NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
1 — Description of Organization and Business Operations
Kismet
Acquisition Two Corp. (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on September
15, 2020. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization
or similar business combination with one or more businesses that the Company has not yet identified (“Business Combination”).
As
of March 31, 2021, the Company had not yet commenced operations. All activity for the period from September 15, 2020 (inception) through
March 31, 2021 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”),
which is described below, and since the Initial Public Offering, the search for a potential target. The Company will not generate any
operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating
income in the form of interest income on investments held in trust account from the proceeds derived from the Initial Public Offering
and the sale of the Private Placement Warrants (as defined below). The Company has selected December 31 as its fiscal year end.
The
Company’s sponsor is Kismet Sponsor Limited, a British Virgin Islands company (“Sponsor”). The registration statement
for the Company’s Initial Public Offering was declared effective on February 17, 2021. On February 22, 2021, the Company consummated
its Initial Public Offering of 23,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in
the Units being offered, the “Public Shares”), including 3,000,000 additional Units to cover over-allotments (the “Over-Allotment
Units”), at $10.00 per Unit, generating gross proceeds of $230.0 million, and incurring offering costs of approximately $13.1 million,
of which approximately $8.1 million was for deferred underwriting commissions (Note 6).
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 4,400,000
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”), at a price
of $1.50 per Private Placement Warrant with the Sponsor, generating gross proceeds of $6.6 million, and incurring offering costs of approximately
$7,000 (Note 4).
Upon the closing of the Initial Public Offering
and the Private Placement, $230.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds
of the Private Placement were placed in a trust account (“Trust Account”) with Continental Stock Transfer & Trust Company
acting as trustee and invested in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting
certain conditions under Rule 2a-7 under the Investment Company Act of 1940 (the “Investment Company Act”), which invest only
in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination
and (ii) the distribution of the Trust Account as described below.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of its Initial Public Offering
and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward
consummating a Business Combination. The Company’s initial Business Combination must be with one or more operating businesses or
assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (as defined below) (excluding the deferred
underwriting commissions and taxes payable, if any, on the income accrued on the trust account) at the time the Company signs a definitive
agreement in connection with the initial Business Combination. However, 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 1940,
as amended, or the Investment Company Act.
The
Company will provide its holders of the Public Shares (the “Public 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. The decision as to whether the Company will seek shareholder
approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders
will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated
to be $10.00 per 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). The per-share amount to be distributed to Public Shareholders who redeem their Public Shares will not be
reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 6). These Public Shares
will be recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance
with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case,
the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation
of a Business Combination and a majority of the shares are voted in favor of the Business Combination. If a shareholder vote is
not required by law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will,
pursuant to the amended and restated memorandum and articles of association which will be adopted by the Company upon the consummation
of the Initial Public Offering (the “Amended and Restated Memorandum and Articles of Association”), conduct the redemptions
pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (the “SEC”), and file tender offer documents
with the SEC prior to completing a Business Combination. If, however, a shareholder approval of the transactions is required by law,
or the Company decides to obtain shareholder approval for business or legal 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. Additionally, each Public Shareholder
may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks
shareholder approval in connection with a Business Combination, the holders of the Founder Shares prior to this Initial Public Offering
(the “Initial Shareholders”) agreed to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased during
or after the Initial Public Offering in favor of a Business Combination. In addition, the Initial Shareholders agreed to waive their
redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.
In addition, the Company agreed not to enter into a definitive agreement regarding an initial Business Combination without the prior
consent of the Sponsor.
Notwithstanding
the foregoing, 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 redeeming its shares with respect to more than an aggregate of 20% or more of the Class A ordinary shares sold in the Initial Public
Offering, without the prior consent of the Company.
The
Company’s Sponsor, executive officers, directors and director nominees agreed not to propose an amendment to the Company’s
Amended and Restated Memorandum and Articles of Association that would affect the substance or timing of the Company’s obligation
to provide for the redemption of its Public Shares in connection with a Business Combination or to redeem 100% of its Public Shares if
the Company does not complete a Business Combination, unless the Company provides the Public Shareholders with the opportunity to redeem
their Class A ordinary shares in conjunction with any such amendment.
