
in U.S. government treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and
meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
The proceeds from the IPO and the sale of the Private Placement Warrants will not be released from the Trust Account until the earliest
of (1) the completion of an initial Business Combination; (2) the redemption of any Public Shares properly submitted in connection with
a shareholder vote to amend the Company’s amended and restated memorandum and articles of association (A) to modify the substance
or timing of the Company’s obligation to allow redemption in connection with the initial Business Combination or to redeem 100%
of the Company’s Public Shares if the Company does not complete the initial Business Combination within 24 months from the closing
of the IPO (the “Combination Period”) or (B) with respect to any other provision relating to shareholders’ rights or
pre-initial Business Combination activity; and (3) the redemption of the Company’s Public Shares if the Company has not completed
an initial Business Combination within the Combination Period, subject to applicable law.
Initial
Business Combination
The
Company must complete its initial Business Combination with one or more operating businesses or assets having an aggregate fair market
value of at least 80% of the value of the assets held in the Trust Account (excluding the deferred underwriting commissions) at the time
of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the
post-transaction company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company
Act. There is no assurance that the Company will be able to complete a Business Combination successfully.
The
Company will provide its public shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion
of the initial Business Combination either (i) in connection with a general meeting called to approve the Business Combination or
(ii) without a shareholder vote by means of a tender offer. The decision as to whether the Company will seek shareholder approval
of a proposed Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public shareholders
will be entitled to redeem their shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in
the Trust Account calculated as of two business days prior to the consummation of the initial Business Combination, including interest,
divided by the number of then issued and outstanding Public Shares, subject to the limitations. The amount in the Trust Account is initially
anticipated to be $10.00 per Public Share.
The
Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if
any) are classified as liability instruments and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary
shares 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. At all other times, ordinary shares
are classified as shareholders’ equity. The Company’s ordinary shares subject to possible redemption, which feature certain
redemption rights considered to be outside of the Company’s control and subject to the occurrence of uncertain future events, are
presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.
The Company’s amended and restated memorandum and articles of association provide that in no event will the Company redeem its
Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 upon consummation of the initial Business
Combination and after payment of the deferred underwriting commissions. In such case, the Company will proceed with a Business Combination
if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks
shareholder approval, a majority of then issued and outstanding shares voted are voted in favor of the Business Combination.
The
Company has 24 months from the closing of the IPO to complete the initial Business Combination. However, if the Company is unable to
complete the initial Business Combination within the Combination Period, the Company 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 (less
up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and outstanding Public Shares, which
redemption will completely extinguish public shareholders’ rights as shareholders (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
shareholders and board of directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands
law, to provide for claims of creditors and to comply with the requirements of any other applicable law.
The
initial shareholders, directors and officers have entered into a letter agreement with the Company, pursuant to which they have agreed
to waive: (1) their redemption rights with respect to any founder shares (as described in Note 6) and Public Shares held by them, as
applicable, in connection with the completion of the initial Business Combination; (2) their redemption rights with respect to any founder
shares and Public Shares held by them in connection with a shareholder vote to amend the amended and restated memorandum and articles
of association (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the initial
Business Combination or to redeem 100% of our Public Shares if the Company does not complete the initial Business Combination within
the Combination Period or (B) with respect to any other provision relating to shareholders’ rights or pre-initial business combination
activity; and (3) their rights to liquidating distributions from the Trust Account with respect to any founder shares they hold if the
Company fails to complete the initial Business Combination within the Combination Period (although they will be entitled to liquidating
distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete the initial Business
Combination within the Combination Period). If the Company submits the initial Business Combination to the public shareholders for a vote,
the initial shareholders, directors and officers have agreed to vote any founder shares and Public Shares held by them in favor of the
initial Business Combination.
The
Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s
independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business
with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below
(1) $10.00 per Public Share or (2) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of
the Trust Account due to reductions in the value of the trust assets, except as to any claims by a third party who executed a waiver
of any and all rights to seek access to the Trust Account and except as to any claims under the indemnity of the underwriters of the
IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended, (the “Securities Act”).
Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible
to the extent of any liability for such third-party claims. The Company has not independently verified whether the Sponsor has sufficient
funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets are securities of the Company and, therefore,
the Sponsor may not be able to satisfy those obligations.
Effective
April 12, 2021, the holders of Units may elect to separately trade the Class A ordinary shares and warrants included in the Units. The
Units not separated continue to trade on the NASDAQ Capital Market under the symbol “NVSAU.” The separated Class A ordinary
shares and Warrants trade on the NASDAQ Capital Market under the symbols “NVSA” and “NVSAW,” respectively.
Going
Concern Consideration
As of September 30, 2021, the Company had approximately
$1.1 million in its operating bank account and negative working capital of approximately $0.48 million.
Prior
to the completion of the IPO, the Company’s liquidity needs had been satisfied through a capital contribution from the Sponsor
of $25,000, to cover certain offering costs in return for the founder shares (see Note 6), and the loan under an unsecured promissory
note from the Sponsor of $77,012 (see Note 6). The loan under the promissory note from the Sponsor was paid in full on February 22, 2021.
Subsequent to the consummation of the IPO and Private Placement, the Company’s liquidity needs have been satisfied through the
proceeds from the consummation of the Private Placement not held in the Trust Account.
