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
UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 –
ORGANIZATION AND BUSINESS BACKGROUND
Greencity Acquisition Corporation (the
“Company”) is a blank check company incorporated in the Cayman Islands on May 14, 2018. The Company was formed for the
purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all
of the assets of, entering into contractual arrangements with, or engaging in any other similar business combination with one or
more businesses or entities (“Business Combination”). Although the Company is not limited to a particular industry or
geographic region for purposes of consummating a Business Combination, the Company intends to focus on businesses that have a
connection to the Asia market.
At March 31, 2021, the Company had not commenced
any operations. All activity through March 31, 2021 relates to the Company’s formation and the Initial Public Offering (as defined
below).
The registration statement for the Company’s
Initial Public Offering was declared effective on July 23, 2020. On July 28, 2020, the Company consummated the Initial Public Offering
of 4,000,000 units (the “Units” and, with respect to the ordinary shares included in the Units sold, the “Public Shares”),
generating gross proceeds of $40,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 260,000 units (the “Private Units”) at a price of $10.00 per Private
Unit in a private placement to Cynthia Management Corporation (the “Sponsor”), generating gross proceeds of $2,600,000, which
is described in Note 4.
Transaction costs amounted to $2,646,665, consisting
of $1,000,000 of underwriting fees, $1,000,000 of deferred underwriting fees and $646,665 of other offering costs.
Following the closing of the Initial Public Offering
on July 28, 2020, an amount of $40,600,000 ($10.15 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering
and the sale of the Private Units 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 180 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 shareholders,
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 sale of the Private Units, although substantially
all of the net proceeds are intended to be applied generally toward consummating a Business Combination. NASDAQ rules provide that
the Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the
balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of the signing
of an 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 shareholders 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 shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. In connection with a proposed
Business Combination, if the Company is no longer a foreign private issuer, the Company may seek shareholder approval of a Business Combination
at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they vote for or against
a Business Combination. The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001
either immediately prior to or upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a majority
of the outstanding shares voted are voted in favor of the Business Combination.
If the Company seeks shareholder approval of a
Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and Restated
Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder or any other
person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from seeking redemption rights with respect to
15% or more of the Public Shares without the Company’s prior written consent.
If the Company continues to be a foreign
private issuer or if a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or
other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, offer such
redemption pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender
offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to
completing a Business Combination.
The shareholders will be entitled to redeem their
Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.15 per Public Share, subject to increase
of up to an additional $0.30 per Public Share in the event that the Sponsor elects to extend the period of time to consummate a Business
Combination (see below), 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). The per-share amount to be distributed to shareholders who redeem their Public Shares will not
be reduced by the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 6). There will be no
redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
The Sponsor and any of the Company’s officers
or directors that may hold founder shares (the “initial shareholders”) will agree (a) to vote their founder shares, the
ordinary shares included in the Private Units (the “Private Shares”) and any Public Shares purchased during or after the Initial
Public Offering in favor of a Business Combination, (b) not to propose an amendment to the Company’s Amended and Restated Memorandum
and Articles of Association with respect to the Company’s pre-Business Combination activities prior to the consummation of a Business
Combination unless the Company provides dissenting public shareholders with the opportunity to redeem their Public Shares in conjunction
with any such amendment; (c) not to redeem any shares (including the founder shares) and Private Shares into the right to receive
cash from the Trust Account in connection with a shareholder vote to approve a Business Combination (or to sell any shares in a tender
offer in connection with a Business Combination if the Company does not seek shareholder approval in connection therewith) or a vote to
amend the provisions of the Amended and Restated Memorandum and Articles of Association relating to shareholders’ rights of pre-Business
Combination activity and (d) that the founder shares and Private Shares shall not participate in any liquidating distributions upon
winding up if a Business Combination is not consummated. However, the initial shareholders will be entitled to liquidating distributions
from the Trust Account with respect to any Public Shares purchased during or after the Initial Public Offering if the Company fails to
complete its Business Combination.