If
the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or February
22, 2023 (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 all Public Shares then outstanding at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including any amounts representing interest
earned on the Trust Account, less any interest released to the Company for the payment of taxes, if any (and less up to $100,000 in interest
reserved for expenses in connection with the Company’s dissolution), 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), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining
shareholders and the board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to the Company’s
obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
In
connection with the redemption of 100% of the Company’s outstanding Public Shares for a portion of the funds held in the Trust
Account, each holder will receive a full pro rata portion of the amount then in the Trust Account, plus any pro rata interest earned
on the funds held in the Trust Account and not previously released to the Company to pay the Company’s taxes payable (less up to
$100,000 of interest to pay dissolution expenses).
The
Initial Shareholders agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business
Combination within the Combination Period. However, if the Initial Shareholders should acquire Public Shares in or after the Initial
Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the
Company fails to complete a Business Combination within the Combination Period. The underwriters agreed to waive their rights to their
deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination
within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be
available to fund the redemption of the Company’s Public Shares. In the event of such distribution, it is possible that the per
share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00 per share
initially held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor agreed that it will 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 entered into a written letter of intent, confidentiality or other similar agreement or business
combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per public share and (ii) 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 $10.00
per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any
claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account
(whether or not such waiver is enforceable) nor will it apply 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 vendors, service providers (except the Company’s
independent registered public accounting firm), prospective target businesses or other entities with which the Company does business,
execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity
and Capital Resources
As
of March 31, 2021, the Company had $1.3 million in its operating bank account and working capital of approximately $1.5 million.
The
Company’s liquidity needs to date have been satisfied through a contribution of $25,000 from the Sponsor to cover certain expenses
in exchange for the issuance of the Founder Shares (as defined in Note 5), a loan of approximately $111,000 from the Sponsor pursuant
to the Note (as defined in Note 5), and a portion of the proceeds from the consummation of the Private Placement not held in the Trust
Account. The Company repaid the Note in full on February 24, 2021. In addition, in order to finance transaction costs in connection with
a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but
are not obligated to, provide the Company Working Capital Loans (as defined in Note 5). As of March 31, 2021 and December 31, 2020, there
were no amounts outstanding under any Working Capital Loan.
Based
on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity from the Sponsor or
an affiliate of the Sponsor, or certain of the Company’s officers and directors to meet its needs through the earlier of the consummation
of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing
accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating
and consummating the Business Combination.
Note
2 — Basis of Presentation and Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally
accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of
the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited
condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement
of the balances and results for the periods presented. 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.
The
accompanying unaudited condensed financial statements should be read in conjunction with the audited balance sheet and notes thereto
included in the Form 8-K and the final prospectus filed by the Company with the SEC on February 26, 2021 and February 19, 2021, respectively.
During the course of preparing the quarterly report on Form 10-Q for the three-month period ended March 31, 2021, the Company identified
misapplication of accounting guidance related to the Company’s warrants and forward purchase agreement units in the Company’s
previously issued audited balance sheet dated February 22, 2021, filed on Form 8-K on February 26, 2021 (the “Post-IPO Balance
Sheet”). The warrants and forward purchase units were reflected as a component of equity in the Post-IPO Balance Sheet as opposed
to liabilities on the balance sheets, based on the Company’s application of FASB ASC Topic 815-40, Derivatives and Hedging, Contracts
in Entity’s Own Equity (“ASC 815-40”) (Note 10).
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 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 an 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 unaudited condensed financial statements
with another public company that is neither an emerging growth company nor an emerging growth company that 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 unaudited condensed financial statements in conformity with 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 unaudited
condensed financial statements and the reported amounts of revenues and expenses during the reporting periods. Making estimates requires
management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the 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. One of the more significant accounting estimates
included in these financial statements is the determination of the fair value of the warrant liability and the forward purchase agreement.
Accordingly, the actual results could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company had no cash equivalents as of March 31, 2021 and December 31, 2020.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Depository Insurance Coverage limit of $250,000, and investments held in Trust Account. The Company
has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Investments
Held in the Trust Account
The
Company’s portfolio of investments held in the Trust Account is comprised of U.S. government securities, within the meaning set
forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that
invest in U.S. government securities, or a combination thereof. The Company’s investments held in the Trust Account are classified
as trading securities. Trading securities are presented on the balance sheets at fair value at the end of each reporting period. Gains
and losses resulting from the change in fair value of these securities are included in net gain from investments held in Trust Account
in the accompanying unaudited condensed statement of operations. The estimated fair values of investments held in the Trust Account are
determined using available market information.
