The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(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, 2022, the
Company had not commenced any operations. All activity through March 31, 2022 relates to the Company’s formation and 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 generates non-operating income in the form of interest income and unrealized gains
from the marketable securities held in the Trust Account (as defined below), and gains or losses from the change in fair value of the
warrant liabilities and convertible promissory note.
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 3.
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 4.
The Company incurred $14,303,235
in transaction costs, including $3,450,000 of underwriting fees, $6,037,500 of deferred underwriting fees, $4,411,238 of fair value of
the Founder Shares (defined below) attributable to the Anchor Investor (defined below) and $404,497 of other offering costs. Transaction
costs allocated to the warrants were $523,013 and were expensed in the accompanying condensed statement of operations for the period ended
March 31, 2021.
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 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 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 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 Capital Markets 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 into 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.
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.
KLUDEIN I ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
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
the Public 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 5) 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, without voting, and if they do vote, irrespective of whether
they vote for or against the proposed Business Combination.
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 Public 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.
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 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 ($10.00).
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 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.
KLUDEIN I ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
Liquidity and Going Concern
As of March 31, 2022, the
Company had $43,339 in its operating bank accounts, $172,620,428 in and cash securities held in the Trust Account to be used for a Business
Combination or to repurchase or redeem its common stock in connection therewith and working capital deficit of $478,142, which excludes
$50,000 of interest earned on Trust which is available to pay Delaware franchise taxes payable. As of March 31, 2022, approximately $120,000
of the amount on deposit in the Trust Account represented interest income, which is available to pay the Company’s tax obligations
and up to $100,000 of dissolution expenses.
Until the consummation of
a Business Combination, the Company has used and will be using the funds not held in the Trust Account for identifying and evaluating
prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting
the target business to acquire, and structuring, negotiating and consummating the Business Combination.
In order to fund working
capital deficiencies or 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. If the Company completes a Business Combination,
it may repay the notes out of the proceeds of the Trust Account released to it. In the event that a Business Combination does not close,
the Company may use a portion of the working capital held outside the Trust Account to repay the notes, but no proceeds from our Trust
Account would be used for such repayment. On January 21, 2022, the Company issued a promissory note with respect to the Working Capital
Loans in the principal amount of up to $1,500,000 to the Sponsor. On January 31, 2022, the Company drew $350,000 on the Working Capital
Loan. On April 1, 2022, the Company drew an additional $112,500 on the Working Capital Loan. The Working Capital Loan is non-interest
bearing and payable upon the consummation of a Business Combination or 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 (see Note 8).
In connection with the Company’s assessment of going concern
considerations in accordance with Financial Accounting Standards Board’s Accounting Standards Codification Subtopic 205-40, “Presentation
of Financial Statements – Going Concern,” the Company has until July 11, 2022, to consummate an initial Business Combination.
It is uncertain that the Company will be able to consummate an initial Business Combination by this time. If an initial Business Combination
is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Additionally, the Company
may not have sufficient liquidity to fund the working capital needs of the Company through one year from the issuance of these condensed
financial statements. Management has determined that the liquidity condition and mandatory liquidation, should an initial Business Combination
not occur, and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern.
No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after July
11, 2022.
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 condensed financial statements. The condensed financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and Belarus commenced a military
action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic
sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are
not determinable as of the date of these financial statements. The specific impact on the Company’s financial condition, results
of operations, and cash flows is also not determinable as of the date of these financial statements.
NOTE 2 — SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited
condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of
America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of
Regulation S-X of the 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.
KLUDEIN I ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
The accompanying unaudited condensed financial statements should be
read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on
April 12, 2022. The accompanying condensed balance sheet as of December 31, 2021 has been derived from the audited financial statements
included in that annual report. The interim results for the three months ended March 31, 2022 are not necessarily indicative of the results
to be expected for the year ending December 31, 2022 or for any future periods.
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 public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, 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 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 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 condensed financial
statements and the reported amounts of income and expenses during the reporting periods.
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 condensed 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, 2022 and December 31, 2021.
Marketable Securities Held in Trust Account
At March 31, 2022
and December 31, 2021, substantially all of the assets held in the Trust Account were primarily invested in U.S. Treasury securities.
All of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented
on the condensed balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair
value of investments held in the Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying
condensed statements of operations. The estimated fair values of investments held in Trust Account are determined using available market
information.
KLUDEIN I ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
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 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 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)
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 sheets.
