NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
KludeIn
I Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on September 24, 2020. The Company
was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or other similar business combination with one or more businesses (the “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.
As
of March 31, 2021, the Company had not commenced any operations. All activity for the period from September 24, 2020 (inception)
through March 31, 2021 relates to the Company’s formation, the initial public offering (the “Initial Public Offering”),
which is described below, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination.
The Company will not generate any operating revenues until after the completion of a 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
registration statement for the Company’s Initial Public Offering was declared effective on January 6, 2021. On January 11,
2021, the Company consummated the Initial Public Offering of 17,250,000 units (the “Units” and, with respect to the
shares of Class A common stock included in the Units sold, the “Public Shares”), which includes the full exercise
by the underwriter of its over-allotment option in the amount of 2,250,000 Units, at $10.00 per Unit, generating gross proceeds
of $172,500,000, which is described in Note 4.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 5,200,000 warrants (each, a “Private
Placement Warrant” and, collectively, the “Private Placement Warrants”) at a price of $1.00 per Private Placement
Warrant in a private placement to KludeIn Prime LLC (the “Sponsor”), generating gross proceeds of $5,200,000, which
is described in Note 5.
Transaction
costs amounted to $9,891,996, consisting of $3,450,000 of underwriting fees, $6,037,500 of deferred underwriting fees and $404,496
of other offering costs.
Following
the closing of the Initial Public Offering on January 11, 2021, an amount of $172,500,000 ($10.00 per Unit) from the net proceeds
of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account
(the “Trust Account”), 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 meeting the conditions of Rule 2a-7 of the Investment Company Act of 1940, as amended (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 funds in the Trust Account to the Company’s stockholders, 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 the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied
generally toward consummating a Business Combination. NASDAQ rules provide that the Business Combination must be with one or more
target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (less any deferred
underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the signing a definitive agreement
to enter a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company
owns or acquires 50% or more of the 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 successfully effect a Business Combination.
KLUDEIN
I ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The
Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity
to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with
a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether
the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely
in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount
then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the funds
held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption
rights upon the completion of a Business Combination with respect to the Company’s warrants.
The
Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior
to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares
voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide
to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Certificate of
Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender
offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior
to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company
decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with
a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder
approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 6) and
any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally,
each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed
transaction or don’t vote at all.
Notwithstanding
the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to
the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with
any affiliate of such stockholder or any other person with whom such stockholder 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% or more of the Public Shares, without the prior consent
of the Company.
The
Sponsor has agreed (a) to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection
with the completion of a Business Combination, (b) to waive its liquidation rights with respect to the Founder Shares if the Company
fails to complete a Business Combination by July 11, 2022 and (c) not to propose an amendment to the Amended and Restated Certificate
of Incorporation (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 its Public Shares if the Company does not complete a Business
Combination or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination
activity, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction
with any such amendment.
The
Company will have until July 11, 2022 to complete a Business Combination (the “Combination Period”). If the Company
is unable to complete a 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 earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations (less
up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption
will completely extinguish public stockholders’ rights as stockholders (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 stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case
to the Company’s obligations under Delaware 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.
KLUDEIN
I ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The
Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business
Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering,
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 underwriters have agreed to waive their rights to their deferred underwriting commission
(see Note 7) held in the Trust Account in the event the Company does not complete a Business Combination within in 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 ($10.00).
In
order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent
any claims by a third party 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) the actual 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, in each case net of the interest which may be withdrawn
to pay our taxes. This liability will not apply with respect 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 Company’s indemnity of the underwriters
of the Initial Public Offering 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 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 (except 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.
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic 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 the financial statements. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
NOTE
2. REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENT
The Company previously accounted for its outstanding Public Warrants (as
defined in Note 4) and Private Placement Warrants (as defined in Note 5) (collectively, with the Public Warrants, the “Warrants”)
issued in connection with its Initial Public Offering as components of equity instead of as derivative liabilities. The warrant agreements
governing the Warrants includes a provision that provides for potential changes to the settlement amounts dependent upon the characteristics
of the holder of the warrant. In addition, the warrant agreement includes a provision that in the event of a tender offer or exchange
offer made to and accepted by holders of more than 50% of the outstanding shares of a single class of stock, all holders of the Warrants
would be entitled to receive cash for their Warrants (the “tender offer provision”).