Fair
Value Measurements
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
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Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
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Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and
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Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
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In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
As
of March 31, 2021 and December 31, 2020, the carrying values of cash, accounts payable, accounts payable – related party and accrued
expenses approximate their fair values due to the short-term nature of the instruments. The Company’s marketable securities held
in Trust Account is comprised of investments in U.S. Treasury securities with an original maturity of 185 days or less and are recognized
at fair value. The fair value of marketable securities held in Trust Account is determined using quoted prices in active markets.
The
fair value of warrants issued in connection with the Public Offering has been estimated using Monte-Carlo simulation at each measurement
date. The fair value of warrants issued in connection with the Private Placement has been estimated using Black-Scholes Option Pricing
Model at each measurement date while the fair value of the units associated with the forward purchase agreement has been measured using
John C Hull’s Options, Futures and Other Derivatives model.
Offering
Costs
Offering
costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly
related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial
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 Class A ordinary shares were charged to shareholders’ equity upon the completion of the Initial Public Offering.
Class A
Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary
shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.”
Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value.
Conditionally redeemable Class A ordinary shares (including Class A 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, Class A ordinary shares are classified as shareholders’ equity. The Company’s
Class A ordinary shares 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, 2021, 20,731,034 and 0 shares of Class A
ordinary share subject to possible redemption are presented as temporary equity, respectively, outside of the shareholders’ equity
section of the Company’s balance sheets.
Share-based
Compensation
The Company complies with the accounting and disclosure
requirement of ASC Topic 718, “Compensation – Stock Compensation.” Share-based compensation to employees and non-employees
is recognized over the requisite service period based on the estimated grant-date fair value of the awards. Share-based awards with graded-vesting
schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award.
The Company recognizes the expense for share-based compensation awards subject to performance-based milestone vesting over the remaining
service period when management determines that achievement of the milestone is probable. Management evaluates when the achievement of
a performance-based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date. Share-based
compensation will be recognized in general and administrative expense in the statement of operations. The Company issued option awards
that contain both a performance condition and service condition. The option awards vest upon the consummation of the initial business
combination and will expire in five years after the date on which they first become exercisable. The Company has determined that the consummation
of an initial business combination is a performance condition subject to significant uncertainty. As such, the achievement of the performance
is not deemed to be probable of achievement until the consummation of the event, and therefore no compensation has been recognized for
the period from inception to March 31, 2021.
Income
Taxes
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 as income tax
expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2021 and December
31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material
deviation from its position.
There
is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman federal income tax regulations,
income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s unaudited condensed financial
statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change
over the next twelve months.
Net
Income (Loss) per Ordinary Share
Net
Income (loss) per ordinary share is computed by dividing net income (loss) applicable to shareholders by the weighted average number
of ordinary shares 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 12,066,667 Class A ordinary shares in the calculation of diluted income
per share, because their inclusion would be anti-dilutive under the treasury stock method.
The Company’s unaudited condensed statement
of operations includes a presentation of income (loss) per ordinary shares subject to redemption in a manner similar to the two-class
method of income (loss) per share. Net income per Class A ordinary share, basic and diluted is calculated by dividing the investment income
earned on the Trust Account of approximately $3,000 by the weighted average number of Class A ordinary shares outstanding for three months
ended March 31, 2021. Net loss per Class B ordinary share, basic and diluted for is calculated by dividing the net loss of approximately
$788,000 for the three months ended March 31, 2021, less income attributable to Class A ordinary shares of approximately $3,000, by the
weighted average number of Class B ordinary shares outstanding.
Derivative Warrant Liabilities and Forward
Purchase Agreement
The
Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates
all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain
features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including
whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The Company accounts for its 12,066,667 warrants
issued in connection with its Initial Public Offering (7,666,667) and Private Placement (4,400,000) and units committed to be issued under
the forward purchase agreement, as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the
instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject
to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement
of operations. The fair value of warrants issued in connection with the Initial Public Offering has been estimated using Monte-Carlo simulation
at each measurement date. The fair value of warrants issued in connection with the Private Placement has been estimated using Black-Scholes
Option Pricing Model at each measurement date while the fair value of the units associated with the forward purchase agreement has been
measured using the John C Hull’s Options, Futures and Other Derivatives model.
