CASCADE ACQUISITION
CORP.
CONDENSED BALANCE
SHEETS
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
|
Unaudited
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1,108,078
|
|
|
$
|
1,277,708
|
|
Prepaid expenses
|
|
|
242,038
|
|
|
|
285,823
|
|
Total current assets
|
|
|
1,350,116
|
|
|
|
1,563,531
|
|
|
|
|
|
|
|
|
|
|
Cash and marketable securities held in Trust Account
|
|
|
232,374,183
|
|
|
|
232,296,529
|
|
TOTAL ASSETS
|
|
$
|
233,724,299
|
|
|
$
|
233,860,060
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities – accrued expenses
|
|
$
|
206,033
|
|
|
$
|
88,747
|
|
Warrant Liability
|
|
|
17,745,300
|
|
|
|
26,815,120
|
|
Deferred underwriting fee payable
|
|
|
6,854,750
|
|
|
|
6,854,750
|
|
Total Liabilities
|
|
|
24,806,083
|
|
|
|
33,758,617
|
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock, $0.0001 par value, subject to possible redemption, 20,187,820 and 19,317,263 shares at redemption value at March 31, 2021 and December 31, 2020, respectively.
|
|
|
203,918,209
|
|
|
|
195,101,440
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 2,812,180 and 3,682,737 shares issued and outstanding (excluding 20,187,820 and 19,317,263 shares subject to possible redemption) as of March 31, 2021 and December 31, 2020, respectively.
|
|
|
281
|
|
|
|
368
|
|
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 5,750,000 shares issued and outstanding at March 31, 2021 and December 31, 2020
|
|
|
575
|
|
|
|
575
|
|
Additional paid-in capital
|
|
|
4,011,053
|
|
|
|
12,827,735
|
|
Accumulated deficit
|
|
|
988,098
|
|
|
|
(7,828,675
|
)
|
Total Shareholders’ Equity
|
|
|
5,000,007
|
|
|
|
5,000,003
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
$
|
233,724,299
|
|
|
$
|
233,860,060
|
|
The accompanying
notes are an integral part of the unaudited condensed financial statements.
CASCADE ACQUISITION
CORP.
CONDENSED STATEMENT
OF OPERATIONS
FOR THE THREE
MONTHS ENDED MARCH 31, 2021
(Unaudited)
Formation and operating costs
|
|
$
|
330,701
|
|
Loss from operations
|
|
|
(330,701
|
)
|
|
|
|
|
|
Other income:
|
|
|
|
|
Interest earned on marketable securities held in Trust Account
|
|
|
58,062
|
|
Unrealized gain on marketable securities held in Trust Account
|
|
|
19,592
|
|
Change in fair value of derivative liability
|
|
|
9,069,820
|
|
Other income, net
|
|
|
9,147,474
|
|
|
|
|
|
|
Net income
|
|
$
|
8,816,773
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption
|
|
|
19,317,263
|
|
|
|
|
|
|
Basic and diluted net income per share, Class A common stock subject to possible redemption
|
|
$
|
0.00
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Non-redeemable common stock
|
|
|
9,432,737
|
|
|
|
|
|
|
Basic and diluted net income per share, Non-redeemable common stock
|
|
$
|
0.93
|
|
The accompanying
notes are an integral part of the unaudited condensed financial statements.
CASCADE ACQUISITION
CORP.
CONDENSED STATEMENT
OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE THREE
MONTHS ENDED MARCH 31, 2021
(Unaudited)
|
|
Class A
Common Stock
|
|
|
Class B
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Retained Earnings (Accumulated
|
|
|
Total
Shareholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit)
|
|
|
Equity
|
|
Balance — January 1, 2021
|
|
|
3,682,737
|
|
|
$
|
368
|
|
|
|
5,750,000
|
|
|
$
|
575
|
|
|
$
|
12,827,735
|
|
|
$
|
(7,828,675
|
)
|
|
$
|
5,000,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of Class A common stock subject to redemption
|
|
|
(870,557
|
)
|
|
|
(87
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(8,816,682
|
)
|
|
|
—
|
|
|
|
(8,816,769
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,816,773
|
|
|
|
8,816,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – March 31, 2021
|
|
|
2,812,180
|
|
|
$
|
281
|
|
|
|
5,750,000
|
|
|
$
|
575
|
|
|
$
|
4,011,053
|
|
|
$
|
988,098
|
|
|
$
|
5,000,007
|
|
The accompanying
notes are an integral part of the unaudited condensed financial statements.
