NOTES
TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE
1. |
DESCRIPTION
OF ORGANIZATION AND BUSINESS OPERATIONS AND GOING CONCERN |
Rigel
Resource Acquisition Corp. (the “Company”) was incorporated in the Cayman Islands on April 6, 2021. The Company was incorporated
for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more businesses (the “Business Combination”). The Company is not limited to a particular industry or sector for
purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company
is subject to all of the risks associated with early stage and emerging growth companies.
All
activity for the period from April 6, 2021 (inception) through September 30, 2022 relates to the Company’s formation, the initial
public offering (“Initial Public Offering”), which is described below, and the search for a target company. 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 from the proceeds derived from the Initial Public Offering. The Company
has selected December 31 as its fiscal year end.
On
November 9, 2021, the Company consummated the Initial Public Offering of 27,500,000 units (“Units” and, with respect to the
ordinary shares included in the Units being offered, the “Public Shares”), generating gross proceeds of $275,000,000, which
is described in Note 3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private sale (the “Private Placement”) of
an aggregate of 14,000,000 warrants
(the “Private Placement Warrants”) - 11,300,000
to Rigel Resource Acquisition Holding LLC (the “Sponsor”), 100,000
to Nathanael Abebe, 35,000
to Christine Coignard, 25,000
to Kelvin Dushnisky, 200,000
to L. Peter O’Hagan and 2,340,000
to Orion Mine Finance GP III LP (“Orion GP”) - at a purchase price of $1.00 per
Private Placement Warrant, generating gross proceeds to the Company in the amount of $14,000,000,
which is described in Note 4.
On
November 9, 2021, the underwriter purchased an additional 2,500,000 Units pursuant to a partial exercise of the over-allotment option.
The Units were sold at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $25,000,000. Since
the underwriter did not exercise the remainder of the over-allotment option, the Sponsor forfeited 406,250 Founder Shares upon the expiration
of the over-allotment option in December 2021.
As
of November 9, 2021, transaction costs amounted to $17,585,547 consisting of $6,000,000 of underwriting fees in cash, $10,500,000 of
deferred underwriting fees payable (which are held in a trust account with Continental Stock Transfer & Trust Company acting as trustee
(the “Trust Account”)) and $1,085,547 of costs related to the Initial Public Offering. Cash of $156,104 was held outside
of the Trust Account on September 30, 2022 and was available for working capital purposes. As described in Note 6, the $10,500,000 deferred
underwriting fees are contingent upon the consummation of the Business Combination by May 9, 2023 or November 9, 2023 if an extension option is elected.
Following
the closing of the Initial Public Offering on November 9, 2021, an amount of $306,000,000 ($10.20 per Unit) from the net proceeds of
the sale of the Units in the Initial Public Offering and the Private Placement was placed in Trust Account which may be invested in U.S.
government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (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 the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the
earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account, as described below.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public
Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied
generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business
Combination successfully. The Company must complete one or more initial Business Combinations with one or more operating businesses
or assets with a fair market value equal to at least 80% of the value of the net assets held in the Trust Account (as defined
above) (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account). The Company
will only complete a Business Combination if the post transaction company owns or acquires 50% or more of the outstanding voting
securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required
to register as an investment company under the Investment Company Act of 1940, as amended.
The
Company will provide the holders of the outstanding Public Shares (the “Public Shareholders”) with the opportunity to redeem
all or a portion of their Public Shares either (i) in connection with a general meeting called to approve the Business Combination or
(ii) by means of a tender offer in connection with the Business Combination. The decision as to whether the Company will seek shareholder
approval for a Business Combination or conduct a tender offer will be made by the Company. The Public Shareholders will be entitled to
redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.20 per Public Share, and such
amount will be increased by $0.10 per public share for any three-month extension of our time to consummate our initial business combination,
as described herein, plus any pro rata interest then in the Trust Account, net of taxes payable). There will be no redemption rights
upon the completion of a Business Combination with respect to the Company’s warrants. The Public Shares subject to redemption will
be recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance
with the Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
If
the Company seeks shareholder approval of the Business Combination, the Company will proceed with a Business Combination only if the
Company receives an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote
of a majority of the shareholders who attend and vote at a general meeting of the Company, or such other vote as required by law or stock
exchange rule. If a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or other
legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions
pursuant to the tender offer rules of the Securities and Exchange Commission (the “SEC”), and file tender offer documents
containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination.
If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares
(as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination.
Additionally, each Public Shareholder may elect to redeem their Public Shares, without voting, and if they do vote, irrespective of whether
they vote for or against a proposed Business Combination. Additionally, each Public Shareholder may elect to redeem their Public Shares
without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.
Notwithstanding
the foregoing, if the Company seeks shareholder approval of the Business Combination and the Company does not conduct redemptions pursuant
to the tender offer rules, a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder
is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public
Shares without the Company’s prior written consent.