Recent
Adopted Accounting Standards
In
August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an
Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major
separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked
contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The
Company adopted ASU 2020-06 on January 1, 2021.
Recent
Issued Accounting Standards
The
Company’s management does not believe that any recently issued, but not yet effective, accounting standards updates, if currently
adopted, would have a material effect on the accompanying financial statements.
Note
3 — Initial Public Offering
On
February 22, 2021, the Company consummated its Initial Public Offering of 23,000,000 Units, including 3,000,000 Over-Allotment Units,
at $10.00 per Unit, generating gross proceeds of $230.0 million, and incurring offering costs of approximately $13.1 million, of which
approximately $8.1 million was for deferred underwriting commissions.
Each
Unit consists of one Class A ordinary share and one-third of one redeemable warrant (“Public Warrant”). Each whole Public
Warrant will entitle the holder to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment
(see Note 8).
Note
4 — Private Placement
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the Private Placement of 4,400,000 Private Placement Warrants, at a price of $1.50 per Private
Placement Warrant with the Sponsor, generating gross proceeds of $6.6 million, and incurring offering costs of approximately $7,000
and have been expensed.
Each
whole Private Placement Warrant is exercisable for one whole share of Class A ordinary shares at a price of $11.50 per share. A
portion of the proceeds from the sale of the Private Placement Warrants to the Sponsor was added to the proceeds from the Initial Public
Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private
Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable for cash and exercisable on a cashless
basis so long as they are held by the Sponsor or its permitted transferees.
The
Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of
their Private Placement Warrants until 30 days after the completion of the initial Business Combination.
Note
5 — Related Party Transactions
Forward
Purchase Agreement
In
connection with the consummation of the Initial Public Offering, the Company entered into a forward purchase agreement (the “Forward
Purchase Agreement”) with the Sponsor, which provides for the purchase of $20.0 million of units, which at the option of the Sponsor
can be increased to $50.0 million, with each unit consisting of one Class A ordinary share (the “Forward Purchase Shares”)
and one-third of one warrant to purchase one Class A ordinary share at $11.50 per share (the “Forward Purchase Warrants”),
for a purchase price of $10.00 per unit, in a private placement to occur concurrently with the closing of the initial Business Combination.
The purchase under the Forward Purchase Agreement is required to be made regardless of whether any Class A ordinary shares are redeemed
by the Public Shareholders. The forward purchase securities will be issued only in connection with the closing of the initial Business
Combination. The proceeds from the sale of forward purchase securities may be used as part of the consideration to the sellers in the
initial Business Combination, expenses in connection with the initial Business Combination or for working capital in the post-transaction
company. The Company classified the Forward Purchase units as liabilities on its balance sheets. The initial value of the units associated
with the Forward Purchase Agreement and the change in the fair value of the derivative liabilities for the three months ended March 31,
2021 were insignificant.
Founder
Shares
On
September 21, 2020, the Company issued 4,812,500 Class B ordinary shares, par value $0.001 per share (the “Founder Shares”)
to the Sponsor. On September 23, 2020, the Sponsor paid an aggregate of $25,000 for certain expenses on behalf of the Company in exchange
for issuance of the Founder Shares. On January 25, 2021, the Company effected a stock dividend of 1,437,500 shares with respect to Class
B ordinary shares, resulting in an aggregate of 6,250,000 shares outstanding. The Sponsor agreed to forfeit up to an aggregate of 750,000
Founder Shares, on a pro rata basis, to the extent that the option to purchase additional Units was not exercised in full by the underwriters,
so that the Founder Shares would represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering
plus the 2,000,000 Forward Purchase Shares underlying the Forward Purchase Units (which at the option of the Sponsor can be increased
to up to 5,000,000 Forward Purchase Shares). On February 22, 2021, the underwriter fully exercised its over-allotment option; thus, these
750,000 Founder Shares were no longer subject to forfeiture.