The Company will have until July 28, 2021
to consummate a Business Combination. However, if the Company anticipates that it may not be able to consummate a Business Combination
by July 28, 2021, the Company may extend the period of time to consummate a Business Combination up to nine times, each by an additional month
(for a total of 21 months 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 $133,334, up to an aggregate of $1,200,000, or $0.30 per Public Share, on or prior to the date of the applicable deadline, for
each monthly extension.
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 no more than ten business days thereafter, redeem 100% of the outstanding 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 (net of taxes payable
and less interest to pay dissolution expenses up to $50,000), divided by the number of then outstanding Public Shares, which redemption
will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of the remaining shareholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal
dissolution of the Company, subject in each case to its obligations to provide for claims of creditors and the requirements of applicable
law. The underwriter has agreed to waive its rights to the deferred underwriting commission 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 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).
The Sponsor has agreed that it will be
liable to the Company, if and to the extent any claims by a vendor (other than the Company’s independent auditors) 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 amounts in the Trust Account to below (i) $10.15 per share or (ii) such lesser
amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the
value of the trust assets, except as to any claims by a third party who executed a waiver of any and all rights to seek access to
the Trust Account and except as to any claims under the 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”).
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, prospective target
businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title,
interest or claim of any kind in or to monies held in the Trust Account.
Risks and Uncertainties
On January 30, 2020, the World Health Organization
(“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”).
In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact
of the COVID-19 outbreak continues to evolve.
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 these financial statements. The financial statements do not include any adjustments that might result from the outcome of
this uncertainty.
Liquidity and Going Concern
As of March 31, 2021, the Company had $355,822
in its operating bank accounts and working capital deficit of $38,097.
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.
To complete a Business Combination, the Company
will need to raise additional capital through loans or additional investments from its Sponsor, stockholders, officers, directors, or
third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to
time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs.
Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it 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. The Company 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 one year from the date of these financial statements if a Business Combination is not consummated.
These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the
liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 2 –
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.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s Annaul Report on Form 10-K/A for the year ended December 31, 2020, as
filed with the SEC on July 26, 2021. The interim results for the three months ended March 31, 2021 are not necessarily indicative of
the results to be expected for the year ending December 31, 2021 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting
firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation
in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies
(that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use of Estimates
The preparation of the financial statements in
conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses
during the reporting period.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near
term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of
March 31, 2021 and December 31, 2020.
Warrants
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing
Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers
whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480,
and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed
to the Company’s own ordinary shares 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 equity 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
as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
Marketable Securities Held in Trust Account
At March 31, 2021, substantially all of the assets
held in the Trust Account were held in U.S. Treasury Bills.
Offering Costs
The Company complies with the requirements of
the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A – “Expenses of Offering”.
Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the
Public Offering. Offering costs are allocated to the separable financial instruments issued in the
Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant
liabilities are expensed as incurred, presented as non-operating expenses in the statement of operations. Offering costs associated
with the ordinary shares were charged to shareholders’ equity upon the completion of the Public Offering.
Ordinary Shares Subject to Possible Redemption
The Company accounts for its ordinary shares subject
to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured
at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within
the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)
are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s
ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence
of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented at redemption value as temporary
equity, outside of the shareholders’ equity section of the Company’s balance sheets.
Income Taxes
The Company complies with the accounting and reporting
requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting
and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement
and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 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’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The
Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized
tax benefits as of March 31, 2021 and no amounts accrued for interest and penalties. 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 may be subject to potential examination
by foreign taxing authorities in the area 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 foreign 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.
The Company is considered to be an exempted Cayman
Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing
requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the periods presented.
Net Income (Loss) Per Ordinary Share
The Company complies with accounting
and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net income (loss) per ordinary share is computed by
dividing net income by the weighted-average number of ordinary shares outstanding during the period.
The Company’s statement of operations includes a
presentation of income (loss) per share for ordinary shares subject to possible redemption in a manner similar to the two-class
method of income (loss) per share. Net income (loss) per ordinary share subject to possible redemption, basic and diluted, 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 ordinary shares subject to possible redemption outstanding since original issuance.