CASCADE ACQUISITION
CORP.
CONDENSED STATEMENT
OF CASH FLOWS
FOR THE THREE
MONTHS ENDED MARCH 31, 2021
(Unaudited)
Cash Flows from Operating Activities:
|
|
|
|
Net income
|
|
$
|
8,816,773
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
Interest earned on marketable securities held in Trust Account
|
|
|
(58,062
|
)
|
Unrealized gain on marketable securities held in Trust Account
|
|
|
(19,592
|
)
|
Change in fair value of warrant liability
|
|
|
(9,069,820
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
Prepaid expenses
|
|
|
43,785
|
|
Accrued expenses
|
|
|
117,286
|
|
Net cash used in operating activities
|
|
|
(169,630
|
)
|
|
|
|
|
|
Net Change in Cash
|
|
|
(169,630
|
)
|
Cash – Beginning
|
|
|
1,277,708
|
|
Cash – Ending
|
|
$
|
1,108,078
|
|
|
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
Change in value of Class A common stock subject to possible redemption
|
|
$
|
8,816,769
|
|
The accompanying
notes are an integral part of the unaudited condensed financial statements.
CASCADE ACQUISITION
CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 1. DESCRIPTION
OF ORGANIZATION AND BUSINESS OPERATIONS
Cascade Acquisition
Corp. (the “Company”) was incorporated in Delaware on August 14, 2020. The Company was formed for the purpose of entering
into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or
more businesses (a “Business Combination”).
The Company is
not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early
stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth
companies.
As of March 31,
2021, the Company had not commenced any operations. All activity for the period from August 14, 2020 (inception) through March 31, 2021
relates to the Company’s formation and the initial public offering (“Initial Public Offering”), which is described
below, and the search for a target for its initial 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
statements for the Company’s Initial Public Offering were declared effective on November 19, 2020. On November 24, 2020, the Company
consummated the Initial Public Offering of 20,000,000 units (the “Units” and, with respect to the shares of Class A
common stock included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $200,000,000,
which is described in Note 3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 7,317,000 warrants (the “Private Placement
Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Cascade Acquisition Holdings LLC (the “Sponsor”),
generating gross proceeds of $7,317,000, which is described in Note 4.
Following the closing
of the Initial Public Offering on November 24, 2020, an amount of $202,000,000 ($10.10 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”), located in the United States and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16)
of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less
or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of
Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business
Combination and (ii) the distribution of the funds held in the Trust Account, as described below.
On December 9,
2020, pursuant to the full exercise of the underwriters’ over-allotment option, the Company consummated the sale of an additional
3,000,000 Units, at $10.00 per Unit. Also on December 9, 2020, pursuant to provision of the sponsor warrant purchase agreement, the Company
consummated the sale of an additional 900,000 Private Placement Warrants, at $1.00 per Private Placement Warrant. Combined sales of Units
and Private Placement Warrants generated total gross proceeds of $30,900,000. A total of $30,300,000 of the net proceeds was deposited
into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $232,300,000.
Transaction costs
amounted to $11,166,437, consisting of $3,917,000 of underwriting fees, $6,854,750 of deferred underwriting fees and $394,687 of other
offering costs.
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. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company
must complete a Business Combination with one or more target businesses that together have an aggregate fair market value of at least
80% of the value of the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust
Account) at the time of the agreement to enter into an initial Business Combination. The Company will only complete a Business Combination
if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company
Act.
CASCADE 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 $10.10 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 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 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 May 24, 2022 (or until November 24, 2022 if the Company extends the period of time to consummate
a Business Combination) 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. 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 Company will
have until May 24, 2022 to complete a Business Combination. However, if the Company anticipates that it may not be able to consummate
a Business Combination by May 24, 2022, the Company may extend the period of time to consummate a Business Combination by an additional
six months (until November 24, 2022 to complete a Business Combination) (the “Combination Period”). In order to extend the
time available for the Company to consummate a Business Combination, the Sponsor or its affiliate or designees must deposit into the
Trust Account $2,000,000, or $2,300,000 if the underwriters’ over-allotment option is exercised in full ($0.10 per Public Share
in either case), on or prior to the date of the deadline.
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.
CASCADE 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 6) 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 amount of funds deposited into the Trust Account ($10.10).
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) $10.10 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, if less than $10.10
per Public Share 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 accountants), 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.
Liquidity
and Going Concern
As of Mach 31,
2021, the Company had $1,108,078 in its operating bank accounts, $232,374,183 in 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 a working capital of $1,194,083.