The
Sponsor agreed not to transfer, assign or sell any of its Founder Shares until the earlier to occur of (i) one year after the date of
the consummation of the initial Business Combination, or earlier if, subsequent to the initial Business Combination, (x) the last reported
sale price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations
and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business
Combination or (y) the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results
in all of the shareholders having the right to exchange their ordinary shares for cash, securities or other property.
Related
Party Loans
On
September 23, 2020, the Sponsor agreed to loan the Company up to $250,000 to cover costs related to the Initial Public Offering pursuant
to a promissory note, which was later amended on January 22, 2021 (the “Note”). The Note was non-interest bearing, unsecured
and due upon the closing of the Initial Public Offering. As of February 22, 2021, the Company borrowed approximately $111,000 under the
Note. The Company repaid the Note in full on February 24, 2021.
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, members of the Company’s
founding team or any of their affiliates 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.
The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lenders’
discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity
at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. 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. As of March
31, 2021 and December 31, 2020, the Company had no borrowings under the Working Capital Loans.
Administrative
Services Agreement
Commencing
on February 17, 2021 through the earlier of consummation of the initial Business Combination and the liquidation, the Company agreed
to pay an affiliate of the Sponsor $10,000 per month for office space, utilities, secretarial support and administrative services. For
the three months ended March 31, 2021, the Company did not incur any expense for these services.
Director
Compensation
Commencing on February 18, 2021, through the earlier
of consummation of the initial Business Combination and the Company’s liquidation, the Company agreed to pay its directors $40,000
each and granted each of the independent directors an option to purchase 40,000 Class A ordinary shares at an exercise price of $10.00
per share, which will vest upon the consummation of the initial Business Combination and will expire five years after the date on which
it first became exercisable. In addition, the Sponsor, executive officers and directors, or any of their respective affiliates will be
reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential
target businesses and performing due diligence on suitable Business Combinations. The Company’s audit committee will review on a
quarterly basis all payments that were made to the Sponsor, officers or directors, or the Company’s or their affiliates. During
the three months ended March 31, 2021, the Company recorded approximately $7,000 director compensation.
Note
6 — Commitments and Contingencies
Registration
Rights
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 ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion
of Working Capital Loans) were entitled to registration rights pursuant to a registration rights agreement dated February 17, 2021. 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 the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any
such registration statements.
Pursuant
to the Forward Purchase Agreement, the Company agreed to use its commercially reasonable efforts (i) to file within 30 days after the
closing of the initial Business Combination a registration statement with the SEC for a secondary offering of the Forward Purchase Shares
and the Forward Purchase Warrants (and underlying Class A ordinary shares), (ii) to cause such registration statement to be declared
effective promptly thereafter but in no event later than sixty (60) days after the initial filing, and (iii) to maintain the effectiveness
of such registration statement until the earliest of (A) the date on the Sponsor or its assignees cease to hold the securities covered
thereby and (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144
under the Securities Act. In addition, the Forward Purchase Agreement provides for “piggy-back” registration rights to the
holders of forward purchase securities to include their securities in other registration statements filed by the Company.
Underwriting
Agreement
The
Company granted the underwriters a 45-day option from February 17, 2021 to purchase up to 3,000,000 additional Units at the Initial Public
Offering price less the underwriting discounts and commissions. On February 22, 2021, the underwriter fully exercised its over-allotment
option.
The
underwriters were entitled to an underwriting discount of $0.20 per unit, or $4.6 million in the aggregate, paid upon the closing of
the Initial Public Offering. In addition, $0.35 per unit, or approximately $8.1 million in the aggregate will be payable to the underwriters
for deferred underwriting commissions. 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.
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that
the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target
company, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements. The unaudited
condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note
7 — Warrants
Public
Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units
and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion
of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has
an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the Public
Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration
under the securities, or blue sky, laws of the state of residence of the holder (or the Company permit holders to exercise their warrants
on a cashless basis under certain circumstances). The Company agreed that as soon as practicable, but in no event later than 15 business
days after the closing of the initial Business Combination, the Company will use commercially reasonable efforts to file with the SEC
and have an effective registration statement covering the Class A ordinary shares issuable upon exercise of the warrants and to maintain
a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant
agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by
the 60th day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective
registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise
warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding
the above, if the Class A ordinary shares 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” and, in the event
the Company so elects, the Company will not be required to file or maintain in effect a registration statement, and in the event the
Company does not so elect, it will use commercially reasonable efforts to register or qualify the shares under applicable blue sky laws
to the extent an exemption is not available.