Net income (loss) per non-redeemable ordinary share, basic and diluted,
is calculated by dividing the net income (loss), adjusted for income or loss on marketable securities attributable to ordinary shares
subject to possible redemption, by the weighted average number of non-redeemable ordinary shares outstanding for the period.
Non-redeemable ordinary shares include Founder Shares and non-redeemable
ordinary shares as these shares do not have any redemption features. Non-redeemable ordinary shares participate in the income or loss
on marketable securities based on non-redeemable ordinary shares’ proportionate interest.
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 financial statements, primarily due to their short-term nature, not including the warrants.
Derivative Financial Instruments
We evaluate our financial instruments to determine
if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives
and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially
recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in
the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities
or as equity, is evaluated at the end of each reporting period.
Derivative liabilities are classified in the
balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument is required within
12 months of the balance sheet date.
Recently Issued 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 financial
statements.
NOTE 3.
INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold 4,000,000 Units at a purchase price of $10.00 per Unit. Each Unit consists of one ordinary share and one redeemable warrant
(“Public Warrant”). Each Public Warrant will entitle the holder to purchase one-half of one ordinary share at an exercise
price of $11.50 per whole share (see Note 8).
NOTE 4.
PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Sponsor purchased an aggregate of 260,000 Private Units at a price of $10.00 per Private Unit, for an aggregate purchase
price of $2,600,000. The proceeds from the Private Units were added to the net proceeds from the Initial Public Offering held in the Trust
Account. The Private Units are identical to the Units sold in the Initial Public Offering, except for the private warrants (“Private
Warrants”), as described in Note 8. If the Company does not complete a Business Combination within the Combination Period, the proceeds
from the sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable
law) and the Private Units and underlying securities will be worthless.
NOTE 5.
RELATED PARTY TRANSACTIONS
Founder Shares
In December 2018, the Company received $25,000
for the anticipated issuance of 1,150,000 founder shares to the Sponsor. As of December 31, 2018, one founder share was issued to the
Sponsor. The remaining 1,149,999 founder shares were issued to the Sponsor on February 21, 2019.
The 1,150,000 founder shares included an aggregate
of up to 150,000 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not exercised
in full or in part, so that the Sponsor will collectively own 20% of the Company’s issued and outstanding shares after the Initial
Public Offering. On September 10, 2020, the underwriters’ election to exercise their over-allotment option expired unexercised,
resulting in the forfeiture of 150,000 founder shares. Accordingly, there were 1,000,000 Founder Shares issued and outstanding.
The initial shareholders have agreed not to transfer,
assign or sell any of the founder shares (except to certain permitted transferees) until, with respect to 50% of the founder shares, the
earlier of (i) six months after the date of the consummation of a Business Combination, or (ii) the date on which the closing
price of the Company’s ordinary shares equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations
and recapitalizations) for any 20 trading days within any 30-trading day period commencing after a Business Combination, with respect
to the remaining 50% of the founder shares, upon six months after the date of the consummation of a Business Combination, or earlier,
in each case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other
similar transaction which results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash,
securities or other property.
Administrative Services Arrangement
The Company entered into an agreement whereby,
commencing on July 24, 2020, through the earlier of the Company’s consummation of a Business Combination and its liquidation, the
Company will pay the Sponsor a total of $10,000 per month for certain general and administrative services, including office space, utilities
and administrative services, as the Company may require from time to time. For the three months ended March 31, 2021, the Company incurred
$30,000 in fees for these services, and $80,000 is included within accrued expenses in the accompanying balance sheets.
Advance from Related Party
As of December 31, 2018, the Sponsor advanced
the Company an aggregate of $24,995. The advance was non-interest bearing and due on demand. In February 2019, the advance was converted
into a promissory note. As of March 31, 2021 and December 31, 2020, there were no advances outstanding.