The Company recognizes changes in redemption value immediately as they
occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Immediately
upon the closing of the Initial Public Offering, the Company recognized the re-measurement from initial carrying value to redemption amount,
which approximates fair value. The change in the carrying value of redeemable Class A common stock resulted in charges against additional
paid-in capital (to the extent available), accumulated deficit and Class A common stock during the three months ended March 31, 2021.
There were no changes in the carrying value of redeemable Class A common stock during the three months ended March 31, 2022.
At March 31, 2022 and December
31, 2021, the shares of Class A common stock reflected in the condensed balance sheet as temporary equity were reconciled in the following
table:
Gross proceeds for the Initial Public Offering | |
$ | 172,500,000 | |
Less: | |
| | |
Proceeds allocated to the initial fair value of Public Warrants | |
| (6,210,000 | ) |
Class A common stock issuance costs | |
| (9,527,789 | ) |
Fair value of Founder Shares attributable to Anchor Investor allocated
to redeemable Class A common stock, net of allocated transaction costs | |
| (4,252,433 | ) |
Plus: | |
| | |
Re-measurement of carrying value to redemption value | |
| 19,990,222 | |
| |
| | |
Class A common stock subject to possible redemption | |
$ | 172,500,000 | |
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 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 shares of common stock, 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 condensed statements of operations. For the Private
Placement Warrants, the fair value was estimated using a binomial lattice model incorporating the Cox-Ross-Rubenstein methodology since
the closing date of Initial Public Offering and as of March 31, 2022 (see Note 9). For the public warrants, the fair value was estimated
using a binomial lattice model incorporating the Cox-Ross-Rubenstein methodology at the closing date of Initial Public Offering and the
level 1 quoted prices in an active market since the public warrants starting
trading separately on March 1, 2021 and as of March 31, 2022 (see Note 9).
Convertible Instruments
The Company evaluated the accounting for its promissory notes that
feature conversion options in accordance with ASC 815, Derivatives and Hedging Activities (“ASC 815”). ASC 815 requires companies
to bifurcate conversion options from their host instruments and account for them as freestanding derivative financial instruments according
to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative
instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) a promissory note
that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable
GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative
instrument would be considered a derivative instrument. However, the Company has elected to account for its promissory notes at fair value,
as described in Note 9.
KLUDEIN I ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
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 $14,303,235—consisting of $3,450,000 of underwriting fees, $6,037,500 of deferred underwriting commissions, $4,411,238 of fair
value of the Founder Shares attributable to the Anchor Investor, and $404,497 of other offering costs—to the issuance of its Class
A common stock and warrants in the amount of $13,780,222 and $523,013, respectively. Issuance costs attributed to the warrants were expensed
to the condensed statement of operations during the three months ended March 31, 2021. Issuance costs attributed to the Class A common
stock were initially charged to temporary equity and then re-measured to Class A common stock subject to redemption upon completion of
the Initial Public Offering.
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 condensed 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. As of March 31, 2022 and December 31,
2021, the Company has provided a full valuation allowance against its net deferred tax assets.
ASC 740 prescribes a recognition threshold and a measurement attribute
for the condensed 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, 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. The Company
is subject to income tax examinations by major taxing authorities since inception.
For interim periods, the income tax provision or benefit related to
ordinary income or loss is computed at an estimated annual effective income tax rate and the income tax provision or benefit related to
all other items is individually computed and recognized when the items occur. The effective tax rate differs from the statutory tax rate
of 21% for the three months ended March 31, 2022 and 2021, due primarily to the permanent differences. The permanent differences relate
primarily to the change in fair value of warrant liabilities and convertible notes.
Net Income per Share of Common Stock
The Company complies with accounting and disclosure requirements of FASB
ASC Topic 260, “Earnings Per Share”. Net income per share of common stock is computed by dividing net income by the weighted
average number of shares of common stock outstanding for the period. The Company applies the two-class method in calculating income per
share of common stock. Re-measurement associated with the redeemable shares of Class A common stock is excluded from income per share
of common stock as the redemption value approximates fair value. Net income is allocated among the classes of common stock based on weighted
average shares outstanding.
The calculation of diluted
income per share of common stock does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering,
and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. The warrants
are exercisable to purchase 13,825,000 shares of Class A common stock in the aggregate, not including warrants that may be acquired
from the conversion feature in the Convertible Promissory Note. As of March 31, 2022 and 2021, the Company did not have any other dilutive
securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the
Company. As a result, diluted net income per share of common stock is the same as basic net income per share of common stock for the periods
presented.