The
warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business
Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked
securities for capital raising purposes in connection with the closing of the initial 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 an affiliate of the Sponsor, without
taking into account any Founder Shares held by the Sponsor or an affiliate of the Sponsor, as applicable, prior to such issuance) (the
“Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for the funding of the initial Business Combination on the date of the completion of the initial Business
Combination (net of redemptions), and (z) the volume-weighted average trading price of the Class A ordinary shares during the 20 trading
day period starting on the trading day prior to the day on which the Company completes its initial Business Combination (such price,
the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to
be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $10.00 and $18.00 per share redemption trigger
prices described under “Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00” and “Redemption
of warrants when the price per Class A ordinary share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal
to 100% and 180% of the higher of the Market Value and the Newly Issued Price, respectively.
The
Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that
the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable,
assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally,
the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchasers or such purchasers’ permitted
transferees. If the Private Placement Warrants are held by someone other than the Initial Shareholders or their permitted transferees,
the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
Redemption
of warrants when the price per Class A ordinary share equals or exceeds $18.00:
Once
the warrants become exercisable, the Company may call the outstanding warrants (excluding the Private Placement Warrants), in whole and
not in part, at a price of $0.01 per warrant:
|
●
|
upon
a minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
if, and
only if, the last reported sale price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted) for any 20
trading days within a 30 trading day period ending three business days before the Company sends the notice of redemption to the warrant
holders (the “Reference Value”).
|
The
Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the Class A
ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those Class A ordinary
shares is available throughout the 30-day redemption period.
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 a price of $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 Class A ordinary shares to be determined by reference to an agreed table based on
the redemption date and the “fair market value” of Class A ordinary shares; and
|
|
●
|
if, and
only if, and only if, the Reference Value equals or exceeds $10.00 per Public Share (as adjusted), and
|
|
●
|
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
“fair market value” of Class A ordinary shares for the above purpose shall mean the volume-weighted average price of the
Class A ordinary shares for the 10 trading days immediately following the date on which the notice of redemption is sent to the holders
of warrants. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 Class A ordinary
shares per warrant (subject to adjustment).
In
no event will the Company be required to net cash settle any warrant. 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 the respect to such warrants. Accordingly, the warrants may expire worthless.
Note
8 — Shareholders’ Equity
Class A Ordinary Shares —
The Company is authorized to issue 200,000,000 Class A ordinary shares with a par value of $0.001 per share. Holders of the Company’s
Class A ordinary shares are entitled to one vote for each share. At March 31, 2021, there were 2,268,966 Class A ordinary shares issued
and outstanding, excluding 20,731,034 Class A ordinary shares subject to possible redemption. At December 31, 2020, there were no Class
A ordinary shares issued and outstanding.
Class
B Ordinary Shares — The Company is authorized to issue 10,000,000 Class B ordinary shares with a par value of $0.001 per
share. On September 23, 2020, the Company issued 6,250,000 Class B ordinary shares, which amount had been retroactively restated to reflect
the share dividend as discussed in Note 5. Of the 6,250,000 shares outstanding, up to 750,000 Class B ordinary shares were subject to
forfeiture, to the Company by the Initial Shareholders for no consideration to the extent that the underwriters’ over-allotment
option was not exercised in full or in part, so that the Initial Shareholders would collectively own 20% of the Company’s issued
and outstanding shares after the Initial Public Offering plus the potential Forward Purchase Shares. On February 22, 2021, the underwriter
fully exercised its over-allotment option; thus, these 750,000 Class B ordinary shares were no longer subject to forfeiture.
Ordinary
shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders. Except as described
below, holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters
submitted to a vote of the shareholders except as required by law.
The
Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination or earlier
at the option of the holders thereof at a ratio such that the number of Class A ordinary shares 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 the ordinary shares issued and
outstanding upon completion of the Initial Public Offering, plus (ii) the total number of Class A ordinary shares issued or deemed issued
or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued by the Company in connection
with or in relation to the completion of the initial Business Combination (including the Forward Purchase Shares, but not the Forward
Purchase Warrants), excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary
shares issued, deemed issued, or to be issued, to any seller in the initial Business Combination and any private placement warrants issued
to the Sponsor or any of its affiliates or any member of the Company’s management team upon conversion of Working Capital Loans.