Promissory Note — Related Party
On February 21, 2019, the Company issued
a non-interest bearing, unsecured promissory note to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal
amount of $300,000. On June 30, 2019, the Company amended the promissory note such that the Company may borrow up to an aggregate
total principal amount of $500,000 (the “Promissory Note”) and on June 20, 2020, the Company further amended the Promissory
Note such that the Promissory Note is payable on the earlier of (i) December 31, 2020 or (ii) the consummation of the Initial
Public Offering. In connection with the Promissory Note, the Company converted $24,995 in advances as of December 31, 2018 into amounts
outstanding under the Promissory Note. On July 28, 2020, the Company amended the Promissory Note such that it is payable upon the
consummation of a Business Combination. At March 31, 2021 and December 31, 2020, there was $393,808 and $394,590, respectively, outstanding
under the Promissory Note. 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 Promissory Note but no proceeds held in the Trust Account would be used to repay the Promissory Note.
Related Party Loans
In order to finance transaction costs in
connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor, or the Company’s officers
and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such
Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a Business
Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be converted upon consummation of
a Business Combination into additional Private Units at a price of $10.00 per Unit. 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.
Related Party Extension Loans
As discussed in Note 1, the Company may extend
the period of time to consummate a Business Combination up to nine times, each by an additional month (for a total of 21 months
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 $133,334 ($0.033 per Public Share), up to an aggregate of $1,200,000,
or $0.30 per Public Share, on or prior to the date of the applicable deadline, for each monthly extension. Any such payments would be
made in the form of a loan. The terms of the promissory note to be issued in connection with any such loans have not yet been negotiated.
If the Company completes a Business Combination, the Company would repay such loaned amounts out of the proceeds of the Trust Account
released to the Company. If the Company does not complete a Business Combination, the Company will not repay such loans. Furthermore,
the letter agreement with the initial shareholders contains a provision pursuant to which the Sponsor has agreed to waive its right to
be repaid for such loans in the event that the Company does not complete a Business Combination. 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 AND CONTINGENCIES
Registration Rights
Pursuant to a registration rights agreement entered
into on July 23, 2020, the holders of the founder shares, Private Units (and their underlying securities), the shares underlying
the warrants underlying the unit purchase option issued to the underwriters and any Units that may be issued upon conversion of the Working
Capital Loans (and underlying securities) are 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 consummation of a Business Combination and rights
to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. Notwithstanding the
foregoing, the underwriters may not exercise their demand and “piggyback” registration rights after five (5) and seven
(7) years after the effective date of the registration statement and may not exercise their demand rights on more than one occasion.
The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day
option to purchase up to 600,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting
discounts and commissions. On September 10, 2020, the underwriters’ election to exercise their over-allotment option expired
unexercised. The underwriters were paid a cash underwriting discount of two and one-half percent (2.5%) of the gross proceeds
of the Initial Public Offering, or $1,000,000. The underwriters are entitled to a deferred fee of two and one-half percent (2.5%)
of the gross proceeds of the Initial Public Offering, or $1,000,000. The deferred fee will be paid in cash upon the closing of a Business
Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement.
NOTE 7.
SHAREHOLDERS’ EQUITY
Preference Shares — On February 21,
2019, the Company filed an Amended and Restated Memorandum and Articles of Incorporation, pursuant to which the Company is authorized
to issue 1,000,000 preference shares with a par value of $0.0001 per share with such designation, rights and preferences as may be determined
from time to time by the Company’s Board of Directors. At March 31, 2021 and December 31, 2020, there were no preference shares
designated, issued or outstanding.
Ordinary Shares — On February 21,
2019, the Company filed an Amended and Restated Memorandum and Articles of Incorporation, pursuant to which the Company is authorized
to issue 100,000,000 ordinary shares, with a par value of $0.0001 per share. Holders of the ordinary shares are entitled to one vote for
each ordinary share. As of March 31, 2021 and December 31, 2020, there were 2,033,883 and 2,129,810 ordinary shares issued and outstanding,
excluding 3,226,117and 3,130,190 ordinary shares subject to possible redemption, respectively.