On
April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the Securities and Exchange
Commission together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose
acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special
Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement
focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms
are similar to those contained in the warrant agreement.
KLUDEIN
I ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
In
further consideration of the SEC Statement, the Company’s management further evaluated the Warrants under Accounting Standards
Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. ASC Section 815-40-15 addresses
equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a
warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s common
stock. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s common stock if the terms of the warrant require
an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on
management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the
Company’s Private Placement Warrants are not indexed to the Company’s common stock in the manner contemplated by ASC
Section 815-40-15 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity
shares. In addition, based on management’s evaluation, the Company’s audit committee, in consultation with management,
concluded that the tender offer provision in the public warrant agreement fails the “classified in stockholders’
equity” criteria as contemplated by ASC Section 815-40-25.
In
addition to revisions for the above, the Company allocated its issuance costs of $9,891,996—consisting of $3,450,000 of underwriting
fees, $6,037,500 of deferred underwriting commissions, and $404,496 of other offering costs—to the issuance of its Class A shares
and Warrants in the amount of $9,527,887 and $364,109, respectively. The issuance costs attributed to the Warrants were revised at IPO
date below as those offering costs were expensed to the condensed statement of operations versus being accounted for as a reduction in
equity.
As
a result of the above, the Company should have classified the Warrants as derivative liabilities in its previously issued balance sheet as of January 11, 2021. Under this accounting treatment, the Company is required to measure the fair value of the Warrants
at the end of each reporting period as well as re-evaluate the treatment of the warrants and recognize changes in the fair value
from the prior period in the Company’s operating results for the current period.
The
Company’s accounting for the Warrants as components of equity instead of as derivative liabilities did not have any effect
on the Company’s previously reported investments held in trust or cash.
|
|
As
Previously
Reported
|
|
|
Adjustments
|
|
|
As
Revised
|
|
Balance sheet as of January 11, 2021 (audited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability
|
|
$
|
—
|
|
|
$
|
9,954,000
|
|
|
$
|
9,954,000
|
|
Class A Common Stock Subject to Possible Redemption
|
|
|
162,829,910
|
|
|
|
(9,954,000
|
)
|
|
|
152,875,910
|
|
Class A Common Stock
|
|
|
97
|
|
|
|
99
|
|
|
|
196
|
|
Additional Paid-in Capital
|
|
|
5,002,566
|
|
|
|
364,109
|
|
|
|
5,366,675
|
|
Accumulated Deficit
|
|
|
(3,091
|
)
|
|
|
(364,208
|
)
|
|
|
(367,299
|
)
|
NOTE
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation and Going Concern
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 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 accompanying unaudited condensed
financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation
of the financial position, operating results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s prospectus for its
Initial Public Offering as filed with the SEC on January 11, 2021, as well as the Company’s Current Report on Form 8-K,
as filed with the SEC on February 26, 2021 and the Company’s annual report on Form 10-K, as filed with the SEC on March 25, 2021. The interim results for the three months ended March 31, 2021 are not necessarily
indicative of the results to be expected for the year ending December 31, 2021 or for any future periods.
As indicated in the accompanying financial statements, at March 31, 2021, the Company
had approximately $0.7 million in cash, and a working capital of approximately $1.0 million.
The Company’s liquidity needs prior to the consummation of the Initial Public
Offering were satisfied through the proceeds of $25,000 from the sale of the Founders Shares (as defined in Note 6), and loans from the
Sponsor of approximately $89,000. The loan was repaid in full on January 11, 2021. Subsequent from the consummation of the Initial Public
Offering, the Company’s liquidity has been satisfied through the net proceeds received from the consummation of the Initial Public
Offering and the Private Placement.
In connection with the
Company’s assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Basis of Presentation
– Going Concern,” management has determined that the expected shortfall in working capital over the period of time
between the date these financial statement are issued and its estimated business combination date raises substantial doubt about the
Company’s ability to continue as a going concern until the earlier of the consummation of the Business Combination or the date
the Company is required to liquidate. The financial statements do not include any adjustment that might be necessary if the Company
is unable to continue as a going concern.
