NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 — Description of Organization, Business
Operations and Basis of Presentation
Tech and Energy Transition Corporation (formerly
known as M Acquisition Company IV Corporation) (the “Company”) was incorporated in Delaware on December 4, 2017. The Company
was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar
business combination with one or more businesses (the “Business Combination”).
Although the Company is not limited to a particular
industry or sector for the purpose of consummating a Business Combination, the Company intends to focus its search on companies in end
markets – communications, internetworking, clean energy, digital technology and services and software applications that enable or
support digital transformation. The Company is an early stage and emerging growth company and, as such, the Company is subject to all
of the risks associated with early stage and emerging growth companies.
As of September 30, 2021, the Company had not
yet commenced operations. All activity through September 30, 2021 relates to the Company’s formation and initial public offering
(“IPO”), and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination.
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 cash and cash equivalents from the proceeds derived from
the IPO. The Company has selected March 31st as its fiscal year end.
The Company’s sponsor is Tech and Energy
Transition Sponsor LLC (the “Sponsor”), a Delaware limited liability company.
The registration statement for the Company’s
IPO was declared effective on March 16, 2021 (the “Effective Date”). On March 19, 2021, the Company consummated the IPO of
38,500,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public
Shares”), at $10.00 per Unit, generating gross proceeds of $385.00 million, which is discussed in Note 4. Transaction costs of the
IPO amounted to $22.23 million consisting of $7.70 million of underwriting commission, $13.47 million of deferred underwriting commission,
and $1.06 million of other offering costs, which is discussed in Note 7.
The underwriters had a 45-day option from the
date of the IPO to purchase up to an additional 5,775,000 units to cover over-allotments, if any. On April 30, 2021, the over-allotment
option expired unexercised.
Simultaneously with the closing of the IPO, the
Company consummated the sale of 7,366,667 Private Placement Warrants to the Sponsor at a price of $1.50 per Private Placement Warrant,
generating total gross proceeds of $11.05 million, which is discussed in Note 5.
Following the closing of the IPO on March 19,
2021, $385.00 million ($10.00 per Unit) from the net proceeds of the IPO and the sale of the Private Placement Warrants was placed in
a Trust Account with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. government securities,
within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”),
with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries selected by the Company meeting the conditions
of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of:
(i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below. Except with respect to
interest earned on the funds held in the Trust Account that may be released to the Company to pay its franchise and income tax obligations
(less up to $100,000 of interest to pay dissolution expenses), the proceeds from the IPO and the sale of the Private Placement Warrants
will not be released from the Trust Account until the earlier of (i) the completion of the Company’s initial Business Combination
and (ii) the redemption of 100% of the Company’s public shares if the Company is unable to complete the Company’s initial
Business Combination within 24 months from the closing of the IPO (the “Combination Period”). The proceeds deposited in the
Trust Account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the IPO 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. There is no assurance that the
Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations
having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding taxes payable on income earned
on the Trust Account) at the time of the agreement to enter into 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.
The Company will provide its holders of the outstanding
Public Shares of its Class A common stock, par value $0.0001 (“Class A common stock”), (the “public stockholders”)
with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection
with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the
Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its
discretion. The public stockholders will be entitled to redeem their Public Shares (as defined below in Note 4) for a pro rata portion
of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share).
These Public Shares are recorded at a redemption
value and classified as temporary equity in accordance with the Financial Accounting Standards Board’s (“FASB”) 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 voted are voted in favor of the Business Combination.
If the Company is unable to complete a Business
Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten (10) business days thereafter, redeem the Public Shares, at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account
and not previously released to the Company to pay franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses),
divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights
as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, the Company’s
remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The initial stockholders have 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 stockholders acquire Public Shares in or after the IPO, 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. 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 has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered
or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement,
reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed
a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s
indemnity of the underwriter of the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended
(the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party,
the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility
that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers,
except for 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
The accompanying financial statements have been
prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and
satisfaction of liabilities in the normal course of business. As of September 30, 2021, the Company had approximately $0.92 million in
its operating bank account and had working capital of approximately $1.08 million.
The Company’s liquidity needs prior to the
completion of the Initial Public Offering were satisfied through a payment from the Sponsor of $27,467 (see Note 6) for the Founder Shares,
borrowings under the Promissory Note totaled $275,000 (see Note 6), and the net proceeds from the consummation of the Private Placement
not held in the Trust Account. Borrowing from Promissory Note was fully repaid upon the consummation of the IPO on March 19, 2021, has
expired and no further borrowing are allowed. Subsequent to the consummation of the Initial Public Offering and Private Placement, the
Company’s liquidity needs have been satisfied from the proceeds from the consummation of the Initial Public Offering and the Private
Placement not held in the Trust Account.