In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one-to-one.
Note
9 — Fair Value Measurements
The
following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring
basis as of March 31, 2021 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine
such fair value.
|
|
Fair Value Measured as of March 31, 2021
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account - U.S. Treasury Securities
|
|
$
|
230,003,313
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
230,003,313
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liabilities - public warrants
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
7,053,334
|
|
|
$
|
7,053,334
|
|
Warrant liabilities - private warrants
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,092,000
|
|
|
$
|
4,092,000
|
|
Transfers
to/from Levels 1, 2, and 3 are recognized in the beginning of the reporting period. There were no transfers between levels of the
hierarchy for the three months ended March 31, 2021.
The Company utilizes a Monte-Carlo simulation
to estimate the fair value of the public warrants at each reporting period and Black-Scholes Option Pricing Model to estimate the fair
value of the private warrants at each reporting period, with changes in fair value recognized in the statement of operations. For the
three months ended March 31, 2021, the Company recognized a change in the fair value of warrant liabilities of approximately $318,000
presented on the accompanying statement of operations.
The Company utilizes John C Hull’s Options,
Futures and Other Derivatives model to estimate the fair value of the units associated with the forward purchase agreement. The Company
determined that the initial fair value of the units (including shares and warrants) associated with the Forward Purchase Agreement and
change in fair value of the derivative liabilities of the forward purchase agreement were insignificant as of and for the three months
ended March 31, 2021.
The fair value of marketable securities held in
Trust Account is determined using quoted prices in active markets.
The
change in the fair value of the derivative warrant liabilities for three months ended March 31, 2021 is summarized as follows:
Warrant liabilities at January 1, 2021
|
|
$
|
-
|
|
Issuance of Public and Private Warrants
|
|
|
10,827,334
|
|
Change in fair value of warrant liabilities
|
|
|
318,000
|
|
Warrant liabilities at March 31, 2021
|
|
$
|
11,145,334
|
|
The
estimated fair value of the derivative warrant liabilities is determined using Level 3 inputs. However, inherent uncertainties are involved.
If factors or assumptions change, the estimated fair values could be materially different. Inherent in a Monte-Carlo simulation and Black-Scholes
Option Pricing model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend
yield. The Company estimates the volatility of its ordinary shares based on historical volatility of select peer companies that matches
the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the
grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be
equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining
at zero. The Company estimated the probability of completing a business combination by weighted the percentage of SPACs that have successfully
consummated a merger.
The
following table provides quantitative information regarding Level 3 fair value measurements inputs for derivative warrant liabilities
as their measurement dates:
|
|
As of
February 22,
2021
|
|
|
As of
March 31,
2021
|
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Stock Price
|
|
$
|
9.70
|
|
|
$
|
9.63
|
|
Term (in years)
|
|
|
6.00
|
|
|
|
5.89
|
|
Volatility
|
|
|
15.90
|
%
|
|
|
15.90
|
%
|
Risk-free interest rate
|
|
|
0.76
|
%
|
|
|
1.13
|
%
|
Dividend yield
|
|
|
-
|
|
|
|
-
|
|
Probability of completing a Business Combination
|
|
|
88.30
|
%
|
|
|
88.30
|
%
|
The
estimated fair value of the derivative liabilities of the units associated with the forward purchase agreement is determined using Level
3 inputs. However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially
different. Inherent in the John C Hull’s Options, Futures and Other Derivatives model are assumptions related to expected, expected
life, risk-free interest rate and probability of completing a business combination. The risk-free interest rate is based on the U.S.
Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the units. The expected life
of the units is assumed to be equivalent to their remaining contractual term. The Company estimated the probability of completing a business
combination by weighted the percentage of SPACs that have successfully consummated a merger.