The
holders of the Founder Shares have agreed (a) to waive their redemption rights with respect to any Founder Shares and Public Shares held
by them in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Memorandum
and Articles of Association (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection
with the Company’s initial Business Combination or to redeem 100% of the Public Shares if the Company does not complete a Business
Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to shareholders’
rights or pre-initial business combination activity, unless the Company provides the Public Shareholders with the opportunity to redeem
their Public Shares upon approval of any such amendment.
If
the Company has not completed a Business Combination within 18 months (or up to 24 months, if applicable) from the closing of the Initial
Public Offering (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 100% of the Public Shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned and not previously
released to us to pay our taxes, if any (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 the rights of the Public Shareholders 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 Company’s remaining Public Shareholders and its 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 the requirements
of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants,
which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
The
holders of the Founder Shares have agreed to waive the rights to liquidating distributions from the Trust Account with respect to the
Founder Shares they will receive if the Company fails to complete a Business Combination within the Combination Period. However, if the
Sponsor or any of its respective affiliates acquire Public Shares, such Public Shares will be entitled to liquidating distributions from
the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriter has agreed to
waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not
complete a Business Combination within the Combination Period, and in such event, such amounts will be included with the other funds
held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is
possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price
per Unit ($10.20 or $10.30 or $10.40 in case of one or both extensions of the time period to complete our initial business combination
have been effectuated).
In
order to protect the amounts held in the Trust Account, 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 the lesser of (1) $10.20 per Public Share following the closing of the Initial Public
Offering, $10.30 per public share after 18 months from the closing of the Initial Public Offering, or $10.40 per public share after 21
months from the closing of the Initial Public Offering, as applicable; and (2) the actual amount per Public Share held in the Trust Account
as of the date of the liquidation of the Trust Account, if less than $10.20 per Public Share, due to reductions in the value of trust
assets, in each case net of the interest that may be withdrawn to pay taxes. This liability will not apply to any claims by a third party
who executed a waiver of any and all rights to seek access to the Trust Account and as to any claims under the Company’s indemnity
of the underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933,
as amended (the “Securities Act”). 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 will seek to reduce the possibility
that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers
(other than the Company’s independent registered public accounting firm), prospective target businesses or other entities with
which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to
monies held in the Trust Account.
Going
Concern Considerations
The
Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. In addition, the Company
currently has less than 12 months from the date these financial statements were issued to complete a business combination transaction.
If the Company is unsuccessful in consummating an initial business combination within 18 months from the closing of the IPO (May 9, 2023),
per the mandatory liquidation requirement, the Company must cease all operations, redeem the public shares and thereafter liquidate and
dissolve. In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update
(“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,”
the Company does not have adequate liquidity to sustain operations. 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.
There is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful or successful
within the Combination Period. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Risks
and Uncertainties
Management
is currently evaluating the impact of the COVID-19 pandemic and other events (such as the recent invasion by Russia of Ukraine and any
further escalation of hostilities related thereto, terrorist attacks, natural disasters or a significant outbreak of other infectious
diseases), on the industry 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 its operations and/or search for a target company, the specific impact is not readily
determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
NOTE
2. |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES |
Basis
of presentation
The
accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America
(“US GAAP”) and pursuant to the rules and regulations of the SEC.
Certain
information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed.
As such, the information included in these financial statements should be read in conjunction with the Company’s Annual Report
on Form 10-K, as filed with the SEC on March 31, 2022. In the opinion of the Company’s management, these condensed financial statements
include all adjustments, which are only of a normal and recurring nature, necessary for a fair statement of the Company’s financial
position as of September 30, 2022 and the Company’s results of operations and cash flows for the periods presented. The results
of operations for the three and nine months ended September 30, 2022 not necessarily indicative of the results to be expected for the
full year ending December 31, 2022.
Emerging
Growth Company
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 independent registered public accounting firm 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 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 which
is neither an emerging growth company nor an emerging growth company which 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 the financial statements in conformity with US GAAP requires the Company’s 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 financial
statements and the reported amounts of revenues and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. The Company’s significant estimates and
assumptions include the fair value of the related party convertible note and the change in fair value of the derivative liabilities.
Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. Although the
Company believes that its estimates and assumptions are reasonable, they are based upon information available at the time the estimates
and assumptions were made. Actual results could differ from those estimates.
Investments
held in Trust Account
At
September 30, 2022 and December 31, 2021, the Company had approximately $307.8 million and $306.0 million in treasury securities held
in the Trust Account, respectively. The Company’s portfolio of investments held in the Trust Account are invested 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 the conditions of Rule
2a-7 of the Investment Company Act.
Offering
Costs associated with Initial Public Offering
The
Company complies with the requirements of the Financial Accounting Standards Board ASC 340-10-S99-1 and SEC Staff Accounting Bulletin
(“SAB”) Topic 5A, “Expenses of Offering.” Offering costs were allocated to the separable financial
instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Upon completion
of the Initial Public Offering, offering costs associated with warrant liabilities for the public warrants and the Private Placement
Warrants, the over-allotment and the Forward Purchase Agreement were expensed as incurred and presented as non-operating expenses in
the statement of operations and other offering costs associated with the Class A Ordinary Shares were recorded to temporary equity.