In order to finance transaction costs in connection
with a Business Combination, the Company’s 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 (see Note 6). As of September 30, 2021, there were
no amounts outstanding under any Working Capital Loans.
Based on the foregoing, management believes that
the Company will have sufficient working capital and borrowing capacity 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 — Restatement of Previously Issued
Financial Statements
In connection with the preparation of the
Company's financial statements as of September 30, 2021, management determined it should restate its previously reported financial
statements included in the Form 8-K filed on March 25, 2021, the Form 10-K for the year ended March 31, 2021 and the Form 10-Q for
the quarter ended June 30, 2021. The Company previously determined that the Public Shares subject to possible redemption were equal
to their redemption value of $10.00 per Public Share while also taking into consideration the requirement under the Company's
amended and restated memorandum and articles of association that the Company's redemption of Public Shares cannot result in the
Company's net tangible assets being less than $5,000,001. Upon review of its financial statements for the period ended September 30,
2021, the Company reevaluated the classification of the Public Shares and determined that the Public Shares can be redeemed or
become redeemable subject to the occurrence of future events considered outside the Company's control under ASC 480-10- S99.
Therefore, management concluded that the carrying value should include all Public Shares subject to possible redemption, resulting
in all of the Public Shares being outside of permanent equity. As a result, management has noted a reclassification adjustment
related to temporary equity and permanent equity. This resulted in an adjustment to the initial carrying value of the Public Shares
with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Public Shares. See Note 3,
"Class A Common Stock Subject to Possible Redemption." In connection with the change in presentation for the Public
Shares, the Company also restated its earnings per share calculation to allocate net income (loss) pro-rata to Public Shares and
Class B ordinary shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both
classes of ordinary shares share pro rata in the income (loss) of the Company.
There has been no change in the Company's total
assets, liabilities or operating results.
The impact of the restatement on the Company's
financial statements is reflected in the following table.
|
|
As
Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet as of March 19, 2021
|
|
|
|
|
|
|
|
|
|
Class A Common Stock subject to possible redemption
|
|
|
368,829,730
|
|
|
|
16,170,270
|
|
|
|
(385,000,000
|
)
|
Common stock, Class A
|
|
|
162
|
|
|
|
(162
|
)
|
|
|
-
|
|
Additional paid-in-capital
|
|
|
5,005,380
|
|
|
|
(5,005,380
|
)
|
|
|
-
|
|
Accumulated deficit
|
|
|
(6,643
|
)
|
|
|
(11,164,728
|
)
|
|
|
(11,171,371
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet as of March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Common Stock subject to possible redemption
|
|
$
|
350,632,812
|
|
|
$
|
34,367,188
|
|
|
$
|
385,000,000
|
|
Common stock, Class A
|
|
|
344
|
|
|
|
(344
|
)
|
|
|
—
|
|
Additional paid-in-capital
|
|
|
2,326,544
|
|
|
|
(2,326,544
|
)
|
|
|
—
|
|
Accumulated Deficit
|
|
|
2,672,006
|
|
|
|
(32,040,300
|
)
|
|
|
(29,368,294
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet as of June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Common Stock subject to possible redemption
|
|
$
|
347,923,578
|
|
|
$
|
37,076,422
|
|
|
$
|
385,000,000
|
|
Common stock Class A - $0.0001 par value
|
|
|
371
|
|
|
|
(371
|
)
|
|
|
—
|
|
Additional paid-in-capital
|
|
|
5,035,895
|
|
|
|
(5,035,895
|
)
|
|
|
—
|
|
Accumulated Deficit
|
|
|
(37,228
|
)
|
|
|
(32,040,156
|
)
|
|
|
(32,077,384
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the year ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption
|
|
|
34,714,206
|
|
|
|
(33,342,973
|
)
|
|
|
1,371,233
|
|
Basic and diluted net income per share, Class A common stock subject to possible redemption
|
|
$
|
0.00
|
|
|
$
|
0.22
|
|
|
$
|
0.22
|
|
Basic and diluted weighted average shares outstanding, Class B common stock
|
|
|
11,691,729
|
|
|
|
(622,979
|
)
|
|
|
11,068,750
|
|
Basic and diluted net income per share, Class B common stock
|
|
$
|
0.23
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the three months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption
|
|
|
35,063,281
|
|
|
|
3,436,719
|
|
|
|
38,500,000
|
|
Basic and diluted net income per share, Class A common stock subject to possible redemption
|
|
$
|
0.00
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
Basic and diluted weighted average shares outstanding, Class B common stock
|
|
|
13,542,969
|
|
|
|
(3,426,142
|
)
|
|
|
10,116,827
|
|
Basic and diluted net income per share, Class B common stock
|
|
$
|
(0.20
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Changes in Stockholders’ Equity for the year ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of Units in public offering, less fair value of public warrants
|
|
|
371,268,334
|
|
|
|
(371,268,334
|
)
|
|
|
-
|
|
Offering costs less, costs allocated to public warrants
|
|
|
(21,428,995
|
)
|
|
|
21,428,995
|
|
|
|
-
|
|
Class A Common stock subject to possible redemption
|
|
|
(350,632,812
|
)
|
|
|
350,632,812
|
|
|
|
-
|
|
Remeasurement adjustment on redeemable common stock
|
|
|
|
|
|
|
(35,161,257
|
)
|
|
|
(35,161,257