Unit Purchase Option
On July 28, 2020, the Company sold the underwriter
(and/or its designees), for $100, an option to purchase up to 240,000 Units exercisable at $11.00 per Unit (or an aggregate exercise price
of $2,640,000) commencing on the later of the consummation of a Business Combination and January 28, 2021. The unit purchase option may
be exercised for cash or on a cashless basis, at the holder’s option, and expires five years from the effective date of the registration
statement related to the Initial Public Offering. The Units issuable upon exercise of the option are identical to those offered in the
Initial Public Offering. The Company accounted for the unit purchase option as liability classification. The unit purchase option is valued
based on the fair value of the public share estimated at the redemption value plus the fair value of the warrants. These amounts
are below the exercise price of the unit purchase option therefore the probability of exercise is low resulting in a de minimus value
for the unit purchase option. The option and such units purchased pursuant to the option, as well as the ordinary shares underlying such
units, the warrants included in such units, and the shares underlying such warrants, have been deemed compensation by FINRA and are therefore
subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA’s NASDAQ Conduct Rules. Additionally, the option may
not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following July 28,
2020 except to any underwriter and selected dealer participating in the Initial Public Offering and their bona fide officers or partners.
The option grants to holders demand and “piggy-back” rights for periods of five and seven years, respectively, from July 28,
2020 with respect to the registration under the Securities Act of the securities directly and indirectly issuable upon exercise of the
option. The Company will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which
will be paid for by the holders themselves. The exercise price and number of units issuable upon exercise of the option may be adjusted
in certain circumstances including in the event of a stock dividend, or the Company’s recapitalization, reorganization, merger or
consolidation. However, the option will not be adjusted for issuances of ordinary shares at a price below its exercise price.
NOTE 8.
WARRANTS
Warrants — 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) the consummation of a Business Combination or (b) 12 months from the effective
date of the registration statement relating to the Initial Public Offering. No Public Warrants will be exercisable for cash unless the
Company has an effective and current registration statement covering the ordinary shares issuable upon exercise of the Public Warrants
and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, if a registration statement covering the ordinary
shares issuable upon the exercise of the Public Warrants is not effective within 60 days, the 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 the Public Warrants on a cashless basis pursuant to an available exemption from registration under the Securities
Act. If an exemption from registration is not available, holders will not be able to exercise their Public Warrants on a cashless basis.
The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.
Redemption of warrants when the price per share
of ordinary shares equals or exceeds $16.50. Once the Public Warrants become exercisable, the Company may redeem the Public Warrants
(except 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 Public Warrant holder,
|
|
•
|
if, and only if, the reported last sale price of the ordinary shares equal or exceed $16.50 per share, (as adjusted for share splits, share capitalizations, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading day period ending on the third trading day prior to the notice of redemption to Public Warrant holders, and
|
|
•
|
if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.
|
If the Company calls the Public Warrants for
redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a
“cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon
exercise of the 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 warrants will not be adjusted
for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net
cash settle the 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 warrants will not receive any of such funds with respect to their
warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to
such warrants. Accordingly, the warrants may expire worthless.
In addition, if (x) the Company issues additional
ordinary shares 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 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 the ordinary shares during the 20 trading day period starting
on the trading day prior to the day on which the Company consummates a 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 $16.50 per share redemption trigger price will be adjusted (to the nearest cent)
to be equal to 165% of the higher of the Market Value and the Newly Issued Price.
The Private Warrants are identical to the Public
Warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants and the ordinary shares issuable upon
the exercise of the Private Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business
Combination, subject to certain limited exceptions and the Private Warrants underlying the Private Units issued to the underwriter may
not be exercised after five years from the effective date of the Initial Public Offering. Additionally, the Private Warrants will be exercisable
on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private
Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable
by the Company and exercisable by such holders on the same basis as the Public Warrants.