KLUDEIN
I ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
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 stockholder 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 statement 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 condensed financial statements in conformity with 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. Accordingly, the actual
results could differ significantly 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 March 31, 2021 and December 31, 2020.
Marketable
Securities Held in Trust Account
At
March 31, 2021, substantially all of the assets held in the Trust Account were held in U.S. Treasury securities. At December 31,
2020, there were no assets held in the Trust Account.
Class
A Common Stock Subject to Possible Redemption
The
Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject
to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common
stock (including Class A common stock that features redemption rights that is either within the control of the holder or subject
to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary
equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features
certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain
future events. Accordingly, Class A common stock subject to possible redemption is presented at redemption value as temporary
equity, outside of the stockholders’ equity section of the Company’s condensed balance sheet.
KLUDEIN
I ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Warrant
Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow,
market, or foreign currency risks. The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives
and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments
pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements
for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares,
among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted
at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For
issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a
component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria
for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each
balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the
statements of operations. For the private placement warrants, the fair value was estimated using a binomial lattice model
incorporating the Cox-Rss-Rubenstein methodology at the IPO date and as of March 31, 2021(see Note 10). For the public
warrants, the fair value was estimated using a binomial lattice model incorporating the Cox-Rss-Rubenstein methodology at the IPO
date and the level 1 quoted prices in an active market as of March 31, 2021(see Note 10).
Allocation of issuance costs
The
Company accounts for the allocation of its issuance costs to its Warrants using the guidance in ASC Topic 470-20, Debt
with Conversion and Other Options (“ASC 470-20), applied by analogy.
Under this guidance, if debt or stock is issued with detachable warrants, the proceeds need to be allocated to the two instruments using
either the fair value method, the relative fair value method, or the residual value method. The guidance also requires companies to use
a consistent approach in allocating issuance costs between the instruments. Accordingly, the Company allocated its issuance costs of
$9,891,996—consisting of $3,450,000 of underwriting fees, $6,037,500 of deferred underwriting commissions, and $404,496 of other
offering costs—to the issuance of its Class A shares and Warrants in the amount of $9,527,887 and $364,109, respectively. Issuance
costs attributed to the Warrants were expensed to the condensed statement of operations.
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.
FASB
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 March 31, 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 subject to income
tax examinations by major taxing authorities since inception. The effective tax rate differs from the statutory tax rate of 21%
for the three months ended March 31, 2021, due to the valuation allowance recorded on the Company’s net operating losses.
Net
income (Loss) per Common Share
Net
income (loss) per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding
during the period, excluding shares of common stock subject to forfeiture. The Company has not considered the effect of the warrants
sold in the Initial Public Offering and private placement to purchase an aggregate of 13,825,000 shares in the calculation of
diluted loss per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion
of such warrants would be anti-dilutive.
The
Company’s statement of operations includes a presentation of income (loss) per share for common stock subject to possible redemption
in a manner similar to the two-class method of income (loss) per share. Net income (loss) per common share, basic and diluted, for Class
A common stock subject to possible redemption is calculated by dividing the proportionate share of income or loss on marketable securities
held by the Trust Account, net of applicable franchise and income taxes, by the weighted average number of Class A common stock subject
to possible redemption outstanding since original issuance.
KLUDEIN
I ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Net
income (loss) per share, basic and diluted, for non-redeemable common stock is calculated by dividing the net income (loss), adjusted
for income or loss on marketable securities attributable to Class A common stock subject to possible redemption, by the weighted
average number of non-redeemable common stock outstanding for the period.
Non-redeemable
common stock includes Founder Shares and non-redeemable shares of common stock as these shares do not have any redemption features.
Non-redeemable common stock participates in the income or loss on marketable securities based on non-redeemable shares’
proportionate interest.