Founder Shares subject to forfeiture (see Note 5) are not included in weighted average shares outstanding for basic net income per share until the forfeiture restrictions lapse, however, they are included in weighted average shares outstanding for diluted net
income per share for the entire period.
KLUDEIN I ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
The following table reflects
the calculation of basic and diluted net income per share of common stock (in dollars, except share amounts):
| |
For the Three Months Ended March 31, 2022 | | |
For the Three Months Ended March 31, 2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic net income per share of common stock | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income | |
$ | 4,624,471 | | |
$ | 1,156,118 | | |
$ | 1,084,225 | | |
$ | 303,875 | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic weighted average shares outstanding | |
| 17,250,000 | | |
| 4,312,500 | | |
| 15,141,667 | | |
| 4,243,750 | |
| |
| | | |
| | | |
| | | |
| | |
Basic net income per share of common stock | |
$ | 0.27 | | |
$ | 0.27 | | |
$ | 0.07 | | |
$ | 0.07 | |
| |
| | | |
| | | |
| | | |
| | |
Diluted net income per share of common stock | |
| | | |
| | | |
| | | |
| | |
Numerator: | |
| | | |
| | | |
| | | |
| | |
Allocation of net income | |
$ | 4,624,471 | | |
$ | 1,156,118 | | |
$ | 1,084,225 | | |
$ | 303,875 | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Diluted weighted average shares outstanding | |
| 17,250,000 | | |
| 4,312,500 | | |
| 15,141,667 | | |
| 4,312,500 | |
| |
| | | |
| | | |
| | | |
| | |
Diluted net income per share of common stock | |
$ | 0.27 | | |
$ | 0.27 | | |
$ | 0.07 | | |
$ | 0.07 | |
Concentration of Credit Risk
Financial instruments that
potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times,
may exceed the Federal Depository Insurance Coverage of $250,000. 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 Company’s condensed balance sheets, primarily due to their short-term nature, except for
warrants (see Note 9).
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 3 — INITIAL 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 Whole 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 8).
NOTE 4 — 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. Certain qualified institutional buyers or institutional accredited investors (“Anchor Investor”)
purchased an aggregate of 780,000 Private Placement Warrants from the Sponsor at a price of $1.00 per Private Placement Warrant ($780,000
in the aggregate). As a result, the Sponsor and Anchor Investor held 4,420,000 and 780,000 Private Placement Warrants, respectively. 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. As a result of the difference in the initial fair value of $0.72 per warrant of the Private Placement
Warrants and the purchase price of $1.00 per share, the Company recorded a contribution to additional paid-in capital of $1,456,000 as
of the date of the Private Placement issuance which is included in the condensed statements of stockholders’ equity for the three
months ended March 31, 2021.
KLUDEIN I ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
NOTE 5 — 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”). On January
6, 2021, the Sponsor transferred an aggregate of 75,000 Founder Shares to the Company’s director nominees. These 75,000 Founder
Shares were not subject to forfeiture in the event the underwriter’s over-allotment option was not exercised. 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
was not exercised in full or in part, so that the Sponsor would collectively own, on an as-converted basis, 20% of the Company’s
issued and outstanding shares after the Initial Public Offering (assuming the Sponsor did 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 were
forfeited, and none are currently subject to forfeiture.
The Sponsor and its director
nominees have 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.
In connection with the closing of the Initial Public Offering, the
Anchor Investor acquired from the Sponsor an indirect economic interest in an aggregate of 635,625 Founder Shares at the original purchase
price that the Sponsor paid for the Founder Shares. The Sponsor has agreed to distribute such Founder Shares to the Anchor Investor after
the completion of a Business Combination. The Company estimated the aggregate fair value of the Founder Shares attributable to the Anchor
Investor to be $4,411,238, or $6.94 per share. The fair value of the Founder Shares was estimated using the income approach. The excess
of the fair value of the Founder Shares was determined to be an offering cost in accordance with Staff Accounting Bulletin Topic 5A and
Topic 5T. Accordingly, the offering cost was allocated to the separable financial instruments issued in the Initial Public Offering using
the with-and-without method, compared to total proceeds received. Offering costs related to the Founder Shares amounted to a contribution
to additional paid-in capital $4,411,238, of which $158,805 were expensed to the statement of operations and included in transaction costs
attributable to warrant liabilities and the remaining $4,252,433 recorded as an additional offering cost as a reduction of temporary equity,
and re-measured to accumulated deficit upon recording temporary equity at redemption value during the three months ended March 31, 2021.