The
following table provides quantitative information regarding Level 3 fair value measurements inputs for derivative liabilities of the
units associated with the forward purchase agreement at their measurement dates:
|
|
As of
February 22,
2021
|
|
|
As of
March 31,
2021
|
|
Stock price
|
|
$
|
9.70
|
|
|
$
|
9.63
|
|
Warrant price
|
|
$
|
0.89
|
|
|
$
|
0.92
|
|
Term (in years)
|
|
|
1.00
|
|
|
|
0.88
|
|
Risk-free interest rate
|
|
|
0.07
|
%
|
|
|
0.07
|
%
|
Probability of completing a Business Combination
|
|
|
88.30
|
%
|
|
|
88.30
|
%
|
Note
10 — Revision to Prior Period Financial Statements
During
the course of preparing the quarterly report on Form 10-Q for the three-month period ended March 31, 2021, the Company identified a misapplication
of accounting guidance related to the Company’s warrants and forward purchase agreement units in the Company’s previously
issued audited balance sheet dated February 22, 2021, filed on Form 8-K on February 26, 2021.
On April 12, 2021, the staff of the Securities
and Exchange Commission (the “SEC Staff”) issued a public statement entitled “Staff Statement on Accounting and Reporting
Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Staff Statement”).
In the SEC Staff Statement, the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the
warrants to be classified as liabilities on the SPAC’s balance sheets as opposed to equity. Since their issuance on February 22,
2021, the Company’s warrants and forward purchase agreement units have been accounted for as equity within the Company’s previously
reported balance sheet. After discussion and evaluation, including with the Company’s audit committee, management concluded that
the warrants and forward purchase units should be presented as liabilities with subsequent fair value remeasurement.
The
warrants and forward purchase units were reflected as a component of equity in the Post-IPO Balance Sheet as opposed to liabilities on
the balance sheets, based on the Company’s application of ASC 815-40. The views expressed in the SEC Staff Statement were not consistent
with the Company’s historical interpretation of the specific provisions within its warrant and forward purchase agreements and
the Company’s application of ASC 815-40 to those agreements. The Company reassessed its accounting for warrants and forward purchase
agreement units issued on February 22, 2021, in light of the SEC Staff’s published views. Based on this reassessment, management
determined that the warrants and forward purchase agreement units should be classified as liabilities measured at fair value upon issuance,
with subsequent changes in fair value reported in the Company Statement of Operations each reporting period.
The
fair value impact of the forward purchase agreement was insignificant and hence not recognized in this quarterly report.
The
effect of the revisions to the Post-IPO Balance Sheet is as follows:
|
|
As
of February 22, 2021
|
|
|
|
As
Previously
Reported
|
|
|
Revision
Adjustment
|
|
|
As
Revised
|
|
Balance
Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
232,026,800
|
|
|
$
|
-
|
|
|
$
|
232,026,800
|
|
Liabilities
and shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
$
|
464,998
|
|
|
$
|
-
|
|
|
$
|
464,998
|
|
Deferred
underwriting commissions
|
|
|
8,050,000
|
|
|
|
-
|
|
|
|
8,050,000
|
|
Warrant
liabilities
|
|
|
-
|
|
|
|
10,827,334
|
|
|
|
10,827,334
|
|
Total
liabilities
|
|
|
8,514,998
|
|
|
|
10,827,334
|
|
|
|
19,342,332
|
|
Class
A ordinary shares, $0.001 par value; shares subject to possible redemption
|
|
|
218,511,800
|
|
|
|
(10,827,340
|
)
|
|
|
207,684,460
|
|
Shareholders’
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary shares
- $0.001 par value
|
|
|
1,149
|
|
|
|
1,083
|
|
|
|
2,232
|
|
Class B ordinary shares
- $0.001 par value
|
|
|
6,250
|
|
|
|
-
|
|
|
|
6,250
|
|
Additional
paid-in-capital
|
|
|
5,024,850
|
|
|
|
394,278
|
|
|
|
5,419,128
|
|
Accumulated
deficit
|
|
|
(32,247
|
)
|
|
|
(395,355
|
)
|
|
|
(427,602
|
)
|
Total
shareholders’ equity
|
|
|
5,000,002
|
|
|
|
6
|
|
|
|
5,000,008
|
|
Total
liabilities and shareholders’ equity
|
|
$
|
232,026,800
|
|
|
$
|
-
|
|
|
$
|
232,026,800
|
|
Note
11 — Subsequent Events
Management
has evaluated subsequent events to determine if events or transactions occurring through the date the financial statements were issued
required potential adjustment to or disclosure in the financial statements and has concluded that all such events that would require
recognition or disclosure have been recognized or disclosed.