The
following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share
amounts):
|
|
Three
Months Ended
March 31,
2021
|
|
Class A common stock subject to possible redemption
|
|
|
|
|
Numerator: Earnings allocable to Class A common stock subject to possible redemption
|
|
|
|
|
Interest earned on marketable securities held in Trust Account
|
|
$
|
33,277
|
|
Unrealized loss on marketable securities held in Trust Account
|
|
|
(616
|
)
|
Less: interest available to be withdrawn for payment of taxes
|
|
|
(32,661
|
)
|
Net income attributable
|
|
$
|
—
|
|
Denominator: Weighted Average Class A common stock subject to possible redemption
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption
|
|
|
15,287,591
|
|
Basic and diluted net income per share, Class A common stock subject to possible redemption
|
|
$
|
0.00
|
|
|
|
|
|
|
Non-Redeemable Common Stock
|
|
|
|
|
Numerator: Earnings allocable to non-redeemable ordinary shares
|
|
|
|
|
Net income
|
|
$
|
1,546,905
|
|
Less: Net income allocable to Class A common stock subject to possible redemption
|
|
|
—
|
|
Non-Redeemable Net Income
|
|
$
|
1,546,905
|
|
Denominator: Weighted Average Non-redeemable Common stock
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Non-redeemable Common stock
|
|
|
5,991,211
|
|
Basic and diluted net loss per share, Non-redeemable Common stock
|
|
$
|
0.26
|
|
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations 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.
Fair
Value of Financial Instruments
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 accompanying condensed balance sheets, primarily
due to their short-term nature.
KLUDEIN
I ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
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 condensed financial statements.
NOTE
4. PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company sold 17,250,000 Units, which includes a full exercise by the underwriters of their
over-allotment option in the amount of 2,250,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share
of the Company’s Class A common stock and one-half of one redeemable warrant (“Public Warrant”). Each Public
Warrant entitles the holder to purchase one share of Class A common stock at an exercise price of $11.50 per whole share
(see Note 7).
NOTE
5. PRIVATE PLACEMENT WARRANTS
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 5,200,000 Private Placement Warrants at
a price of $1.00 per Private Placement Warrant ($5,200,000 in the aggregate), in a private placement. Each Private Placement Warrant
is exercisable to purchase one share of Class A common stock at a price of $11.50 per share. The proceeds from the sale of
the Private Placement Warrants were added to the net 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
Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private
Placement Warrants will expire worthless.
NOTE
6. RELATED PARTY TRANSACTIONS
Founder
Shares
On
September 24, 2020, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 4,312,500 shares
of Class B common stock (the “Founder Shares”). The Founder Shares included an aggregate of up to 562,500 shares
subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in
part, so that the Sponsor will collectively own, on an as-converted basis, 20% of the Company’s issued and outstanding shares
after the Initial Public Offering (assuming the Sponsor does not purchase any Public Shares in the Initial Public Offering). As
a result of the underwriters’ election to fully exercise their over-allotment option, no Founder Shares are currently subject
to forfeiture.
The
Sponsor has agreed, subject to certain 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 or (B) subsequent to a Business Combination,
(x) if the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits,
stock dividends, 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 stock exchange or other similar transaction that results in all of the Company’s stockholders having the
right to exchange their shares of common stock for cash, securities or other property.
Promissory
Note — Related Party
On September 24, 2020, the Sponsor agreed to loan the Company an aggregate
of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”). The
Note is non-interest bearing and is payable on the earlier of June 30, 2021 or the completion of the Initial Public Offering. During the
three months ended March 31, 2021, the Company received additional proceeds of $5,000 under this arrangement. The outstanding balance
under the Promissory Note of $88,905 was repaid at the closing of the Initial Public Offering on January 11, 2021.
KLUDEIN
I ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
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 directors and officers may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out
of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of
funds held outside the Trust Account. 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. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been
determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation
of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans
may be convertible into warrants of the post-Business Combination entity at a price of $1.00 per warrant. The warrants would be
identical to the Private Placement Warrants. To date, the Company has not entered into any related party loans.
NOTE
7. COMMITMENTS
Registration
Rights
Pursuant
to a registration rights agreement entered into on January 11, 2021, the holders of the Founder Shares, Private Placement Warrants
and any warrants that may be issued upon conversion of the Working Capital Loans (and any shares of Class A common stock issuable
upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and
upon conversion of the Founder Shares) will have registration rights to require the Company to register a sale of any of our securities
held by them. These holders of these securities will be entitled to make up to three demands, excluding short form registration
demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back”
registration rights to include their securities in other registration statements filed by us, subject to certain limitations.