Class
A ordinary shares subject to possible redemption
The
Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance enumerated in ASC 480 “Distinguishing
Liabilities from Equity”. Ordinary shares subject to mandatory redemption are classified as a liability instrument 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
Class A ordinary shares feature certain redemption rights that are considered by the Company to be outside of the Company’s control
and subject to the occurrence of uncertain future events. Accordingly, at September 30, 2022 and December 31, 2021, the Class A ordinary
shares subject to possible redemption in the amount of approximately $307,850,000 and $306,000,000 are presented as temporary equity,
outside of the shareholders’ deficit section of the Company’s condensed balance sheets, respectively.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable shares of Class
A ordinary shares to equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public
Offering, the Company recognized a remeasurement adjustment from initial book value to redemption amount value. The change in the carrying
value of the redeemable Class A ordinary shares resulted in charges against additional paid-in capital and accumulated deficit.
Net
income (loss) per share
Net
income (loss) per share is computed by dividing net income (loss) by the weighted average number of ordinary shares during the
period. The Company applies the two-class method in calculating earnings per share. Earnings and losses are shared pro rata between
the two classes of shares. The calculation of diluted income (loss) per ordinary share does not consider the effect of the warrants
issued in connection with the (i) Initial Public Offering, (ii) Private Placement and (iii) embedded conversion feature of the
related party convertible promissory note, since their inclusion would be anti-dilutive under the two-class method. As a result,
diluted earnings per ordinary share is the same as basic earnings per ordinary share for the periods presented. The warrants are
exercisable to purchase 15,000,000
Class A ordinary shares in the aggregate.
The
following table reflects the calculation of basic and diluted net income (loss) per ordinary share (in dollars, except per share
amounts):
Scheduled of basic and diluted net loss per share | |
| | | |
| | |
| |
For the
Three Months Ended | | |
For the
Three Months Ended | |
| |
September 30, | | |
September 30, | |
| |
2022 | | |
2021 | |
Class A ordinary shares | |
| | | |
| | |
Allocation of net loss, as adjusted | |
$ | (1,600,746 | ) | |
| | |
Denominator: | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 30,000,000 | | |
| | |
Basic and diluted net loss per ordinary share | |
$ | (0.05 | ) | |
| | |
| |
| | | |
| | |
Class B ordinary shares | |
| | | |
| | |
Numerator: Loss allocable to Class B ordinary shares | |
$ | (400,186 | ) | |
$ | (129,131 | ) |
Denominator: | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 7,500,000 | | |
| 6,250,000 | |
Basic and diluted net loss per share, Class B ordinary share | |
$ | (0.05 | ) | |
$ | (0.02 | ) |
| |
For the
Nine Months Ended | | |
For the Period from April 6, 2021 (inception)
through | |
| |
September 30, | | |
September 30, | |
| |
2022 | | |
2021 | |
Class A ordinary shares | |
| | | |
| | |
Allocation of net income, as adjusted | |
$ | 6,907,583 | | |
| | |
Denominator: | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 30,000,000 | | |
| | |
Basic and diluted net income (loss) per ordinary share | |
$ | 0.23 | | |
| | |
| |
| | | |
| | |
Class B ordinary shares | |
| | | |
| | |
Numerator: Income (loss) allocable to Class B ordinary shares | |
$ | 1,726,896 | | |
$ | (162,831 | ) |
Denominator: | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 7,500,000 | | |
| 6,250,000 | |
Basic and diluted net income (loss) per share, Class B ordinary share | |
$ | 0.23 | | |
$ | (0.03 | ) |
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution
which, at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts
and management believes the Company is not exposed to significant risks on such accounts.
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred
tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period
that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.
ASC
740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
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. 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,
2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments,
accruals or material deviation from its position.
There
is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations,
income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements.
Convertible
Promissory Note
The
Company accounts for their convertible promissory note under ASC 815, “Derivatives and Hedging” (“ASC 815”).
Under ASC 815-15-25, the election can be at the inception of a financial instrument to account for the instrument under the fair value
option under ASC 825. The Company has made such election for their convertible promissory note. Using the fair value option, the convertible
promissory note is required to be recorded at its initial fair value on the date of issuance, and each balance sheet date thereafter.
Changes in the estimated fair value of the notes are recognized as a non-cash gain or loss on the condensed statements of operations.
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.” The Company’s derivative instruments
are recorded at fair value as of the closing date of the Initial Public Offering (November 9, 2021) 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 public warrants, the Private Placement Warrants and the Forward Purchase
Agreement are derivative instruments. As the public warrants, the Private Placement Warrants and the Forward Purchase Agreement meet
the definition of a derivative, the public warrants, the Private Placement Warrants and Forward Purchase Agreement are measured at fair
value at issuance and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized
in the condensed statements of operations in the period of change.