The
Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination
candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business
to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
The
Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. These conditions raise substantial
doubt about the Company’s ability to continue as a going concern for a period of time within one year after the date that the financial
statements are issued. If the 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, the Company may have insufficient funds available to operate
its business prior to its Business Combination. Moreover, the Company may need to obtain additional financing or draw on the Working
Capital Loans (as defined below) either to complete a Business Combination or because it becomes obligated to redeem a significant number
of the Public Shares upon consummation of our Business Combination, in which case the Company may issue additional securities or incur
debt in connection with such Business Combination. Subject to compliance with applicable securities laws, the Company would only complete
such financing simultaneously with the completion of our Business Combination.
If
the Company is unable to complete the Business Combination because it does not have sufficient funds available, the Company will be forced
to cease operations and liquidate the Trust Account. In addition, following the Business Combination, if cash on hand is insufficient,
the Company may need to obtain additional financing in order to meet its obligations.
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic on the Company’s financial statements and has concluded that while it
is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of operations and/or
search for a target company, the specific impact is not readily determinable as of the date of the financial statements. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Note
2 — Restatement of Previously Issued Financial Statements
In connection with the preparation of the Company’s
financial statements as of September 30, 2021 and in light of recent comment letters issued to several special purpose acquisition companies,
management determined that the Company should restate its previously reported financial statements. The Company previously determined
the Class A ordinary shares subject to possible redemption to be equal to the redemption value of $10.00 per Class A ordinary share while
also taking into consideration the requirement in the Company’s amended and restated memorandum and articles of association that
a redemption cannot result in the Company’s net tangible assets being less than $5,000,001. Upon review of its financial statements
for the period ended September 30, 2021, the Company reevaluated the classification of the Class A ordinary shares and determined that
the Class A ordinary shares issued during the IPO and pursuant to the exercise of the underwriters’ overallotment can be redeemed
or become redeemable subject to the occurrence of future events considered outside the Company’s control under ASC 480-10-S99. Therefore,
the Company concluded that the carrying value should include all Class A ordinary shares subject to possible redemption, resulting in
the Class A ordinary shares subject to possible redemption being classified as temporary equity in their entirety. As a result, management
has noted a reclassification adjustment related to temporary equity and permanent equity. This resulted in an adjustment to the initial
carrying value of the Class A ordinary shares subject to possible redemption with the offset recorded to additional paid-in capital (to
the extent available), accumulated deficit and Class A ordinary shares.
In
connection with the change in presentation for the Class A ordinary shares subject to redemption, the Company also revised its
earnings per share calculation to allocate net income (loss) evenly to Class A and Class B ordinary shares. This presentation
contemplates a Business Combination as the most likely outcome, in which case, both classes of ordinary shares share pro rata in the
net income (loss) of the Company.
In accordance with SEC Staff Accounting
Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial Statements;” the Company evaluated the changes and has determined that
the related impact was material to any previously presented financial statements. Therefore, the Company, in consultation with its Audit
Committee, concluded that its previously issued financial statements as of February 19, 2021, March 31, 2021 and June 30, 2021 should
be restated because of a misapplication in the guidance around complex accounting for financial instruments and should no longer be relied
upon. The Company is reporting the restatements to those periods in this Quarterly Report.
The impact of the restatement on the Company’s
financial statements is reflected in the following table.
Unaudited
Balance Sheet as of February 19, 2021 as adjusted for Temporary Equity related to Public Shares
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary shares subject to possible redemption
|
|
$
|
244,337,930
|
|
|
$
|
31,662,070
|
|
|
$
|
276,000,000
|
|
Ordinary shares Class A, $0.0001 par value
|
|
|
317
|
|
|
|
(317
|
)
|
|
|
-
|
|
Ordinary shares Class B, $0.0001 par value
|
|
|
690
|
|
|
|
-
|
|
|
|
690
|
|
Additional paid-in capital
|
|
|
5,705,322
|
|
|
|
(5,705,322
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(706,327
|
)
|
|
|
(25,956,431
|
)
|
|
|
(26,662,758
|
)
|
Total shareholders’ (deficit) equity
|
|
$
|
5,000,002
|
|
|
$
|
(31,662,070
|
)
|
|
$
|
(26,662,068
|
)
|
Number of shares subject to redemption
|
|
|
24,433,793
|
|
|
|
3,166,207
|
|
|
|
27,600,000