A summary of warrants activity for the period
ended March 31, 2021 is as follows:
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Weighted
|
|
|
|
shares
|
|
|
average life
|
|
Public warrants assumed from the Company’s initial Public Offering in July 2020
|
|
|
4,000,000
|
|
|
|
|
|
Private warrants assumed from the Company’s private placement in July 2020
|
|
|
260,000
|
|
|
|
|
|
Balance of warrants outstanding as of March 31, 2021
|
|
|
4,260,000
|
|
|
|
5 years
|
|
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.
|
The following tables present information about
the Company’s assets that are measured at fair value on a recurring basis at March 31, 2021 and December 31, 2020, and indicate
the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
|
|
|
|
|
Quoted Prices In
|
|
|
Significant Other
|
|
|
Significant Other
|
|
|
|
March 31, 2021
|
|
|
Active Markets
|
|
|
Observable Inputs
|
|
|
Unobservable Inputs
|
|
Description
|
|
(Unaudited)
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Securities held in Trust Account*
|
|
$
|
40,616,475
|
|
|
$
|
40,616,475
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative warrant liabilities – Public warrants
|
|
$
|
1,710,000
|
|
|
$
|
1,710,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivative warrant liabilities – Private warrants
|
|
|
110,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
110,000
|
|
Total fair value
|
|
$
|
1,820,000
|
|
|
$
|
1,710,000
|
|
|
$
|
—
|
|
|
$
|
110,000
|
|
|
|
|
|
|
Quoted Prices In
|
|
|
Significant Other
|
|
|
Significant Other
|
|
|
|
December 31, 2020
|
|
|
Active Markets
|
|
|
Observable Inputs
|
|
|
Unobservable Inputs
|
|
Description
|
|
(Audited)
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Securities held in Trust Account*
|
|
$
|
40,615,212
|
|
|
$
|
40,615,212
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative warrant liabilities – Public warrants
|
|
$
|
2,740,000
|
|
|
$
|
2,740,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivative warrant liabilities – Private warrants
|
|
|
190,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
190,000
|
|
Total fair value
|
|
$
|
2,930,000
|
|
|
$
|
2,740,000
|
|
|
$
|
—
|
|
|
$
|
190,000
|
|
*included in cash and investments held in trust
account on the Company’s balance sheet.
The warrants are accounted for as liabilities in accordance with ASC
815-40 and are presented within warrant liabilities on our unaudited condensed balance sheets. At March 31, 2021 and December 31, 2020,
the fair value of Public Warrants was measured using quoted prices in an active market (Level 1) and the fair value of Private Warrants
was measured using Black-Scholes model. There were no transfers between Levels 1, 2 or 3 during the quarter ended March 31, 2021.
The key inputs into Black-Scholes model for the
Private Warrants were as follows at their measurement dates:
|
|
December 31,2020
|
|
|
March 31, 2021
|
|
Input
|
|
|
|
|
|
|
|
|
Share price
|
|
$
|
10.08
|
|
|
$
|
10.06
|
|
Risk-free interest rate
|
|
|
0.36
|
%
|
|
|
0.92
|
%
|
Volatility
|
|
|
20
|
%
|
|
|
13
|
%
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Warrant life
|
|
|
5 years
|
|
|
|
5 years
|
|
The following table presents the changes
in the fair value of warrant liabilities for the three months ended March 31, 2021:
|
|
Public
|
|
|
Private
|
|
|
Total
|
|
|
|
Warrants
|
|
|
Warrants
|
|
|
Warrants
|
|
Fair Value at January 1, 2021
|
|
$
|
2,740,000
|
|
|
$
|
190,000
|
|
|
$
|
2,930,000
|
|
Change in fair value of public and private warrants
|
|
|
(1,030,000
|
)
|
|
|
(80,000
|
)
|
|
|
(1,110,000
|
)
|
Fair Value at March 31, 2021
|
|
$
|
1,710,000
|
|
|
$
|
110,000
|
|
|
$
|
1,820,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that that the condensed financial statements were issued. Based upon this review,
other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in
the condensed financial statements.