Until the consummation
of a Business Combination, the Company 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 connection with the Company’s
assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update
(“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,”
the Company has until May 24, 2022 to consummate the proposed Business Combination. It is uncertain that the Company will be able to
consummate the proposed Business Combination by this time. 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 financial statements. If a business combination is not consummated
by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the liquidity
condition and mandatory liquidation, should a 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 May 24, 2022. The Company intends to complete the proposed Business
Combination before the mandatory liquidation date. However, there can be no assurance that the Company will be able to consummate any
business combination by May 24, 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 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.
CASCADE ACQUISITION
CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
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 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 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 audited financial statements and notes
thereto included in Amendment No. 1 to the Annual Report on Form 10-K for the period ended December 31, 2020 filed with the SEC on June
28, 2021. The operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be
expected through December 31, 2021.
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 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 shareholder approval of any golden parachute payments
not previously approved.
Further, Section
102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a
class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.
The JOBS Act provides that an emerging growth 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.
The Company will
remain an emerging growth company until the earliest of (i) the last day of the first fiscal year (a) following the fifth anniversary
of the completion of the Initial Public Offering, (b) in which the Company’s total annual gross revenue is at least $1.07 billion
or (c) when the Company is deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates
exceeds $700.0 million as of the prior June 30th and (ii) the date on which the Company has issued more than $1.0 billion in non-convertible
debt securities during the prior three-year period.
Use of Estimates
The preparation
of unaudited 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 unaudited
condensed 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 unaudited 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.
CASCADE ACQUISITION
CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
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
The Company classifies
its U.S. Treasury and equivalent securities as held-to-maturity in accordance with Financial Accounting Standards Board Accounting Standards
Codification (“ASC”) Topic 320 “Investments - Debt and Equity Securities.” Held-to-maturity securities are those
securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at
amortized cost on the accompanying balance sheet and adjusted for the amortization or accretion of premiums or discounts.
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 480 “Distinguishing Liabilities
from Equity” (“ASC 480”). Class A common stock subject to mandatory redemption (if any) are classified as a liability
instrument and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that feature
redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not
solely within the Company’s control) are classified as temporary equity. At all other times, common stock are classified as shareholders’
equity. The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s
control and subject to the occurrence of uncertain future events. Accordingly, at March 31, 2021 and December 31, 2020, 20,187,820 and
19,317,263, respectively, Class A common stock subject to possible redemption are presented at redemption value as temporary equity,
outside of the shareholders’ equity section of the Company’s balance sheet.
Warrant Liability
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, Distinguishing Liabilities from Equity 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 common stock and whether the warrant holders could potentially require “net
cash settlement” in a circumstance outside of the Company’s control, 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.
The Company accounts for the warrants issued in connection with our Initial Public Offering in accordance with the guidance contained
in ASC 815-40-15-7D, under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly,
the Company classifies the warrants as liabilities at their fair value and adjusts the warrants to fair value at each reporting period.
This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in
our statement of operations. The Private Warrants and the Public Warrants (as described in Note 3) for period where no observable traded
price was available are valued using a Monte Carlo simulation. For periods subsequent to the detachment of the Public Warrants from the
Units, the Public Warrant quoted market price was used as the fair value of each relevant date.
CASCADE ACQUISITION
CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
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. 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 Company may
be subject to potential examination by federal, state and city taxing authorities in the areas of income taxes. These potential examinations
may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with
federal, state and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will
materially change over the next twelve months.
On March 27, 2020,
the CARES Act was enacted in response to COVID-19 pandemic. Under ASC 740, the effects of changes in tax rates and laws are recognized
in the period which the new legislation is enacted. The CARES Act made various tax law changes including among other things (i) increasing
the limitation under Section 163(j) of the Internal Revenue Code of 1986, as amended (the “IRC”) for 2019 and 2020 to permit
additional expensing of interest (ii) enacting a technical correction so that qualified improvement property can be immediately expensed
under IRC Section 168(k), (iii) making modifications to the federal net operating loss rules including permitting federal net operating
losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously
paid income taxes and (iv) enhancing the recoverability of alternative minimum tax credits. Given the Company’s full valuation
allowance position and capitalization of all costs, the CARES Act did not have an impact on the financial statements.
Net Income
(Loss) per Common Share
Net income (loss)
per common share is computed by dividing net income by the weighted-average number of common stock outstanding during the period. The
Company has not considered the effect of the warrants sold in the Initial Public Offering and the private placement to purchase an aggregate
of 19,717,000 shares in the calculation of diluted loss per share, since the inclusion of such warrants would be anti-dilutive.