|
|
Unaudited Balance Sheet as of March 31, 2021
as adjusted for Temporary Equity related to Public Shares
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary shares subject to possible redemption
|
|
$
|
243,469,260
|
|
|
$
|
32,530,740
|
|
|
$
|
276,000,000
|
|
Ordinary shares Class A, $0.0001 par value
|
|
|
325
|
|
|
|
(325
|
)
|
|
|
-
|
|
Ordinary shares Class B, $0.0001 par value
|
|
|
690
|
|
|
|
-
|
|
|
|
690
|
|
Additional paid-in capital
|
|
|
6,573,983
|
|
|
|
(6,573,983
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(1,574,996
|
)
|
|
|
(25,956,432
|
)
|
|
|
(27,531,428
|
)
|
Total shareholders’ (deficit) equity
|
|
$
|
5,000,002
|
|
|
$
|
(32,530,740
|
)
|
|
$
|
(27,530,738
|
)
|
Number of shares subject to redemption
|
|
|
24,346,926
|
|
|
|
3,253,074
|
|
|
|
27,600,000
|
|
Unaudited
Statement of Operations For the three ended March 31, 2021 as adjusted for Temporary Equity related to Public Shares
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, ordinary share subject to redemption
|
|
|
10,859,464
|
|
|
|
1,407,203
|
|
|
|
12,266,667
|
|
Basic and diluted weighted average shares outstanding, ordinary share not subject to redemption
|
|
|
7,807,203
|
|
|
|
(1,807,203
|
)
|
|
|
6,000,000
|
|
EPS - Redeemable Shares
|
|
$
|
-
|
|
|
$
|
0.10
|
|
|
$
|
0.10
|
|
EPS - Non-Redeemable Shares
|
|
$
|
(0.20
|
)
|
|
$
|
0.30
|
|
|
$
|
0.10
|
|
Statement of Changes in Shareholders’ (Deficit) Equity for the three months ended March 31, 2021
|
|
As Previously Reported
|
|
|
Restatement
|
|
|
As Restated
|
|
Sale of 27,600,000 Units, net of underwriting discount and offering expenses
|
|
$
|
248,987,291
|
|
|
$
|
(248,987,291
|
)
|
|
$
|
-
|
|
Excess of cash received over fair value of private warrants
|
|
$
|
1,031,967
|
|
|
$
|
(1,031,967
|
)
|
|
$
|
-
|
|
Change in Class A ordinary shares subject to possible redemption”
|
|
$
|
(243,469,260
|
)
|
|
$
|
243,469,260
|
|
|
$
|
-
|
|
Subsequent remeasurement under ASC 480-10-S99 against additional paid-in capital and accumulated deficit
|
|
$
|
-
|
|
|
$
|
(27,012,709
|
)
|
|
$
|
(27,012,709
|
)
|
Statement
of Cash Flows for three months ended March 31, 2021
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Initial value of shares subject to possible redemption
|
|
$
|
244,337,930
|
|
|
$
|
31,662,070
|
|
|
$
|
276,000,000
|
|
Change in value of shares subject to possible redemption
|
|
$
|
(868,670
|
)
|
|
$
|
868,670
|
|
|
$
|
-
|
|
Unaudited Balance Sheet as of June 30, 2021 as
adjusted for Temporary Equity related to Public Shares
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Class A ordinary shares subject to possible redemption
|
|
$
|
246,927,720
|
|
|
$
|
29,072,280
|
|
|
$
|
276,000,000
|
|
Ordinary shares Class A, $0.0001 par value
|
|
|
290
|
|
|
|
(290
|
)
|
|
|
-
|
|
Ordinary shares Class B, $0.0001 par value
|
|
|
690
|
|
|
|
-
|
|
|
|
690
|
|
Additional paid-in capital
|
|
|
3,184,642
|
|
|
|
(3,115,558
|
)
|
|
|
69,084
|
|
Retained earnings (Accumulated deficit)
|
|
|
1,814,384
|
|
|
|
(25,956,432
|
)
|
|
|
(24,142,048
|
)
|
Total shareholders’ (deficit) equity
|
|
$
|
5,000,006
|
|
|
$
|
(29,072,278
|
)
|
|
$
|
(24,072,274
|
)
|
Number of shares subject to redemption
|
|
|
24,692,772
|
|
|
|
2,907,228
|
|
|
|
27,600,000
|
|
Unaudited Statements of Operations For the three
and six months ended June 30, 2021 as adjusted for Temporary Equity related to Public Shares
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Three months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Class A ordinary shares subject to redemption
|
|
|
24,346,926
|
|
|
|
3,253,074
|
|
|
|
27,600 ,000
|
|
Basic and diluted weighted average shares outstanding, Class A ordinary shares not subject to redemption
|
|
|
10,153,074
|
|
|
|
(3,253,074
|
)
|
|
|
6,900,000
|
|
EPS - Redeemable Shares
|
|
$
|
-
|
|
|
$
|
0.10
|
|
|
$
|
0.10
|
|
EPS - Non-Redeemable Shares
|
|
$
|
0.33
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Class A ordinary shares subject to redemption
|
|
|
17,640,453
|
|
|
|
2,335,238
|
|
|
|
19,975,691
|
|
Basic and diluted weighted average shares outstanding, Class A ordinary shares not subject to redemption
|
|
|
8,986,619
|
|
|
|
(2,086,619
|
)
|
|
|
6,900,000
|
|
EPS - Redeemable Shares
|
|
$
|
-
|
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
EPS - Non-Redeemable Shares
|
|
$
|
0.20
|
|
|
$
|
(0.13
|
)
|
|
$
|
0.07
|
|
Statement of Changes In Shareholders’ Equity (Deficit)
for the three months
ended June 30, 2021
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Remeasurement of Class A ordinary shares subject to possible redemption
|
|
$
|
(3,458,425
|
)
|
|
$
|
3,458,425
|
|
|
$
|
-
|
|
Statement
of Cash Flows for six months ended June 30, 2021
|
|
As Previously Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Initial value of shares subject to possible redemption
|
|
$
|
244,337,930
|
|
|
$
|
31,662,070
|
|
|
$
|
276,000,000
|
|
Change in value of shares subject to possible redemption
|
|
$
|
2,589,790
|
|
|
$
|
(2,589,790
|
)
|
|
$
|
-
|
|
Note
3 — Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form
10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial
reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position,
results of operations, or cash flows. In the opinion of management, the unaudited condensed financial statements reflect all adjustments,
which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented.
Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected
through December 31, 2021.
The
accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto
included in the Form 8-K and the final prospectus filed by the Company with the SEC on February 25, 2021 and February 19, 2021, respectively.