KLUDEIN I ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
The transfer of the Founders
Shares to the Company’s director nominees, as described above, is within the scope of FASB ASC Topic 718, “Compensation-Stock
Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with equity-classified awards is measured
at fair value upon the grant date. The Founders Shares were effectively transferred subject to a performance condition (i.e., the occurrence
of a Business Combination). Compensation expense related to the Founders Shares and common stock purchase warrants is recognized only
when the performance condition is probable of occurrence under the applicable accounting literature in this circumstance. Stock-based
compensation would be recognized at the date a Business Combination is considered probable in an amount equal to the number of Founders
Shares times the grant date fair value per share (unless subsequently modified) less the amount initially received for the purchase of
the Founders Shares. As of March 31, 2022 and December 31, 2021, the Company determined that a Business Combination is not considered
probable, and, therefore, no stock-based compensation expense has been recognized.
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 was non-interest bearing and was payable on the earlier of June 30, 2021 or the completion
of the Initial Public Offering. The outstanding balance under the Note of $88,905 was repaid at the closing of the Initial Public Offering
on January 11, 2021. Borrowings are no longer available under the Note.
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, make 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. The warrants would be identical to the Private Placement Warrants described in Note 8. On January 21, 2022, the Company issued
a promissory note with respect to the Working Capital Loans in the principal amount of up to $1,500,000 to the Sponsor. The Working Capital
Loan is non-interest bearing and payable upon the consummation of a Business Combination or may be convertible into warrants of the post-Business
Combination entity at a price of $1.00 per warrant at the lender’s discretion. On January 31, 2022, $350,000 was drawn on the Working
Capital Loan and is included (at its then current fair value) in convertible promissory note – related party on the accompanying
condensed balance sheet as of March 31 2022. On April 1, 2022, the Company drew an additional $112,500 on the Working Capital Loan. The
Convertible Note was valued using the fair value method. The discounted cash flow method was used to value the debt component of the Convertible
Note and the Black Scholes Option Pricing Model was used to value the debt conversion 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. The fair value of the note on
date of issuance was 264,900, which resulted in a contribution to stockholder’s deficit of $85,100. The fair value of
the note as of March 31, 2022 was $259,500, which resulted in a change in fair value of the convertible note of $5,400 recorded in the
condensed statement of operations for the three months ended March 31, 2022.
NOTE 6 — COMMITMENTS AND
CONTINGENCIES
Registration Rights
Pursuant to a registration rights agreement entered into on January 6,
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 the Company’s 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.
KLUDEIN I ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
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.
Contingent Legal Fees
As of March 31, 2022 and
December 31, 2021, the Company has incurred legal fees of $511,413 and $118,550, respectively, payments for which are contingent upon
the consummation of the Business Combination, of which such amounts are included in accrued expenses in the accompanying condensed balance
sheets.
NOTE 7 — STOCKHOLDERS’
DEFICIT
Preferred Stock —
The Company is authorized to issue up to 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. As of March 31, 2022 and December
31, 2021, there were no shares of preferred stock issued or outstanding.
Class A Common Stock —
The Company is authorized to issue up to 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, 2022 and December 31, 2021, there were 17,250,000 shares
of Class A common stock issued and outstanding, all of which are subject to possible redemption and presented as temporary equity.
Class B Common Stock —
The Company is authorized to issue up to 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders
of the Company’s Class B common stock are entitled to one vote for each share. At March 31, 2022 and December 31, 2021, there were
4,312,500 shares of Class B common stock issued and outstanding.
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 stockholders, 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 8 — WARRANT LIABILITIES
As of March 31, 2022 and
December 31, 2021, there were 8,625,000 Public Warrants outstanding. 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.
KLUDEIN I ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
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; |
| | |
| ● | 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, 2022 and December 31, 2021, there were 5,200,000 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
and the shares of common stock 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, 2022
(Unaudited)
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 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 the Company’s 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 and liabilities that are measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021, and indicates the
fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | |
Level | |
December 31, 2021 | | |
March 31, 2022 | |
Assets: | |
| |
| | | |
| | |
Cash and marketable securities held in Trust Account | |
1 | |
$ | 172,580,609 | | |
$ | 172,620,428 | |
| |
| |
| | | |
| | |
Liabilities: | |
| |
| | | |
| | |
Warrant Liabilities – Public Warrants | |
1 | |
| 5,180,136 | | |
| 1,207,500 | |
Warrant Liabilities – Private Placement Warrants | |
3 | |
| 3,131,574 | | |
| 728,000 | |
Convertible Promissory Note – Related Party | |
3 | |
| — | | |
| 259,500 | |
The
warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the accompanying
condensed balance sheets. 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 statements of operations.