The Company’s
statement of operations includes a presentation of income (loss) per common shares subject to possible redemption in a manner similar
to the two-class method of income (loss) per share. Net income (loss) per common stock, basic and diluted, for 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
by the weighted average number of common stock subject to possible redemption outstanding since original issuance.
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 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 share’s proportionate interest.
CASCADE ACQUISITION
CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The following table
reflects the calculation of basic and diluted net income (loss) per common stock (in dollars, except per share amounts):
|
|
For the 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
|
|
$
|
50,961
|
|
Unrealized gain on marketable securities held in Trust Account
|
|
|
17,196
|
|
Less: Company’s portion available to pay taxes
|
|
|
43,885
|
|
Net income attributable to Class A common stock subject to redemption
|
|
$
|
24,272
|
|
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
|
|
|
19,317,263
|
|
Basic and diluted net income per share, Class A common stock subject to possible redemption
|
|
$
|
0.00
|
|
|
|
|
|
|
Non-Redeemable Common stock
|
|
|
|
|
Numerator: Net income minus Net Earnings
|
|
|
|
|
Net Income
|
|
$
|
8,816,773
|
|
Less: Net income allocable to Class A common stock subject to possible redemption
|
|
|
24,272
|
|
Non-Redeemable Net Loss
|
|
$
|
8,792,501
|
|
Denominator: Weighted Average Non-Redeemable common stock
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Non-Redeemable common stock
|
|
|
9,432,737
|
|
Basic and diluted net income per share, Non-Redeemable common stock
|
|
$
|
0.93
|
|
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 this account and management
believes the Company is not exposed to significant risks on such account.
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 sheet, primarily due to their short-term nature.
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 accompanying condensed financial statements.
CASCADE ACQUISITION
CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 3. INITIAL
PUBLIC OFFERING
Pursuant to the
Initial Public Offering, the Company sold 23,000,000 Units, inclusive of 3,000,000 Units sold to the underwriters on December 9,
2020 upon the underwriters’ election to fully exercise their over-allotment option, at a purchase price of $10.00 per Unit. Each
Unit consists of one share of 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 share (see Note
8).
NOTE 4. PRIVATE
PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 7,317,000 Private Placement Warrants at a price
of $1.00 per private Placement Warrant, for an aggregate purchase price of $7,317,000 in a private placement. On December 9, 2020,
in connection with the underwriters’ election to fully exercise their over-allotment option, the Company sold an additional 900,000
Private Placement Warrants to the Sponsor, at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $900,000.
Each Private Placement Warrant is exercisable for one Class A ordinary share at a price of $11.50 per share, subject to adjustment (see
Note 8). The proceeds from the Private Placement Warrants were added to the proceeds from the Initial Public Offering held in the Trust
Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds of 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. There will be no redemption rights or liquidating distributions from the Trust Account with
respect to the Private Placement Warrants.
NOTE 5. RELATED
PARTY TRANSACTIONS
Founder Shares
On August 24, 2020,
the Company issued an aggregate of 7,187,500 shares of Class B common stock to the Sponsor for an aggregate purchase price of $25,000
in cash. In October 2020, the Sponsor returned to the Company, at no cost, an aggregate of 1,437,500 shares of Class B common stock,
which the Company cancelled, resulting in an aggregate of 5,750,000 shares of Class B common stock (the “Founder Shares”)
issued and outstanding. The Founder Shares include an aggregate of up to 750,000 shares of Class B common stock subject to forfeiture
by the Sponsor to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the Sponsor
will own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering. As a
result of the underwriters’ election to fully exercise their over-allotment option on December 9, 2020, no Founder Shares are currently
subject to forfeiture.
The Sponsor has
agreed that, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier of (A) one
year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported
sale price of the Class A 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, stock exchange, reorganization or
other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Class A
common stock for cash, securities or other property.
CASCADE ACQUISITION
CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Promissory
Note — Related Party
On August 14, 2020,
the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company could
borrow up to an aggregate principal amount of $300,000. The Promissory Note was non-interest bearing and payable on the earlier of (i) March 31,
2021 or (i) the consummation of the Initial Public Offering. The Company borrowed a total of $172,046 under the Promissory Note,
which was repaid on December 7, 2020.
Related Party
Loans
In order to finance
transaction costs in connection with a Business Combination, the initial stockholders or an affiliate of the initial stockholders 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.
As of March 31, 2021, the terms of the Working Capital Loans, if any, have not been determined and no written agreements exist with respect
to such loans.