Emerging
Growth Company Status
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our
Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory
vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies, but any such election to opt out is irrevocable. The Company has elected not to opt out
of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company that
is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of these unaudited condensed financial statements in conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance
sheet. Actual results could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of September 30, 2021 and December 31, 2020.
Cash
and Marketable Securities held in Trust Account
Investments
held in the Trust Account consist of U.S. Treasury securities. The Company classifies its U.S. Treasury securities as held-to-maturity
in accordance with ASC 320 “Investments - Debt and Equity Securities.” Held-to-maturity securities are those securities which
the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost and
adjusted for the amortization or accretion of premiums or discounts.
A
decline in the market value of held-to-maturity securities below cost that is deemed to be other than temporary, results in an impairment
that reduces the carrying costs to such securities’ fair value. The impairment is charged to earnings and a new cost basis for
the security is established. To determine whether an impairment is other than temporary, the Company considers whether it has the ability
and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment
is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the
severity and the duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the
general market condition in the geographic area or industry the investee operates in.
Premiums
and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective-interest
method. Such amortization and accretion are included in the “Trust interest income” line item in the statements of operations.
Trust interest income is recognized when earned.
Fair
Value Measurements
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
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Level 1,
defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
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Level 2,
defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, such as quoted prices
for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
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●
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Level 3,
defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
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In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
The
fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value
Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet. The fair values of cash and
cash equivalents, prepaid expenses, and accounts payable and accrued expenses are estimated to approximate the carrying values as of
September 30, 2021 due to the short maturities of such instruments.
The
Company’s warrant liability is based on a valuation model utilizing management judgment and pricing inputs from observable and
unobservable markets with less volume and transaction frequency than active markets. Significant deviations from these estimates and
inputs could result in a material change in fair value. See Note 7 for additional information on assets and liabilities measured at fair
value.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution,
which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. At September 30, 2021 and December 31, 2020, the Company
has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Ordinary
Shares Subject to Possible Redemption
The
Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480. Ordinary shares
subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable
ordinary shares (including ordinary shares 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.
At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares feature certain
redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future
events. Accordingly, ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of
the shareholders’ equity 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 Class A ordinary
shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable
Class A ordinary shares are affected by charges against additional paid-in capital and accumulated deficit.
Net Income Per Ordinary Share
Net income per ordinary share is computed by dividing
net income by the weighted average number of ordinary shares outstanding with income allocated pro-rata between the classes. The calculation
of diluted loss per ordinary share excludes the effect of the warrants issued in connection with the Class A ordinary shares since the
warrant shares current market value is below exercise price and would be antidilutive. Accretion associated with the redeemable Class
A ordinary shares is excluded from earnings per share as the redemption value approximates fair value. As a result, diluted income per
ordinary share is the same as basic income per ordinary share.
For the three months ended September 30, 2021
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Class A
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Class B
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Allocation of net income including ordinary shares subject to possible redemption
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|
$
|
2,820,524
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|
|
$
|
705,131
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|
|
|
|
|
|
|
|
|
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Weighted average ordinary shares outstanding
|
|
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27,600,000
|
|
|
|
6,900,000
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Basic and diluted net income per share
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$
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0.10
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|
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$
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0.10
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For the nine months ended September 30, 2021
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Class A
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Class B
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Allocation of net income including ordinary shares subject to possible redemption
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$
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4,118,679
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|
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$
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1,230,424
|
|
|
|
|
|
|
|
|
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Weighted average ordinary shares outstanding
|
|
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22,545,055
|
|
|
|
6,735,165
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Basic and diluted net income per share
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|
$
|
0.18
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|
|
$
|
0.18
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Offering
Costs associated with the Initial Public Offering
The
Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - “Expenses
of Offering.” Offering costs consist principally of professional and registration fees incurred through the balance sheet date
that are related to the IPO. Accordingly, as of February 19, 2021, offering costs of $15,629,812 (consisting of $5,520,000 of underwriting
commissions, $9,660,000 of deferred underwriters’ commission, and $449,812 other cash offering costs) have been incurred. Offering
costs were allocated to the separable financial instruments issued in the IPO based on a relative fair value basis compared to total
proceeds received. Offering costs associated with warrant liability were expensed, and offering costs associated with the Class A ordinary
shares were charged to shareholders’ equity. Accordingly, $683,306 of offering costs associated with warrant liability were expensed
in the statement of operations for the nine months ended September 30, 2021.
Derivative
Financial Instruments
The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded
derivatives in accordance with ASC Topic 815, “Derivatives and Hedging.” Derivative instruments are recorded at fair value
on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative
assets and liabilities are classified on the balance sheet as current or non-current based on whether or not net-cash settlement or conversion
of the instrument could be required within 12 months of the balance sheet date. The Company has determined the Warrants are a derivative
instrument.
ASC
470-20, “Debt with Conversion and Other Options” addresses the allocation of proceeds from the issuance of convertible debt
into its equity and debt components. The Company applies this guidance to allocate IPO proceeds from the Units between Class A ordinary
shares and Warrants, using the residual method by allocating IPO proceeds first to fair value of the Warrants and then the Class A ordinary
shares.
Income
Taxes
The
Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition
of deferred tax assets and liabilities for both the expected impact of differences between the unaudited condensed financial statement
and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards.
ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred
tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty
in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process
for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits
to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides
guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on
the Company’s evaluation, there are no significant uncertain tax positions requiring recognition in the Company’s financial
statements. Since the Company was incorporated on December 21, 2020, the 2020 tax period will be the only period subject to examination.
The
Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of September 30, 2021 and December 31, 2020. The Company is currently
not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The
Company is considered a Cayman Islands exempted company and is presently not subject to income taxes or income tax filing requirements
in the Cayman Islands or the United States.
Recent
Accounting Pronouncements
In August 2020, the Financial Accounting Standards
Board issued Accounting Standards Update (“ASU”) 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) (“ASU 2020-06”) to simplify accounting
for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash
conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification
of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding
instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance,
including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 and
should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is
currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Management
does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect
on the Company’s unaudited condensed financial statement.
Note
4 — Initial Public Offering
Pursuant
to the IPO, the Company sold 27,600,000 Units, including 3,600,000 Units as a result of the underwriters’ full exercise of the
over-allotment option, at a price of $10.00 per Unit. Each Unit consists of one Class A ordinary share and one-third of one redeemable
Warrant. Each whole Warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment.
The Warrants will become exercisable on the later of 30 days after the completion of the initial Business Combination or 12 months from
the closing of the IPO and will expire five years after the completion of the initial Business Combination or earlier upon redemption
or liquidation.
Following the closing of the IPO on February 19,
2021, $276,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement Warrants
was placed in a Trust Account, which is invested only in U.S. government treasury bills with a maturity of 185 days or less or in money
market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act.
All of the 27,600,000 Class A ordinary
shares sold as part of the Units in the IPO contain a redemption feature which allows for the redemption of such Public Shares in connection
with the Company’s liquidation, if there is a shareholder vote or tender offer in connection with the Business Combination and in
connection with certain amendments to the Company’s amended and restated memorandum and articles of association. In accordance with
SEC staff guidance on redeemable equity instruments, which have been codified in ASC 480-10-S99, redemption provisions not solely within
the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Given that the Class
A ordinary shares were issued with other freestanding instruments (i.e., public warrants), the initial carrying value of the Class A ordinary
shares classified as temporary equity are the allocated proceeds based on the guidance in ASC 470-20.
The Class A ordinary
shares are subject to SEC staff guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99. If it is probable
that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the
period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the
earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying
amount of the instrument to equal the redemption value at the end of each reporting period. 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 at the end
of each reporting period. Immediately upon the closing of the IPO, the Company recognized the accretion from initial book value to redemption
amount value. The change in the carrying value of redeemable Class A ordinary shares resulted in charges against additional paid-in capital
and accumulated deficit.
As of September 30, 2021, the Class A ordinary
shares reflected on the balance sheet are reconciled in the following table:
Gross
proceeds from public issuance
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$
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276,000,000
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Less:
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Proceeds
allocated to public warrants
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(12,066,203
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)
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Class
A ordinary shares issuance costs
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(14,946,506
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)
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Plus:
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Accretion
of carrying value to redemption value
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27,012,709
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Contingently
redeemable Class A ordinary shares
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$
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276,000,000
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Public
Warrants
Each
whole Warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment as discussed
herein. In addition, if (x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in
connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per ordinary
share (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any
such issuance to the Sponsor or its affiliates, without taking into account any founder shares held by the Sponsor or such affiliates,
as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent
more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the
date of the completion of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of
the Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates
the initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the Warrants
will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $10.00 per
share redemption trigger price described below under “Redemption of warrants when the price per Class A ordinary share equals or
exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price,
and the $18.00 per share redemption trigger price described below under “Redemption of warrants when the price per Class A ordinary
share equals or exceeds $18.00” and “Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00”
will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The
Warrants will become exercisable on the later of 12 months from the closing of the IPO or 30 days after the completion of its initial
Business Combination and will expire five years after the completion of the Company’s initial Business Combination, at 5:00 p.m.,
New York City time, or earlier upon redemption or liquidation.
The
Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of the initial Business
Combination, the Company will use commercially reasonable efforts to file with the SEC a registration statement covering the issuance,
under the Securities Act, of the Class A ordinary shares issuable upon exercise of the Warrants, and the Company will use commercially
reasonable efforts to cause the same to become effective within 60 business days after the closing of the initial Business Combination
and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of
the Warrants in accordance with the provisions of the Warrant Agreement. Notwithstanding the above, if the Class A ordinary shares are,
at the time of any exercise of a Warrant, not listed on a national securities exchange such that they satisfy the definition of a “covered
security” under Section 18(b)(1) of the Securities Act, the Company may, at the Company’s option, require holders of Public
Warrants who exercise their Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities
Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement,
but will use commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption
is not available. In such event, each holder would pay the exercise price by surrendering the Warrants for that number of Class A ordinary
shares equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying
the Warrants, multiplied by the excess of the “fair market value” (defined below) less the exercise price of the Warrants
by (y) the fair market value and (B) 0.361. The “fair market value” as used in the preceding sentence shall mean the volume
weighted average price of the Class A ordinary shares for the 10 trading days immediately following the date on which the notice of exercise
is received by the warrant agent.
Redemption
of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $18.00
Once
the Warrants become exercisable, the Company may redeem the outstanding Warrants (except as described herein with respect to the Private
Placement Warrants):
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in
whole and not in part;
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●
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at
a price of $0.01 per Warrant;
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●
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upon
not less than 30 days’ prior written notice of redemption to each Warrant holder; and
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●
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if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share for any 20 trading days within any 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the Warrant holders.