The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays
in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any
such registration statements.
Underwriting
Agreement
The
underwriters are entitled to a deferred fee of $0.35 per Unit, or $6,037,500 in the aggregate. The deferred fee will become payable
to the underwriters 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.
NOTE
8. STOCKHOLDERS’ EQUITY
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share
with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors.
At March 31, 2021 and December 31, 2020, there were no shares of preferred stock issued or outstanding.
Class A
Common Stock — The Company is authorized to issue 280,000,000 shares of Class A common stock with a par value
of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At March 31, 2021, there were
1,771,178 shares of Class A common stock issued and outstanding, excluding 15,478,822 shares of Class A common stock subject
to possible redemption. At December 31, 2020, there were no shares of Class A common stock issued or outstanding.
Class B
Common Stock — The Company is authorized to issue 20,000,000 shares of common stock with a par value of $0.0001
per share. Holders of Class B common stock are entitled to one vote for each share. At March 31, 2021 and December 31, 2020,
there were 4,312,500 shares of common stock issued and outstanding.
KLUDEIN
I ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Holders
of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote
of shareholders, except as required by law.
The
shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination
on a one-for-one basis (subject to adjustment). In the case that additional shares of Class A common stock or equity-linked securities
are issued or deemed issued in connection with a Business Combination, the number of shares of Class A common stock issuable upon
conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of
all shares of common stock outstanding upon the completion of the Initial Public Offering, plus the total number of shares of
Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights
issued or deemed issued, by the Company in connection with or in relation to the consummation of a Business Combination, excluding
any shares of Class A common stock or equity-linked securities exercisable for or convertible into shares of Class A common stock
issued, or to be issued, to any seller in a Business Combination and any private placement-equivalent warrants issued to the Sponsor,
officers or directors upon conversion of Working Capital Loans; provided that such conversion of Founder Shares will never occur
on a less than one for one basis. The Company cannot determine at this time whether a majority of the holders of the Class B common
stock at the time of any future issuance would agree to waive such adjustment to the conversion ratio.
NOTE
9. WARRANT LIABILITIES
As
of March 31, 2021, there were 8,625,000 Public Warrants outstanding. As of December 31, 2020 there were no Public Warrants outstanding.
Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public
Warrants. The Public Warrants will become exercisable on the later of (a) 30 days after the consummation of a Business Combination
or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years from the consummation
of a Business Combination or earlier upon redemption or liquidation.
The
Company will not be obligated to deliver any Class A common stock pursuant to the exercise of a Public Warrant and will have no
obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance
of the Class A common stock issuable upon exercise of the Public Warrants is then effective and a prospectus relating thereto
is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and
the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock
issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state
of residence of the registered holder of the warrants.
The
Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination,
it will use its best efforts to file with the SEC a registration statement registering the issuance of the shares of Class A common
stock issuable upon exercise of the warrants, to cause such registration statement to become effective and to maintain a current
prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant
agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not
effective by the 60th business day after the closing of a Business Combination or within a specified period following the consummation
of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any
period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a “cashless
basis” pursuant to the exemption provided by Section 3(a)(9) of the Securities Act; provided that such exemption is available.
If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.
Once
the warrants become exercisable, the Company may call the warrants for redemption (except as described with respect to the Private
Placement Warrants):
|
●
|
in whole
and not in part;
|
KLUDEIN
I ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
|
●
|
at a price of $0.01
per warrant;
|
|
●
|
upon not less than
30 days’ prior written notice of redemption to each warrant holder; and
|
|
●
|
if, and only if,
the reported closing price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending
three business days before the Company sends to the notice of redemption to the warrant holders.
|
If
and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if the Company is unable
to register or qualify the underlying securities for sale under all applicable state securities laws.
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 Class A common stock 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 Class A common stock
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.
In
addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising
purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less
than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by
the Company’s 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 Company’s initial Business Combination on the date of the consummation
of such initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s
common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its
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
and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of
the higher of the Market Value and the Newly Issued Price.