Related Party
Extension Loans
As discussed in
Note 1, the Company may extend the period of time to consummate a Business Combination by an additional six months (until November 24,
2022 to complete a Business Combination). In order to extend the time available for the Company to consummate a Business Combination,
the Sponsor or its affiliates or designees must deposit into the Trust Account $2,300,000 ($0.10 per Public Share), on or prior to the
date of the deadline. Any such payments would be made in the form of a non-interest bearing, unsecured promissory note. Such notes would
either be paid upon consummation of a Business Combination, or, at the relevant insider’s discretion, converted upon consummation
of a Business Combination into additional Private Placement Warrants at a price of $1.00 per Private Warrant. The Sponsor and its affiliates
or designees are not obligated to fund the Trust Account to extend the time for the Company to complete a Business Combination.
NOTE 6. COMMITMENTS
Registration
Rights
Pursuant to a registration
rights agreement entered into on November 19, 2020, the holders of the Founder Shares, Private Placement Warrants and warrants that may
be issued upon conversion of Working Capital Loans (and any Class A common stock issuable upon the exercise of the Private Placement
Warrants and warrants issued upon conversion of the Working Capital Loans) will be entitled to registration rights. The holders of these
securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition,
the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the
completion of a Business Combination. 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
Jay Levine, the
Company’s Chief Executive Officer, Gene Weil, a director of the Company, and certain affiliates of the Sponsor and Waterfall Asset
Management, LLC purchased an aggregate of 2.75% of the Units in the Initial Public Offering, and certain other investors identified by
the Sponsor purchased an aggregate of 14.3% of the Units in the Initial Public Offering, in each case at the Initial Public Offering
price, for an aggregate of 3,415,000 Units. The underwriters did not receive any underwriting discounts or commissions on the Units purchased
by such parties.
The underwriters
are entitled to a deferred fee of $0.35 per Unit, excluding the Units purchased by the parties described above, or $6,854,750 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.
CASCADE ACQUISITION
CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 7. SHAREHOLDERS’
EQUITY
Preference
Shares — The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share, with such
designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.
At March 31, 2021, there were no preference shares issued or outstanding.
Class A Common
stock — The Company is authorized to issue 200,000,000 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 and December 31, 2020, there was 2,812,180 and 3,682,737
shares, respectively, of Class A common stock issued and outstanding, excluding 20,187,820 and 19,317,263 shares, respectively, of Class A
common stock subject to possible redemption.
Class B Common
stock — The Company is authorized to issue 20,000,000 Class B common stock, with a par value of $0.0001 per share. Holders
of the Class B common stock are entitled to one vote for each share. At March 31, 2021 and December 31, 2020, there were 5,750,000 Class
B common stock issued and outstanding.
Holders of the
Class B common stock will have the right to elect all of the Company’s directors prior to a Business Combination. 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 the consummation of a Business Combination
at a ratio such that 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 (i) the total number of shares of common stock issued and outstanding
upon completion of the Initial Public Offering, plus (ii) the sum of (a) all shares of common stock issued or deemed issued
or issuable upon conversion or exercise of any equity-linked securities or deemed issued by the Company in connection with or in relation
to the completion of a Business Combination, excluding (1) 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
(2) Private Placement Warrants issued to the Sponsor or any of its affiliates upon conversion of Working Capital Loans minus (b) the
number of Public Shares redeemed by Public Stockholders in connection with a Business Combination. In no event will the shares of our
Class B common stock convert into shares of our Class A common stock at a rate of less than one to one.
NOTE 8. WARRANTS
As of March 31,
2021 and December 31, 2020, the Company had 11,500,000 Public Warrants and 8,217,000 Private 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 completion of a Business Combination and (b) 12 months from the
closing of the Initial Public Offering. The Public Warrants will expire five years from the completion 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 warrants is then effective and a current prospectus relating thereto is available, subject to the Company
satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable
for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants,
unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising
holder, or an exemption is available.