Warrant
Instruments
The
Company accounts for the public warrants, the Private Placement Warrants and the Forward Purchase Agreement issued in connection with
the Initial Public Offering and the Private Placement in accordance with the guidance contained in ASC 815, “Derivatives and
Hedging” whereby under that provision, the public warrants, the Private Placement Warrants and the Forward Purchase Agreement
do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company classifies the warrant instruments
and the forward purchase as liabilities at fair value and adjust the instrument to fair value at each reporting period. These liabilities
will be re-measured at each balance sheet date until the public warrants, the Private Placement Warrants and the Forward Purchase Agreement
are exercised or expire, and any change in fair value will be recognized in the Company’s statements of operations. The fair value
of the public warrants and the Private Placement Warrants were estimated at issuance using the Monte Carlo simulation model and the modified
Black-Scholes model, respectively. The Forward Purchase Agreement was valued using a valuation model that factors in certain assumptions
such as the probability of business combination, risk free rate and expected period until business combination. The valuation models
utilize inputs and other assumptions and may not be reflective of the price at which they can be settled. Such warrant classification
is also subject to re-evaluation at each reporting period. The Public and Private Warrants will be valued at each reporting period using
the publicly available price for the Warrant.
Fair
Value Measurements
Fair
value is defined as the price that would be received for sale of an asset or paid to transfer a liability, in an orderly transaction
between market participants at the measurement date. US 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:
| ● | Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | 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 |
| ● | 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. |
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair
Value Measurement,” approximates the carrying amounts represented in the condensed balance sheets, primarily due to their short-term
nature, except for the convertible promissory note, warrant liabilities and the Forward Purchase Agreement (see Note 9).
Share-Based
Compensation
The
Company adopted ASC Topic 718, “Compensation - Stock Compensation,” guidance to account for its share-based compensation.
It defines a fair value-based method of accounting for an employee stock option or similar equity instrument. The Company recognizes
all forms of share-based payments, including share option grants, warrants and restricted share grants, at their fair value on the grant
date, which are based on the estimated number of awards that are ultimately expected to vest. Share-based payments, excluding restricted
share, are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services
rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are
amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted,
but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service.
Share-based compensation expenses, when recorded, are included in general and administrative expenses in the condensed statements of
operations.
Recent
Accounting Standards
Management
does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect
on the Company’s financial statements.
NOTE
3. |
INITIAL
PUBLIC OFFERING |
Pursuant
to the Initial Public Offering, the Company sold 30,000,000 Units (27,500,000 Units plus 2,500,000 over-allotment Units) at a purchase
price of $10.00 per Unit generating gross proceeds to the Company in the amount of $300,000,000. Each Unit consists of one share of the
Company’s Class A ordinary shares, par value $0.0001 per share (the “Class A ordinary shares”), and one-half of one
redeemable warrant of the Company (each whole warrant, a “Warrant”), with each whole Warrant entitling the holder thereof
to purchase one whole share of Class A Ordinary Shares at a price of $11.50 per share, subject to adjustment.
NOTE
4. |
PRIVATE
PLACEMENT |
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the Private Placement of an aggregate of 14,000,000 Private
Placement Warrants - 11,300,000 to the Sponsor, 100,000 to Nathanael Abebe, 35,000 to Christine Coignard, 25,000 to Kelvin Dushnisky,
200,000 to L. Peter O’Hagan and 2,340,000 to Orion GP - at a purchase price of $1.00 per Private Placement Warrant, generating
gross proceeds to the Company in the amount of $14,000,000.
A
portion of the proceeds from the Private Placement Units was added to the proceeds from the Initial Public Offering held in the Trust
Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private
Placement Units held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable
law) and the Private Placement Units will be worthless.
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 an Initial Business Combination, subject to certain exceptions.
NOTE
5. |
RELATED
PARTY TRANSACTIONS |
Founder
Shares
On
May 6, 2021, the Sponsor received of the Company’s Class B ordinary shares (the “Founder Shares”) in exchange
for cash of $. On November 4, 2021, the board of directors of the Company authorized a share dividend of Founder Shares,
resulting in the shareholders of the Founder Shares holding an aggregate of Founder Shares. All shares and associated amounts
have been retroactively restated to reflect the share dividend. The Founder Shares included an aggregate of up to shares subject
to forfeiture to the extent that the underwriter’s over-allotment was not exercised in full, so that the number of Founder Shares
would equal, on an as-converted basis, approximately 20% of the Company’s issued and outstanding ordinary shares after the Initial
Public Offering. The underwriter exercised a portion of the over-allotment option in connection with the initial closing of the Initial
Public Offering on November 9, 2021; as a result of the expiration of the over-allotment option, the Sponsor forfeited 406,250 Founder
Shares pursuant to the terms of the underwriting agreement. As of September 30, 2022 and December 31, 2021, there were 7,500,000 Founders
shares outstanding.