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Redemption
of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $10.00
Once
the Warrants become exercisable, the Company may redeem the outstanding Warrants:
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●
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in
whole and not in part;
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●
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at
$0.10 per Warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise
their Warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the “fair
market value” of Class A ordinary shares;
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●
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if,
and only if, the closing price of the Class A ordinary shares equals or exceeds $10.00 per Public Share on the trading day prior
to the date on which the Company sends the notice of redemption to the Warrant holders; and
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●
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if the closing price of the Class A ordinary shares for any 20 trading days within any 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the Warrant holders is less than $18.00 per share, then the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.
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Note
5 — Private Placement
Simultaneously
with the closing of the IPO, the Sponsor purchased an aggregate of 5,680,000 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant, for an aggregate purchase price of $8,520,000, in a private placement. The proceeds from the Private Placement Warrants
were added to the proceeds from the IPO held in the Trust Account. The excess amount of the purchase price over the fair value of the
Private Placement Warrants of $7,488,033 was charged to the shareholders’ equity, and thus $1,031,967 was recorded into additional
paid-in capital.
The
Private Placement Warrants (including the Class A ordinary shares issuable upon exercise of the Private Placement Warrants) will not
be transferable, assignable or salable until 30 days after the completion of the initial Business Combination and they will not be redeemable
by the Company (except as described above in Note 4, “Redemption of Warrants when the price per Class A ordinary share equals or
exceeds $10.00”) so long as they are held by the Sponsor or its permitted transferees. The Sponsor, or its permitted transferees,
have the option to exercise the Private Placement Warrants on a cashless basis and have certain registration rights. Otherwise, the Private
Placement Warrants have terms and provisions that are identical to those of the Public Warrants. If the Private Placement Warrants are
held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company
in all redemption scenarios and exercisable by the holders on the same basis as the Public Warrants. If the Company does not complete
the initial Business Combination within the Combination Period, the proceeds of the sale of the Private Placement Warrants held in the
Trust Account will be used to fund the redemption of the Public Shares, and the Private Placement Warrants will expire worthless.
Note
6 — Related Party Transactions
Founder
Shares
In
December 2020, the Sponsor paid $25,000, or approximately $0.004 per share, to cover certain offering costs in consideration for 5,750,000
Class B ordinary shares, par value $0.0001. Up to 750,000 founder shares were subject to forfeiture by the Sponsor depending on the extent
to which the underwriters’ over-allotment option was exercised. On February 16, 2021, the Company effected a 1:1.2 stock split
of the Class B ordinary shares, resulting an aggregate of 6,900,000 founder shares outstanding. Up to 900,000 founder shares were subject
to forfeiture by the Sponsor depending on the extent to which the underwriters’ over-allotment option was exercised. In connection
with the underwriters’ full exercise of their over-allotment option on February 19, 2021, the 900,000 shares were no longer subject
to forfeiture.
The
initial shareholders, directors and officers have entered into a letter agreement with the Company, pursuant to which they have agreed
to waive: (1) their redemption rights with respect to any founder shares (as described in Note 6) and Public Shares held by them, as
applicable, in connection with the completion of the initial Business Combination; (2) their redemption rights with respect to any founder
shares and Public Shares held by them in connection with a shareholder vote to amend the amended and restated memorandum and articles
of association (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the initial
Business Combination or to redeem 100% of the Company’s Public Shares if the Company does not complete the initial Business Combination
within the Combination Period or (B) with respect to any other provision relating to shareholders’ rights or pre-initial Business
Combination activity; and (3) their rights to liquidating distributions from the Trust Account with respect to any founder shares they
hold if the Company fails to complete the initial Business Combination within the Combination Period (although they will be entitled
to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete the
initial Business Combination within the Combination Period). If the Company submits the initial Business Combination to the public shareholders
for a vote, the initial shareholders, directors and officers have agreed to vote any founder shares and Public Shares held by them in
favor of the initial Business Combination.
With
certain limited exceptions, the founder shares will not be transferable, assignable or salable by the initial shareholders until the
earlier of: (1) one year after the completion of the initial Business Combination; and (2) subsequent to the initial Business Combination
(x) if the last reported sale price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions,
share dividends, rights issuances, 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 (y) the date on which the Company completes a liquidation,
merger, share exchange, reorganization or other similar transaction that results in all of the public shareholders having the right to
exchange their ordinary shares for cash, securities or other property.
Promissory
Note — Related Party
On
December 28, 2020, the Sponsor agreed to loan the Company up to $300,000 to be used for a portion of the expenses of the IPO. These loans
are non-interest bearing, unsecured and were paid in full on February 22, 2021.
Related
Party Loans
In
addition, in order to finance transaction costs in connection with an intended Business Combination, the Sponsor or an affiliate of the
Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required
(“Working Capital Loans”). If the Company completes the initial Business Combination, the Company would repay the Working
Capital Loans. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital
held outside the Trust Account to repay the Working Capital Loans, but no proceeds from the Trust Account would be used to repay the
Working Capital Loans. Up to $1,500,000 of such Working Capital Loans may be convertible into warrants at a price of $1.50 per warrant
at the option of the lender. Such warrants would be identical to the Private Placement Warrants. As of September 30, 2021 and December
31, 2020, the Company had no borrowings under the Working Capital Loans.