CASCADE ACQUISITION
CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(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 commercially reasonable efforts to file with the SEC a registration statement covering the issuance, under the Securities Act,
of the Class A common stock issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause
the same to become effective within 60 business days after the closing of a Business Combination and to maintain the effectiveness of
such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions
of the warrant agreement. Notwithstanding the above, if the Class A common stock are, at the time of any exercise of a warrant, not listed
on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of
the Securities Act, the Company may, at its option, require holders of public warrants who exercise their warrants to do so on a “cashless
basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be
required to file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify
the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of
Warrants When the Price per Class A Ordinary Share Equals or Exceeds $18.00 — Once the warrants become exercisable, the Company
may redeem the outstanding Public Warrants:
|
●
|
in whole and not in part;
|
|
|
|
|
●
|
at a price of $0.01 per
Public Warrant;
|
|
|
|
|
●
|
upon not less than 30 days’
prior written notice of redemption to each warrant holder and
|
|
|
|
|
●
|
if, and only if, the last
reported sale price of the Class A common stock for any 20 trading days within a 30-trading day period ending on the third trading
day prior to the date on which the Company sends the notice of redemption to the warrant holders (the “Reference Value”)
equals or exceeds $18.00 per share (as adjusted).
|
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.
Redemption
of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $10.00 — Once the warrants become exercisable, the
Company may redeem the outstanding warrants:
|
●
|
in whole and not in part;
|
|
●
|
at
$0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption; provided that holders will be able to exercise
their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the “fair
market value” of the Class A common stock; and
|
|
●
|
if,
and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted).
|
|
●
|
if
the Reference Value is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for
redemption on the same terms as the outstanding Public Warrants, as described above.
|
The
exercise price and number of 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 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.
CASCADE ACQUISITION
CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
In addition, if
(x) the Company issues additional Class A common stock or equity-linked securities for capital raising purposes in connection with the
closing of a Business Combination at an issue price or effective issue price of less than $9.20 per Class A ordinary share (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 a Business Combination on the date of
the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of its Class A common
stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its 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
will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price and the $10.00
per share redemption trigger price will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly
Issued Price.
The Private Placement
Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that, so long as they
are held by the Sponsor or its permitted transferees: (1) they will not be redeemable by the Company; (2) they (including the common
stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the
Sponsor until 30 days after the completion of a Business Combination; (3) they may be exercised by the holders on a cashless basis; (4)
they (including the common stock issuable upon exercise of these warrants) are entitled to registration rights; and (5) they can only
be exercised during the period (A) commencing on the later of: (i) the date that is thirty (30) days after the first date on which the
Company completes its Business Combination, and (ii) the date that is twelve (12) months from the date of the closing of the Initial
Public Offering, and (B) terminating at the earliest to occur of (x) 5:00 p.m., New York City time on the date that is seven years after
the date on which the Company completes its Business Combination, and (y) the liquidation of the Company in accordance with the Company’s
Amended and Restated Certificate of Incorporation, as amended from time to time, if the Company fails to complete a Business Combination.
NOTE 9. FAIR
VALUE MEASUREMENTS
The Company follows
the guidance in ASC Topic 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.
|
CASCADE ACQUISITION
CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
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,
2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair
value:
Description
|
|
Level
|
|
|
March 31,
2021
|
|
|
Level
|
|
|
December 31,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
|
1
|
|
|
$
|
232,374,183
|
|
|
1
|
|
|
$
|
232,296,529
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability – Public Warrants
|
|
1
|
|
|
$
|
10,350,000
|
|
|
3
|
|
|
$
|
15,640,000
|
|
Warrant Liability – Private Warrants
|
|
2
|
|
|
$
|
7,395,300
|
|
|
3
|
|
|
$
|
11,175,120
|
|
The warrants were
accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the accompanying balance sheets.
The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within
the change in fair value of warrant liabilities in the statement of operations.
The Public and
Private warrants were valued as of November 24, 2020 and December 31, 2020 using a Monte Carlo simulation, which is considered to be
a Level 3 fair value measurement. The Monte Carlo simulation’s primary unobservable input utilized in determining the fair value
of the Warrants is the probability of consummation of the Business Combination. The probability assigned to the consummation of the Business
Combination was 90% which was estimated based on the observed success rates of business combinations for special purpose acquisition
companies. The expected volatility as of the Initial Public Offering date was derived from observable public warrant pricing on comparable
‘blank-check’ companies without an identified target.
The following table
presents the quantitative information regarding Level 3 fair value measurements at December 31, 2020:
Expected volatility
|
|
|
23.0
|
%
|
Risk-free interest rate
|
|
|
0.52
|
%
|
Expected term (years)
|
|
|
5.42
|
|
Fair value per share of Class A common stock
|
|
$
|
10.45
|
|
The subsequent
measurements of the Public Warrants after the detachment of the Public Warrants from the Units are classified as Level 1 due to the use
of the quoted price in an active market under the ticker CAS.WS. For the Private warrants, because of the provision in the Public
and Private warrant agreements described in Note 8 regarding the Company’s ability to redeem the warrants when the trading price
of the warrants equals or exceeds $10.00, the Company concluded the fair value of the Public and Private warrants to be equal. Therefore,
subsequent measurements of the fair value of the Private warrants are also determined by using the quoted price in an active market under
the ticker CAS. WS, which for the Private warrants is a Level 2 measurement.