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Changes in Stockholders’ Equity for the three months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Common Stock subject to possible redemption
|
|
|
2,709,234
|
|
|
|
(2,709,234
|
)
|
|
|
-
|
|
Remeasurement adjustment on redeemable common stock
|
|
|
|
|
|
|
(37,076,422
|
)
|
|
|
(37,076,422
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Cash Flows for the year ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial classification of common stock subject to possible redemption
|
|
|
347,141,846
|
|
|
|
(347,141,846
|
)
|
|
|
-
|
|
Change in value of Class A common stock subject to possible redemption
|
|
|
3,490,966
|
|
|
|
(3,490,966
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statements of Cash Flows for the three months ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of Class A common stock subject to possible redemption
|
|
|
2,709,234
|
|
|
|
(2,709,234
|
)
|
|
|
-
|
|
Note 3— Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed interim financial
statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes
required by U.S. GAAP. In the opinion of management, the unaudited condensed interim 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 and six months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the
year ended March 31, 2022, or any future period. These unaudited condensed financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the Form 10-K filed by the Company with the Securities and Exchange Commission
(“SEC”) on July 1, 2021.
Emerging Growth Company
The Company is an “emerging growth company”,
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and
proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging
growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth
companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period,
which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company,
as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth
company nor an emerging growth company, which has opted out of using the extended transition period difficult or impossible because of
the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements in conformity
with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet. 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 balance sheet, which management considered in formulating its estimate, could change
in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity
of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2021
and March 31, 2021.
Investments Held in Trust Account
The Company’s portfolio of investments is
comprised solely 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 sheet at fair value at the end of each reporting period. Realized and unrealized gains and losses resulting from the change in
fair value of these securities is included in investment income on Trust Account in the accompanying statement of operations. The estimated
fair values of investments held in the Trust Account are determined using available market information.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration
of credit risk consist of cash accounts in a financial institution, which, at times may exceed the Federal depository insurance coverage
of $250,000. At September 30, 2021 and March 31, 2021, the Company has not experienced losses on these accounts and management believes
the Company is not exposed to significant risks on such accounts.
Use of Estimates
The preparation of financial statements in conformity
with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements.
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.
Fair Value of Financial Instruments
Fair value measurements are based on the premise
that fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on
assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the following
three-tier fair value hierarchy has been used in determining the inputs used in measuring fair value (see Note 9):
|
●
|
Level 1 – Quoted prices in active markets for identical assets or liabilities on the reporting date.
|
|
●
|
Level 2 – Pricing inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
●
|
Level 3 – Pricing inputs are generally unobservable and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require management’s judgment or estimation of assumptions that market participants would use in pricing the assets or liabilities. The fair values are therefore determined using factors that involve considerable judgment and interpretations, including but not limited to private and public comparables, third-party appraisals, discounted cash flow models, and fund manager estimates.
|
As of September 30, 2021, the recorded values
of cash and investments held in the Trust Account, prepaid expenses, accounts payable, accrued expenses and expenses due– a related
party approximate the fair values, due to the short-term nature of the instruments. The Company’s portfolio of investments held
in the Trust Account is comprised of investments in U.S. Treasury securities with an original maturity of 185 days or less or investments
in money market funds that invest in U.S. government securities, or a combination thereof. The fair value for trading securities is determined
using quoted market prices in active market, other than for investments in open-ended money market funds with published daily NAV, in
which case the Company uses NAV as a practical expedient to fair value.
Derivative warrant liabilities
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 Topic
480 “Distinguishing Liabilities from Equity” 480 and ASC Subtopic 815-15 “Derivatives and Hedging — Embedded Derivatives.”