On
July 13, 2021, our sponsor transferred 35,000 Founder Shares to each of an entity owned by Christine Coignard, Kelvin Dushnisky, L. Peter
O’Hagan, and Timothy Keating, our independent directors. On that date, our sponsor also transferred 135,000 Founder Shares to Nathanael
Abebe, our President, at their original per-share purchase price. On October 16, 2021, our sponsor transferred 100,000 Founder Shares
to L. Peter O’Hagan, 17,500 Founder Shares to an entity owned by Christine Coignard and 12,500 Founder Shares to Kelvin Dushnisky,
at their original per-share purchase price. On that date, our sponsor also transferred 20,000 Founder Shares to Nathanael Abebe, at their
original per-share purchase price. These Founder Shares were not subject to forfeiture.
The
holders of the Founder Shares have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until
the earlier to occur of: (A) one year after the completion of a Business Combination and (B) subsequent to a 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 splits, share
capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing
at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital share exchange
or other similar transaction that results in all of the Public Shareholders having the right to exchange their shares of ordinary shares
for cash, securities or other property.
Advances
from Related Party
The
Sponsor paid certain formation and operating costs on behalf of the Company. These advances were due on demand and are non-interest bearing.
During the period ended December 31, 2021, the related party paid $25,000 of formation costs on behalf of the Company. The Company repaid
the outstanding amount in full in November 2021. As of September 30, 2022 and December 31, 2021, the amount due to the Sponsor was $0.
Promissory
Note - Related Party
On
May 6, 2021, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the
Company was able to borrow up to an aggregate principal amount of $. The Promissory Note was non-interest bearing and payable
on the earlier of (i) December 31, 2021 or (ii) the consummation of the Initial Public Offering. During the period ended December 31,
2021, the Company borrowed and repaid a total of $ under the note. As of September 30, 2022 and December 31, 2021, there was no
balance outstanding under the Promissory Note. Borrowings under the Promissory Note are no longer available.
General
and Administrative Services
Commencing
on the date the Units are first listed on the NYSE, the Company has agreed to pay the Sponsor a total of $10,000 per month for office
space, utilities and secretarial and administrative support for up to 24 months. 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, 2022, the Company recorded $30,000 and $90,000 of administrative fees, respectively. As of September 30, 2022 and December 31, 2021,
$107,500 and $17,500, respectively, was outstanding and is included in accounts payable and accrued expenses on the accompanying condensed
balance sheets.
Related
Party Loans
In
order to finance transaction costs in connection with a 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”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of
a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon completion
of a Business Combination into warrants at a price of $1.00 per warrant. Such warrants would be identical to the Private Placement Warrants.
In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to
repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
On
May 18, 2022, the Company entered into a Working Capital Loan with the Sponsor. On May 20, 2022, the Sponsor advanced $300,000 to the
Company under the Working Capital Loan. As of September 30, 2022 and December 31, 2021, there was $300,000 and $0 outstanding under the
Working Capital Loans, respectively, and is included in convertible promissory note - related party on the accompanying condensed balance
sheets.
Management
determined that there was an embedded conversion feature related to the note that would require fair value treatment under ASC 815-15-25
and the note should be measured at fair value at issuance and at each reporting date. At September 30, 2022, the fair value of the note
was $234,841, which resulted in a change in fair value of the note of $(9,118) and $65,159 for the three and nine months then ended September
30, 2022, respectively, which is reflected on the condensed statements of operations.
NOTE
6. |
COMMITMENTS
AND CONTINGENCIES |
Registration
Rights
The
holders of the Founder Shares, Private Placement Units and warrants that may be issued upon conversion of Working Capital Loans (and
any 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
to be signed prior to or on the effective date of the Initial Public Offering requiring the Company to register such securities for resale
(in the case of the Founder Shares, only after conversion to 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 completion of a
Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities
Act. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or
cause any registration statement to become effective until the securities covered thereby are released from their lock-up restrictions.
The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
The
Company granted the underwriter a 45-day option from the date of the Initial Public Offering to purchase up to 4,125,000 additional Units
to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions.
The
underwriter was entitled to a cash underwriting discount of $0.20 per Unit, or $6,000,000 which was paid upon the closing of the Initial
Public Offering. In addition, the underwriter will be entitled to a deferred fee of $0.35 per Unit, or $10,500,000. The deferred fee
will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business
Combination, subject to the terms of the underwriting agreement.
On
November 9, 2021, the underwriter purchased an additional 2,500,000 Option Units pursuant to the partial exercise of the over-allotment
option. The Option Units were sold at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $25,000,000.
Upon expiration of the option in December 2021, 1,625,000 Class A shares eligible for purchase on the over-allotment option expired and
the Sponsor forfeited 406,250 Founder Shares pursuant to the terms of the underwriting agreement.