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
|
|
$
|
11,175,120
|
|
|
$
|
15,640,000
|
|
|
$
|
26,815,120
|
|
Change
in valuation inputs or other assumptions
|
|
|
(3,779,820
|
)
|
|
|
(5,290,000
|
)
|
|
|
(9,069,820
|
)
|
Fair
value as of March 31, 2021
|
|
$
|
7,395,300
|
|
|
$
|
10,350,000
|
|
|
$
|
17,745,300
|
|
Transfers in the
amount of $15,640,000 from Level 3 to Level 1, and transfers in the amount of $11,175,120 from Level 3 to Level 2 of the fair value hierarchy
occurred during the three months ended March 31, 2021.
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated
subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued.
The Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.
ITEM 2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this
report (the “Quarterly Report”) to “we,” “us,” “Cascade” or the “Company”
refer to Cascade Acquisition Corp. References to our “management” refer to our officers and directors, and references to
the “Sponsor” refer to Cascade Acquisition Holdings, LLC. The following discussion and analysis of the Company’s financial
condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere
in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements
that involve risks and uncertainties.
Special Note
Regarding Forward-Looking Statements
This Quarterly
Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended
(the “Securities Act”) and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties
that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical
fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans
and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,”
“anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance,
but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events,
performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For
information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking
statements, please refer to the Risk Factors section of the Company’s Amendment No 1 to the Annual Report on Form 10-K/A for the
year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission (the “SEC”) on June 28, 2021. The Company’s
securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable
securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result
of new information, future events or otherwise.
Overview
We are a blank
check company incorporated in the Delaware on August 14, 2020 formed for the purpose of effecting a merger, amalgamation, share exchange,
asset acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate
our Business Combination using cash derived from the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants,
our shares, debt or a combination of cash, shares and debt.
We expect to continue
to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination
will be successful.
Results of Operations
We have neither
engaged in any operations nor generated any operating revenues to date. All activity for the period from August 14, 2020 (inception)
through March 31, 2021 relates to the Company’s formation and the initial public offering, which is described below, and the search
for a target for its initial Business Combination We do not expect to generate any operating revenues until after the completion of our
initial Business Combination. We expect to generate non-operating income in the form of interest income on marketable securities held
after the Initial Public Offering. We expect that we will incur increased expenses as a result of being a public company (for legal,
financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and
completing, a Business Combination.
For the three months
ended March 31, 2021, we had net income of $8,816,773, which consisted of operating and formation costs of $330,701 a non-cash change
in fair value of derivative liability of $9,069,820, interest income on marketable securities held in the Trust Account of $58,062 and
an unrealized gain on marketable securities held in the Trust Account of $19,592.
Liquidity and
Going Concern
On November 24,
2020, we consummated the Initial Public Offering of 20,000,000 Units at a price of $10.00 per Unit, generating gross proceeds of $200,000,000.
Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 7,317,000 Private Placement Warrants to the
Sponsor at a price of $1.00 per Private Placement Warrant generating gross proceeds of $7,317,000.
On December 9,
2020, in connection with the underwriters’ election to fully exercise of their over-allotment option, we consummated the sale of
an additional 3,000,000 Units and the sale of an additional 900,000 Private Placement Warrants, generating total gross proceeds of $30,900,000.
Following
the Initial Public Offering, the full exercise of the over-allotment option by the underwriters’ and the sale of the Private Placement
Warrants, a total of $232,300,000 was placed in the Trust Account and we had $1,782,072 of cash held outside of the Trust Account, after
payment of costs related to the Initial Public Offering, and available for working capital purposes. We incurred $11,166,437 in transaction
costs, including $3,917,000 of underwriting fees, $6,854,750 of deferred underwriting fees and $394,687 of other offering costs.
For the three months
ending March 31, 2021 cash used in operating activities was $169,630. Net income of $8,816,773 was affected by a non-cash items including
the change in fair value of warrant liability of $9,069,820, interest earned on marketable securities held in the Trust Account of $58,062,
and unrealized gain on marketable securities held in Trust Account $19,592. Changes in operating assets and liabilities provided $161,071
of cash for operating activities.