Administrative
Service Fee
Commencing
on the date the securities of the Company were first listed on The Nasdaq Stock Market LLC, the Company paid the Sponsor $10,000 per
month for office space, utilities, administrative and support services. Upon completion of the initial Business Combination or the Company’s
liquidation, the Company will cease paying these monthly fees. During the three and nine months ended September 30, 2021, the Company
recorded $30,000 and $80,000 of administrative service fees, respectively.
Note
7 — Recurring Fair Value Measurements
Marketable
Securities Held in Trust Account
As of September 30, 2021, investment in the Company’s
Trust Account consisted of $392 in U.S. Money Market and $276,027,287 in U.S. Treasury Securities. The Company classifies its U.S. Treasury
Securities as held-to-maturity in accordance with ASC 320 “Investments — Debt and Equity Securities.” Held-to-maturity
treasury securities are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts. The Company
considers all investments with original maturities of more than three months but less than one year to be short-term investments. The
carrying value approximates the fair value due to its short-term maturity. The carrying value, excluding gross unrealized holding loss
and fair value of held to maturity securities on September 30, 2021 are as follows:
|
|
Carrying
Value/Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair Value
as of
September 30,
2021
|
|
U.S. Money Market
|
|
$
|
392
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
392
|
|
U.S. Treasury Securities
|
|
|
276,027,287
|
|
|
|
-
|
|
|
|
(3,267
|
)
|
|
|
276,024,021
|
|
|
|
$
|
276,027,679
|
|
|
$
|
-
|
|
|
$
|
(3,267
|
)
|
|
$
|
276,024,413
|
|
Warrant
Liability
At
September 30, 2021, the Company’s warrant liability was valued at $10,496,171. Under the guidance in ASC 815-40 the Warrants do
not meet the criteria for equity treatment. As such, the Warrants must be recorded on the balance sheet at fair value. This valuation
is subject to re-measurement at each balance sheet date. With each re-measurement, the warrant valuation will be adjusted to fair value,
with the change in fair value recognized in the Company’s statements of operations.
Initial
Measurement – Public Warrants
The
estimated fair value of the Public Warrants on February 19, 2021 was determined using Level 3 inputs. Inherent in a Monte-Carlo
simulation model are assumptions related to expected share-price volatility (pre-merger and post-merger), expected term, dividend
yield and risk-free interest rate. The Company estimated the volatility of its ordinary shares based on management’s understanding
of the volatility associated with instruments of other similar entities. The risk-free interest rate is based on the U.S. Treasury Constant
Maturity similar to the expected remaining life of the warrants. The expected life of the warrants is simulated based on management assumptions
regarding the timing and likelihood of completing a business combination. The dividend rate is based on the historical rate, which the
Company anticipates to remain at zero. The assumptions used in calculating the estimated fair values represent the Company’s best
estimate. However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially
different.
Subsequent
Measurement — Public Warrants
The fair value of the Public Warrants on September
30, 2021 was classified as Level 1 due to the use of an observable market quote in an active market. Effective April 12, 2021, the Public
Warrants began trading separately. As of September 30, 2021, the aggregate value of Public Warrants was $6,440,000.
Initial
Measurement and Subsequent Measurement – Private Placement Warrants
The
estimated fair value of the Private Placement Warrants on February 19, 2021 and September 30, 2021 was determined using Level 3
inputs. Inherent in a Monte-Carlo simulation model are assumptions related to expected share-price volatility (pre-merger and
post-merger), expected term, dividend yield and risk-free interest rate. The Company estimates the volatility of its ordinary shares
based on management’s understanding of the volatility associated with instruments of other similar entities. The risk-free interest
rate is based on the U.S. Treasury Constant Maturity similar to the expected remaining life of the warrants. The expected life of the
warrants is simulated based on management assumptions regarding the timing and likelihood of completing a business combination. The dividend
rate is based on the historical rate, which the Company anticipates to remain at zero. The assumptions used in calculating the estimated
fair values represent the Company’s best estimate. However, inherent uncertainties are involved. If factors or assumptions change,
the estimated fair values could be materially different.
The
key inputs for the warrants were as follows:
Input
|
|
September 30,
2021
|
|
|
February 19,
2021
|
|
Expected term (years)
|
|
|
6.0
|
|
|
|
5.8
|
|
Expected volatility
|
|
|
12.7
|
%
|
|
|
24.1
|
%
|
Risk-free interest rate
|
|
|
1.2
|
%
|
|
|
0.7
|
%
|
Ordinary share price
|
|
$
|
9.75
|
|
|
$
|
9.56
|
|
The
following table sets forth a summary of the changes in the Level 3 fair value of warrants for the nine months ended September 30, 2021:
|
|
Warrant
Liability
|
|
Fair
value as of December 31, 2020
|
|
$
|
-
|
|
Initial
fair value of warrant liability upon issuance at IPO
|
|
|
19,554,236
|
|
Revaluation
of warrant liability included in other expense
|
|
|
(9,058,065
|
)
|
Transfer
of Public Warrants to Level 1
|
|
|
(6,440,000
|
)
|
Fair
value as of September 30, 2021
|
|
$
|
4,056,171
|
|
Recurring
Fair Value Measurements
The
following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring
basis as of September 30, 2021 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such
fair value.