Forward
Purchase Agreement
The
Company entered into a forward purchase agreement on November 4, 2021, (a “Forward Purchase Agreement”) with an affiliate
of the Sponsor, Orion Mine Finance Fund III LP (“Orion Mine Finance”), which, subject to the approval of Orion Mine Finance’s
investment committee as well as customary closing conditions, will provide for the purchase of up to 5,000,000 units, with each unit
consisting of one Class A ordinary share (the “forward purchase shares”) and one-half of one redeemable warrant (the “forward
purchase warrants”) to purchase one Class A ordinary share, at $11.50 per share, subject to adjustment, for a purchase price of
$10.00 per unit, in a private placement to occur in connection with the closing of a Business Combination.
The
forward purchase warrants will entitle the holder thereof to purchase one Class A ordinary share at $11.50 per share and will have the
same terms as the Private Placement Warrants so long as they are held by the affiliate of our sponsor or its permitted transferees, and
the forward purchase shares will be identical to the Class A ordinary shares included in the Units being sold in the Initial Public Offering,
except the forward purchase shares will be subject to transfer restrictions and certain registration rights.
Orion
Mine Finance’s commitment to purchase securities pursuant to the Forward Purchase Agreement is intended to provide the Company
with a minimum funding level for a Business Combination. The proceeds from the sale of the forward purchase securities may be used as
part of the consideration to the sellers in a Business Combination, expenses in connection with a Business Combination or for working
capital in the post-transaction company.
The
Company classifies the Forward Purchase Agreement as a liability upon execution of the agreement, in accordance with the guidance contained
in ASC 815-40, at its fair value and will allocate a portion of the proceeds from the issuance of the Units equal to its fair value determined
by the modified Black Scholes model. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement,
the liability will be adjusted to fair value, with the change in fair value recognized in the Company’s condensed statements of
operations. Upon issuance of the Forward Purchase Agreement, the Company recorded a derivative liability of $453,701. As of September
30, 2022 and December 31, 2021, the fair value of the Forward Purchase Agreement was $1,705,222 and $670,221, respectively, which is
included in derivative liabilities on the condensed balance sheets. The Company will reassess the classification at each balance sheet
date. If the classification changes as a result of events during the period, the Forward Purchase Agreement will be reclassified as of
the date of the event that causes the reclassification. During the three months and nine months ended September 30, 2022, the Company
recorded loss of $981,288 and $1,035,001, respectively, for the change in fair value which is included in change in fair value of derivative
liabilities on the accompanying condensed statements of operations.
Vendor
Agreements
As
of September 30, 2022, the Company had incurred legal fees related to the Initial Public Offering and general corporate services of approximately
$573,100. These fees will only become due and payable upon the consummation of a Business Combination. The outstanding balance of the
legal fees is in accrued offering costs of approximately $378,200 and accrued expenses of approximately $194,900 on the condensed balance
sheets.
NOTE
7. |
SHAREHOLDERS’
DEFICIT |
Preferred
Shares - The Company is authorized to issue 5,000,000 preference shares with a par value of $0.0001 per share. As of September 30, 2022
and December 31, 2021, there were no preference shares issued or outstanding.
Class
A Ordinary Shares - The Company is authorized to issue 500,000,000 of Class A ordinary shares with a par value of $0.0001 per share.
Holders of Class A ordinary shares are entitled to one vote for each share. As of September 30, 2022 and December 31, 2021, there were
30,000,000 shares of Class A ordinary shares issued and outstanding and classified in temporary equity on the condensed balance sheets.
Class
B Ordinary Shares - The Company is authorized to issue 50,000,000 of Class B ordinary shares with a par value of $0.0001 per share. Holders
of Class B ordinary shares are entitled to one vote for each share. As of September 30, 2022 and December 31, 2021, there were 7,500,000
Class B ordinary shares issued and outstanding.
Only
holders of the Class B ordinary shares will have the right to vote on the appointment of directors prior to the Business Combination.
Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted
to a vote of our shareholders except as otherwise required by law. In connection with our initial business combination, we may enter
into a shareholders agreement or other arrangements with the shareholders of the target or other investors to provide for voting or other
corporate governance arrangements that differ from those in effect upon completion of the Initial Public Offering.
The
Class B ordinary shares will automatically convert into Class A ordinary shares at the time of a Business Combination, or earlier at
the option of the holder, on a one-for-one basis, subject to adjustment. 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 Initial Public Offering and related to the closing of
a Business Combination, the ratio at which Class B ordinary shares shall convert into Class A ordinary shares will be adjusted (unless
the holders of a majority of the then-outstanding Class B ordinary shares agree to waive such 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 the total number of all ordinary shares outstanding upon the completion
of Initial Public Offering plus all Class A ordinary shares and equity-linked securities issued or deemed issued in connection with a
Business Combination (net of the number of Class A ordinary shares redeemed in connection with a Business Combination), excluding any
shares or equity-linked securities issued or issuable to any seller of an interest in the target to us in a Business Combination.
Public
Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only
whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business
Combination and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion
of a Business Combination or earlier upon redemption or liquidation.
The
Company will not be obligated to deliver any Class A ordinary share pursuant to the exercise of a warrant and will have no obligation
to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A ordinary
shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those Class A ordinary shares is
available, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is
available. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares
to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under
the securities laws of the state of residence of the exercising holder, or an exemption from registration is available.