As of March 31,
2021, we had cash and marketable securities held in the Trust Account of $232,374,183. We intend to use substantially all of the funds
held in the Trust Account, including any amounts representing interest earned on the Trust Account, which interest shall be net of taxes
payable and excluding deferred underwriting commissions, to complete our Business Combination. We may withdraw interest from the Trust
Account to pay taxes, if any. Through March 31, 2021, we did not withdraw any interest earned on the Trust Account to pay our taxes.
To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a Business Combination, the remaining
proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make
other acquisitions and pursue our growth strategies.
As of March 31,
2021, we had cash of $1,108,078. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target
businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations
of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective
target businesses, structure, negotiate and complete a Business Combination.
In order to fund
working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the
Sponsor, or our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination,
we would repay such loaned amounts. In the event that a Business Combination does not close, we may use a portion of the working capital
held outside the trust account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment.
Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender. The warrants
would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period. The terms of
such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans.
The loans would be repaid upon consummation of a Business Combination, without interest.
We may need to
raise additional capital through loans or additional investments from our Sponsor, stockholders, officers, directors or third parties.
Our officers, directors and Sponsor may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount
they deem reasonable in their sole discretion, to meet our working capital needs. Accordingly, we may not be able to obtain additional
financing. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which
could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing
overhead expenses. We cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at
all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through the liquidation
date of May 24, 2022.
Off-Balance
Sheet Financing Arrangements
We have no obligations,
assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2021. We do not participate in transactions
that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which
would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance
sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased
any non-financial assets.
Contractual
Obligations
We do not have
any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
Jay Levine, our
Chief Executive Officer, Gene Weil, a director, and certain affiliates of our Sponsor and Waterfall Asset Management, LLC purchased an
aggregate of 2.75% of the Units in the Initial Public Offering, and certain other investors identified by our Sponsor purchased an aggregate
of 14.3% of the Units in the Initial Public Offering, in each case at the Initial Public Offering price, for an aggregate of 3,415,000
Units. The underwriters did not receive any underwriting discounts or commissions on the Units purchased by such parties.
The underwriters
are entitled to a deferred fee of $0.35 per Unit, excluding the Units purchased by the parties described above, or $6,854,750 in
the aggregate. Subject to the terms of the underwriting agreement, (i) the deferred fee will be placed in the Trust Account and
released to the underwriters only upon the completion of a Business Combination and (ii) the deferred fee will be waived by the
underwriters in the event that we do not complete a Business Combination. Up to 50% of the deferred underwriting commissions may be paid
at the sole discretion of its management team to the underwriters in the allocations determined by its management team and/or to third
parties not participating in the Initial Public Offering (but who are members of the Financial Industry Regulatory Authority) that assist
us in consummating our initial Business Combination.
On January 30,
2021, we entered into a consulting agreement with a service provider, pursuant to which the service provider will provide us with consulting
services in connection with our search for a potential merger, share exchange, asset acquisition, share purchase, reorganization or similar
business combination. We agreed to pay the service provider an initial fee of $41,668 and $20,834 per month thereafter up to a period
of 16 months.
Critical Accounting
Policies
The preparation
of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could
materially differ from those estimates. We have identified the following critical accounting policies:
Class A Common
Stock Subject to Redemption
We account for
our shares of Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Shares of 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 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 our control)
is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features
certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly,
the Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity
section of our balance sheet.
Warrant Liability
We account
for the Warrants in accordance with the guidance contained in ASC 815-40 under which the warrants do not meet the criteria for equity
treatment and must be recorded as liabilities. Accordingly, we classify the Warrants as liabilities and adjust them to fair value at
each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised and any change in fair
value is recognized in our statement of operations. The Private Warrants and the Public Warrants for periods where no observable traded
price was available are valued using a Monte Carlo simulation. For periods subsequent to the detachment of the Public Warrants from the
Units, the Public Warrant quoted market price was used as the fair value as of each relevant date.
Net Loss Per
Ordinary Share
We apply the two-class
method in calculating earnings 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 interest income earned on the Trust Account, net of applicable taxes, if any, by
the weighted average number of shares of Class A common stock subject to possible redemption outstanding for the period. Net income
(loss) per common share, basic and diluted for and non-redeemable common stock is calculated by dividing net loss less income attributable
to Class A common stock subject to possible redemption, by the weighted average number of shares of non-redeemable common stock
outstanding for the period presented.
Recent Accounting
Pronouncements
Management does
not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.