As
of March 31, 2022 and December 31, 2021, the Private Placement Warrants were valued using a binomial lattice model 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 closing date of the Initial Public
Offering 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. As of March
31, 2022 and December 31, 2021, the Public Warrants were valued using the level 1 quoted prices in an active market.
KLUDEIN
I ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
The following table provides
quantitative information regarding Level 3 fair value measurements for Private Placement Warrants at March 31, 2022 and December
31, 2021:
| |
As of March 31,
2022 | | |
As of December 31, 2021 | |
Stock price | |
$ | 9.94 | | |
$ | 9.84 | |
Strike price | |
$ | 11.50 | | |
$ | 11.50 | |
Volatility | |
| 3.8 | % | |
| 12.2 | % |
Risk-free rate | |
| 2.42 | % | |
| 1.17 | % |
Probability of Business Combination occurring | |
| 75 | % | |
| 75 | % |
Dividend yield | |
| 0.0 | % | |
| 0.0 | % |
Fair value of warrants | |
$ | 0.14 | | |
$ | 0.60 | |
The following table presents the changes in the fair value of Level
3 warrant liabilities for the three months ended March 31, 2021:
| |
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 | ) |
Transfer to Level 1 | |
| — | | |
| (4,830,000 | ) | |
| (4,830,000 | ) |
Fair value as of March 31, 2021 | |
$ | 2,912,000 | | |
$ | — | | |
$ | 2,912,000 | |
The following table presents the changes in the fair value of Level
3 warrant liabilities for the three months ended March 31, 2022:
| |
Private Placement | |
Fair value as of January 1, 2022 | |
$ | 3,131,574 | |
| |
| | |
Change in fair value | |
| (2,403,574 | ) |
| |
| | |
Fair value as of March 31, 2022 | |
$ | 728,000 | |
Transfers to/from
Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs.
The estimated fair value of the Public Warrants transferred from a Level 3 measurement to a Level 1 fair value measurement during
the three months ended March 31, 2021 was $4,830,000. There were no transfers from Level 3 to any other levels during the three
months ended March 31, 2022.
The Convertible Note was
measured at fair value as of the date of the initial borrowing on January 31, 2022, and as of March 31, 2022. The discounted cash flow
method was used to value the debt component of the Convertible Note and the Black Scholes Option Pricing Model was used to value the debt
conversion option. There were no transfers in or out of Level 3 from other levels in the fair value hierarchy during three months ended
March 31, 2022 for the Convertible Note.
The
following table provides quantitative information regarding Level 3 fair value measurements for the Convertible Promissory Note
– Related Party at March 31, 2022 and January 31, 2022:
| |
As of March 31,
2022 | | |
As of January 31,
2022 | |
Stock price | |
$ | 9.94 | | |
$ | 9.87 | |
Strike price | |
$ | 11.50 | | |
$ | 11.50 | |
Volatility | |
| 3.8 | % | |
| 9.1 | % |
Risk-free rate | |
| 2.40 | % | |
| 2.40 | % |
Probability of Business Combination occurring | |
| 75 | % | |
| 75 | % |
Dividend yield | |
| 0.0 | % | |
| 0.0 | % |
KLUDEIN
I ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2022
(Unaudited)
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 Level
3 Convertible Promissory Note – Related Party for the three months ended March 31, 2022:
| |
Convertible
Promissory Note | |
Fair value as of January 1, 2022 | |
$ | — | |
| |
| | |
Initial measurement at January 31, 2022 | |
| 264,900 | |
| |
| | |
Change in fair value | |
| (5,400 | ) |
| |
| | |
Fair value as of March 31, 2022 | |
$ | 259,500 | |
Transfers
to/from Levels 1, 2 and 3 are recognized at the end of the reporting period. There were no transfers during the three months ended March
31, 2022.
NOTE
10 — 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, except as identified below, the Company did not identify any subsequent events that would
have required adjustment or disclosure in the condensed financial statements.
On April 1, 2022, the Company
drew an additional $112,500 on the Working Capital Loan (see Note 5).