At
March 31, 2021, there were 5,200,000 Private Placement Warrants outstanding. As of December 31, 2020 there were no Private Placement
Warrants outstanding. The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial
Public Offering, except that the Private Placement Warrants will and the common shares issuable upon the exercise of the Private
Placement Warrants will not be transferable, assignable or salable 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
will be non-redeemable 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.
KLUDEIN
I ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE
10. 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 fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable
inputs used in order to value the assets and liabilities:
|
Level 1:
|
Quoted
prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing
basis.
|
|
Level 2:
|
Observable inputs
other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities
and quoted prices for identical assets or liabilities in markets that are not active.
|
|
Level 3:
|
Unobservable inputs
based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The
following table presents information about the Company’s assets that are measured at fair value on a recurring basis at
March 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
March 31,
2021
|
|
Assets:
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
|
1
|
|
$
|
172,532,661
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Warrant Liability – Public Warrants
|
|
1
|
|
|
4,830,000
|
|
Warrant Liability – Private Placement Warrants
|
|
3
|
|
|
2,912,000
|
|
The
Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on our accompanying
March 31, 2021 condensed balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis,
with changes in fair value presented within change in fair value of warrant liabilities in the condensed statement of operations.
The private placement
warrants were valued using a binomial lattice model incorporating the Cox-Ross-Rubenstein methodology, which is considered to be a
Level 3 fair value measurement. The binomial lattice model’s primary unobservable input utilized in determining the fair value
of the Warrants is the expected volatility of the common stock. The expected volatility as of the IPO date was derived from
observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. The expected
volatility as of subsequent valuation dates was implied from the Company’s own public warrant pricing. The Public warrants
were valued using the level 1 quoted prices in an active market.
Due to the use of quoted prices in an active market
(Level 1) to measure the fair values of the Public Warrants subsequent to initial measurement, the Company had transfers out of Level
3 totaling $4.8 million during the period from January 11, 2021 through March 31, 2021.
KLUDEIN
I ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The
following table provides quantitative information regarding Level 3 fair value measurements:
|
|
At
January 11,
2021
(Initial Measurement)
|
|
|
As of
March 31,
2021
|
|
Stock price
|
|
$
|
9.64
|
|
|
$
|
9.73
|
|
Strike price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Volatility
|
|
|
14.1
|
%
|
|
|
11.3
|
%
|
Risk-free rate
|
|
|
0.56
|
%
|
|
|
0.95
|
%
|
Probability of Business Combination occurring
|
|
|
75
|
%
|
|
|
75
|
%
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Fair value of warrants
|
|
$
|
0.72
|
|
|
$
|
0.56
|
|
The following contains additional information
regarding the inputs used in the pricing models:
|
●
|
Term
– the expected life of the warrants was assumed to be equivalent to their remaining
contractual term.
|
|
●
|
Risk-free
rate – the risk-free interest rate is based on the U.S. Treasury yield curve in effect
on the date of valuation equal to the remaining expected life of the Warrants.
|
|
●
|
Volatility
– the Company estimated the volatility of its common stock warrants based on implied
volatility and actual historical volatility of a group of comparable publicly traded companies
observed over a historical period equal to the expected remaining life of the Warrants.
|
|
●
|
Dividend
yield – the dividend yield percentage is zero because the Company does not currently
pay dividends, nor does it intend to do so during the expected term of the Private Placement
Warrants.
|
The
following table presents the changes in the fair value of warrant liabilities:
|
|
Private Placement
|
|
|
Public
|
|
|
Warrant Liabilities
|
|
Fair value as of January 1, 2021
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Initial
measurement on January 11, 2021
|
|
|
3,744,000
|
|
|
|
6,210,000
|
|
|
|
9,954,000
|
|
Change in valuation inputs or other assumptions
|
|
|
(832,000
|
)
|
|
|
(1,380,000
|
)
|
|
|
(2,212,000
|
)
|
Fair value as of March 31, 2021
|
|
|
2,912,000
|
|
|
|
4,830,000
|
|
|
|
7,742,000
|
|
NOTE
11. SUBSEQUENT EVENTS
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed
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.