The
Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of a Business Combination,
the Company will use its commercially reasonable efforts to file, and within 60 business days following a Business Combination to have
declared effective, a registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants
and to maintain a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed. Notwithstanding
the above, if the Class A ordinary share is at the time of any exercise of a warrant not listed on a national securities exchange such
that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at
its 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 its commercially reasonable efforts to register or qualify the shares under applicable
blue sky laws to the extent an exemption is not available.
Redemption
of Warrants When the Price per Share of Class A Ordinary Share Equals or Exceeds $18.00
Once
the warrants become exercisable, the Company may redeem the outstanding Public Warrants:
| ● | in
whole and not in part; |
| ● | at
a price of $0.01 per Public Warrant; |
| ● | upon
a minimum of 30 days’ prior written notice of redemption, or the 30-day redemption period to each warrant holder; and |
| ● | if,
and only if, the last reported sale price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for share
sub-divisions, share dividends, reorganization, recapitalizations and the like) for any 10 trading days within a 20-trading day
period ending on the third trading day prior to the date on which the Company sends the notice of redemption to warrant holders. |
If
and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register
or qualify the underlying securities for sale under all applicable state securities laws.
Redemption
of Warrants When the Price per Share of Class A Ordinary Share Equals or Exceeds $10.00
Once
the warrants become exercisable, the Company may redeem the outstanding warrants:
| ● | in
whole and not in part; |
| ● | at
a price of $0.10 per warrant provided that the holder will be able to exercise their warrants on cashless basis prior to redemption
and receive that number of shares based on the redemption date and the fair market value of the Class A ordinary shares; |
| ● | upon
a minimum of 30 days’ prior written notice of redemption; |
| ● | if,
and only if, the last reported sale price of the Class A ordinary share equals or exceeds $10.00 per share (as adjusted for share
sub-divisions, share dividends, reorganization, recapitalizations and the like) for any 10 trading days within a 20-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;
and |
| ● | if,
and only if, the Private Placement Warrants are also concurrently exchanged at the same price (equal to a number of Class A ordinary
shares) as the outstanding public warrants, as described above. |
If
the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that
wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise
price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including
in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except
as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally,
in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination
within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive
any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held
outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
The
Private Placement Warrants will be identical to the Public Warrants underlying the Units being sold in the Initial Public Offering, except
that the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will
not be transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited
exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described
above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held
by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the
Company and exercisable by such holders on the same basis as the Public Warrants.
The
Company accounts for the 29,000,000 warrants issued in connection with the Initial Public Offering (including 15,000,000 Public Warrants
and 14,000,000 Private Placement Warrants) in accordance with the guidance contained in ASC 815-40. Such guidance provides that because
the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. The Private Placement
Warrants do not meet the criteria for equity treatment under ASC 815-40 because the Private Warrants include a provision that provides
for potential changes to the settlement amounts dependent upon the characteristics of the holder of the Private Placement Warrant and
the holder of an instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. The Public Warrants do not
meet the criteria for equity treatment under ASC 815-40 because the Public Warrants include a tender provision that would entitle all
of the Public Warrant holders to cash while less than all of the shareholders are entitled to cash. Upon issuance of the derivative Warrants,
the Company recorded a liability of $37,584,000 on the balance sheet.
| NOTE
9. | FAIR
VALUE MEASUREMENTS |
The
Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each
reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company
seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities).
The
following table presents information about the Company’s assets and liabilities that are measured at fair value at September 30,
2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair
value:
Schedule of Fair Value Hierarchy for Assets and Liabilities Measured at Fair Value on a Recurring basis | |
| | | |
| | | |
| | |
| |
| | |
September 30, | | |
December 31, | |
Description | |
Level | | |
2022 | | |
2021 | |
Assets: | |
| | | |
| | | |
| | |
Marketable securities held in the Trust Account | |
| 1 | | |
$ | 307,846,892 | | |
$ | 306,003,656 | |
| |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | |
Convertible promissory note - related party | |
| 3 | | |
$ | 234,841 | | |
$ | - | |
| |
| | | |
| | | |
| | |
Warrant liability - Private Placement Warrants | |
| 2 | | |
| 3,284,400 | | |
| 8,400,000 | |
Warrant liability - Public Warrants | |
| 1 | | |
| 3,519,000 | | |
| 9,000,000 | |
Forward Purchase Agreement | |
| 3 | | |
| 1,705,222 | | |
| 670,221 | |
Total Derivative liabilities | |
| | | |
$ | 8,508,622 | | |
$ | 18,070,221 | |
The
Convertible promissory note - related party, the Public Warrants, the Private Placement Warrants and the Forward Purchase Agreement were
accounted for as liabilities in accordance with ASC 815-40 and are presented within convertible note and derivative liabilities on the
condensed balance sheets. The convertible note is measured at fair value at inception and on a recurring basis, with changes in fair
value presented within change in fair value of convertible note in the condensed statements of operations. The warrant liabilities and
Forward Purchase Agreement are measured at fair value at inception and on a recurring basis, with changes in fair value presented within
change in fair value of derivative liabilities in the condensed statements of operations.