|
|
September 30,
|
|
|
Quoted
Prices In
Active
Markets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Other
Unobservable
Inputs
|
|
|
|
2021
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Money Market held in Trust Account
|
|
|
392
|
|
|
|
392
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Securities held in Trust Account
|
|
$
|
276,027,287
|
|
|
$
|
276,027,287
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
276,027,679
|
|
|
$
|
276,027,679
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public Warrants
|
|
$
|
6,440,000
|
|
|
$
|
6,440,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Private Warrants
|
|
|
4,056,171
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,056,171
|
|
Warrant Liability
|
|
$
|
10,496,171
|
|
|
$
|
6,440,000
|
|
|
$
|
-
|
|
|
$
|
4,056,171
|
|
Note
8 — Commitments and Contingencies
Registration
Rights
The
holders of the founder shares, Private Placement Warrants and any warrants that may be issued on conversion of Working Capital Loans
(and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the
Working Capital Loans and upon conversion of the founder shares) will be entitled to registration rights pursuant to a registration rights
agreement signed on February 16, 2021, requiring the Company to register such securities for resale (in the case of the founder shares,
only after conversion to the Class A ordinary shares). The holders of these securities will be entitled to make up to three demands,
excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination and
rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act.
Underwriting
Agreement
The
Company granted the underwriters a 45-day option from February 16, 2021 to purchase up to an additional 3,600,000 units to cover over-allotments.
On February 19, 2021, the underwriters fully exercised the over-allotment option.
On
February 19, 2021, the Company paid a fixed underwriting discount of $5,520,000. Additionally, the underwriters will be entitled to a
deferred underwriting discount of 3.5% of the gross proceeds of the IPO held in the Trust Account, or $9,660,000, upon the completion
of the Company’s initial Business Combination.
Note
9 — Shareholders’ Equity and Redeemable Ordinary Shares
Preference
shares— The Company is authorized to issue 5,000,000 preference shares with a par value of $0.0001 and with such designations,
voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September
30, 2021 and December 31, 2020, there were no preference shares issued or outstanding.
Class A Ordinary Shares— The
Company is authorized to issue 500,000,000 Class A ordinary shares with a par value of $0.0001 per share. As of September 30, 2021 and
December 31, 2020, there were 27,600,000 and zero shares issued and outstanding and are subject to possible redemption, respectively.
The Company classified the Class A ordinary shares subject to redemption as temporary equity as the event of the consummation of the Company’s
initial Business Combination is not solely within the control of the Company.
Class
B Ordinary Shares— The Company is authorized to issue 50,000,000 Class B ordinary shares with a par value of $0.0001 per
share. Holders are entitled to one vote for each share of Class B ordinary shares. In December 2020, the Sponsor paid $25,000, or approximately
$0.004 per share, to cover certain offering costs in consideration for 5,750,000 Class B ordinary shares, par value $0.0001. Up to 750,000
founder shares were subject to forfeiture by the Sponsor depending on the extent to which the underwriters’ over-allotment option
was exercised. On February 16, 2021, the Company effected a 1:1.2 stock split of the Class B ordinary shares, resulting an aggregate
of 6,900,000 founder shares outstanding as of February 19, 2021. Up to 900,000 founder shares were subject to forfeiture by the Sponsor
depending on the extent to which the underwriters’ over-allotment option was exercised. In connection with the underwriters’
full exercise of their over-allotment option on February 19, 2021, the 900,000 shares are no longer subject to forfeiture. At September
30, 2021 and December 31, 2020, there were 6,900,000 Class B ordinary shares issued and outstanding.
Holders
of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class, with each share entitling the
holder to one vote.
The
Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination, or earlier
at the option of the holder, on a one-for-one basis, subject to adjustment for share sub-divisions, share dividends, rights issuances,
reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class
A ordinary shares, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the IPO and related to
the closing of the initial Business Combination, the ratio at which the Class B ordinary shares will convert into Class A ordinary shares
will be adjusted (unless the holders of a majority of the issued and outstanding Class B ordinary shares agree to waive such anti-dilution
adjustment with respect to any such issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion
of all Class B ordinary shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of all ordinary shares issued and
outstanding upon the completion of the IPO plus all Class A ordinary shares and equity-linked securities issued or deemed issued in connection
with the initial Business Combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the
initial Business Combination. The term “equity-linked securities” refers to any debt or equity securities that are convertible,
exercisable or exchangeable for the Class A ordinary shares issued in a financing transaction in connection with the initial Business
Combination, including but not limited to a private placement of equity or debt.
Share-based
Compensation— As of September 30, 2021, the Sponsor had entered into Restricted Profits Interest Award Agreements (the “Awards”)
with 33 participants. The Awards are subject to a distribution threshold and vest over equal monthly installments. The Sponsor granted
401,250 share options in exchange for services provided by these participants for the benefit of the Company. Upon a change in control,
these units become fully vested.
For
the Awards granted during 2021, the weighted average fair value per unit was estimated to be $3.31. The fair value of share-based payment
awards was estimated using the Black-Scholes option model with a volatility figure derived from the Company’s ordinary shares.
The Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla”
options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S.
Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.
In
applying the Black-Scholes option pricing model, the Company used the following assumptions during the nine months ended September 30,
2021:
Risk-free interest rate
|
0.14% - 0.27%
|
Expected term (years)
|
2.00
|
Expected volatility
|
12.7% - 22.1%
|
Expected dividends
|
0.00
|
The
share-based compensation expense related to option grants was $129,619 and $198,703 during the three and nine months ended
September 30, 2021, respectively.
Note
10 — Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed
financial statements were issued. The Company did not identify any subsequent events that would have required adjustment or disclosure
in the unaudited condensed financial statements.