Upon
initial issuance and September 30, 2022, the Company used a modified Black Scholes model to value the Convertible Note. As of September
30, 2022, the Convertible Note was classified as Level 3 on the Fair Value Hierarchy.
Upon
initial issuance, the Company used a modified Black Scholes model to value the Public Warrants and Private Placement Warrants and were
classified within Level 3. The Company allocated the proceeds received from (i) the sale of Units (which is inclusive of one Class A
ordinary share and one-half of one Public Warrant), (ii) the sale of Private Warrants, and (iii) the issuance of Class B ordinary shares,
first to the warrants based on their fair values as determined at initial measurement, with the remaining proceeds allocated to Class
A ordinary shares subject to possible redemption (temporary equity) and Class B ordinary shares (permanent equity) based on their relative
fair values at the initial measurement date. As of September 30, 2022 and December 31, 2021, the Public and Private Warrants were valued
using the publicly available price for the Warrant and are classified as Level 1 and Level 2, respectively, on the Fair Value Hierarchy.
The
Forward Purchase Agreement was valued using a valuation method which considers the reconstructed unit price (the total fair value of
ordinary shares and half the Private Warrant value) and multiple assumptions such as risk-free rate and time to Initial Business Combination.
As of September 30, 2022 and December 31, 2021, the Forward Purchase Agreement was classified within Level 3 of the Fair Value Hierarchy
at the measurement dates due to the use of unobservable inputs.
The
table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and
liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months
ended September 30, 2022:
Schedule of financial assets and liabilities measured at fair value on a recurring basis | |
| | |
| |
Fair Value Measurement Using Level 3 Inputs Total | |
Balance, Fair value at December 31, 2021 | |
$ | 670,221 | |
Change in fair value of forward purchase agreement | |
| 46,917 | |
Balance, March 31, 2022 | |
| 717,138 | |
Proceeds received from issuance of convertible note | |
| 300,000 | |
Change in fair value of convertible promissory note - related party | |
| (74,277 | ) |
Change in fair value of forward purchase agreement | |
| 6,796 | |
Balance, June 30, 2022 | |
| 949,657 | |
Change in fair value of convertible promissory note - related party | |
| 9,118 | |
Change in fair value of forward purchase agreement | |
| 981,288 | |
Balance, September 30, 2022 | |
| 1,940,063 | |
The
key inputs into the discount model for the Convertible Promissory Note were as follows:
Schedule of Fair Value of Assets and Liabilities Valuation Techniques and Measurement Inputs | |
| | |
| |
September 30, 2022 | |
Volatility | |
| 120.30 – 175.59 | % |
Risk-free interest rate | |
| 2.58 – 4.58 | % |
Expected life of convertible promissory note | |
| 0.59 – 0.78 years | |
Dividend yield | |
| 0 | % |
Probability of business combination | |
| 80.0 | % |
The
key inputs into the discount model for the Forward Purchase Agreement were as follows:
Schedule of Fair Value of Assets and Liabilities Valuation Techniques and Measurement Inputs | |
| | | |
| | |
| |
September 30, 2022 | | |
December 31, 2021 | |
Risk-free interest rate | |
| 3.94 | % | |
| 0.33 | % |
Expected life of forward purchase agreement | |
| 0.59 years | | |
| 0.84 years | |
Dividend yield | |
| 0 | % | |
| 0 | % |
Probability of business combination | |
| 80.0 | % | |
| 80.0 | % |
The
following table provides a summary of the changes in the fair value of the Company’s financial instruments that are measured at
fair value on a recurring basis:
Schedule of changes in the fair value of the warrants measured on recurring basis | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Convertible
Promissory
Note | | |
Private Placement Warrants | | |
Public Warrants | | |
Forward
Purchase
Agreement | | |
Total | |
Fair value at December 31, 2021 | |
$ | - | | |
| 8,400,000 | | |
$ | 9,000,000 | | |
$ | 670,221 | | |
$ | 18,070,221 | |
Proceeds received from issuance of convertible note | |
| 300,000 | | |
| - | | |
| - | | |
| - | | |
| 300,000 | |
Change in fair value | |
| (65,159 | ) | |
| (5,115,600 | ) | |
| (5,481,000 | ) | |
| 1,035,001 | | |
| (9,626,758 | ) |
Fair value at September 30, 2022 | |
$ | 234,841 | | |
$ | 3,284,400 | | |
$ | 3,519,000 | | |
$ | 1,705,222 | | |
$ | 8,743,463 | |
| NOTE
10. | SUBSEQUENT
EVENTS |
The
Company’s management has evaluated subsequent events and transactions that occurred after the balance sheet date up to the date
that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have
required adjustment or disclosure in the condensed financial statements.