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 as presented (see note 10).
The 12,833,333 warrants issued in connection with
the IPO (the “Public Warrants”) and the 7,366,667 Private Placement Warrants are recognized as derivative liabilities in accordance
with ASC Subtopic 815-40 “Derivatives and Hedging — Contracts in Entity’s Own Equity.” Accordingly, the Company
recognizes the warrant 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 Public Warrants and the Private Placement Warrants for periods where no observable traded
price was available are valued using a binomial lattice model, which is considered to be a Level 3 fair value measurement. The binomial
lattice model’s primary unobservable input utilized in determining the fair value of the Private Warrants is the expected volatility
of the common stock. The expected volatility as of the IPO date was derived from observable public warrant pricing on comparable blank-check
companies without an identified target.
Offering Costs Associated with the Initial Public Offering
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 IPO. Offering
costs are allocated to the separable financial instruments issued in the IPO 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 Public Shares were charged to stockholders’ equity upon the completion of the
Initial Public Offering. Of the total offering costs of the IPO, approximately $819,000 was included in transaction costs attributable
to warrant liabilities in the statement of operations and $21,421,801 was included in stockholders’ equity. The Company will keep
deferred underwriting commissions classified as a long-term liability due to the uncertain nature of the closing of a Business Combination
and its encumbrance to the Trust Account.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock
subject to possible redemption in accordance with the guidance in ASC Topic 480.
Conditionally redeemable common stock (including
common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence
of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, common stock
is classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that are considered
to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Class A common stock subject
to possible redemption are classified as temporary equity, outside of the stockholders’ equity section of the Company’s balance
sheet. Accordingly, as of September 30, 2021, 385,000,000 shares of Class A common stock subject to possible redemption is presented at
redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.
The Class A common stock subject to possible redemption are subject
to the subsequent measurement guidance in ASC Topic 480-10-S99. Under such guidance, the Company must subsequently measure the shares
to their redemption amount because, as a result of the allocation of net proceeds to transaction costs, the initial carrying amount of
the common stock is less than $10.00 per share. In accordance with the guidance, the Company has measured the common stock subject to
possible redemption to their redemption amount (i.e., $10.00 per share).
Income Taxes
The Company accounts for income taxes under ASC
740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected
impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit
to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when
it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes
recognized in an enterprise’s financial statement and prescribes a recognition threshold and measurement process for financial statement
recognition and measurement of a tax position 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. ASC 740 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim period, disclosure and transition. 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 September 30, 2021 and March 31, 2021. The Company is currently not aware of any issues under review
that could result in significant payments, accruals or material deviation from its position.
The Company has identified the United States as its only “major”
tax jurisdiction.
The Company may be subject to potential examination
by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing
and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state 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.
Net Income (Loss) per Common Share
The Company’s net income is adjusted for
the portion of loss income that is attributable to common stock subject to redemption, as these shares only participate in the earnings
of the Trust Account and not the income or losses of the Company. Accordingly, basic and diluted income per share of common stock is calculated
as follows:
|
|
For the
three months
ended
September 30,
2021
|
|
|
For the
six months
ended
September 30,
2021
|
|
Common stock subject to possible redemption
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
Allocation of net income, as adjusted
|
|
$
|
6,419,841
|
|
|
$
|
3,710,607
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A common stock
|
|
|
38,500,000
|
|
|
|
38,500,000
|
|
Basic and diluted net income per share, Class A common stock
|
|
$
|
0.13
|
|
|
$
|
0.08
|
|
Basic and diluted weighted average shares outstanding, common stock
|
|
|
9,625,000
|
|
|
|
9,869,570
|
|
Basic and diluted net income per share, common stock
|
|
$
|
0.13
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
Proportionate class shares outstanding
|
|
|
|
|
|
|
|
|
Class A
|
|
|
38,500,000
|
|
|
|
38,500,000
|
|
Class B
|
|
|
9,625,000
|
|
|
|
9,869,570
|
|
|
|
|
48,125,000
|
|
|
|
48,369,570
|
|
Weight by class of share
|
|
|
|
|
|
|
|
|
Class A
|
|
|
80
|
%
|
|
|
80
|
%
|
Class B
|
|
|
20
|
%
|
|
|
20
|
%
|
|
|
|
100
|
%
|
|
|
100
|
%
|
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards
Update (“ASU”) No. 2020-06, Debt —debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging
—Contracts in Entity' Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity' 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. Adoption of the ASU did not impact the Company's financial position, results of operations or cash flows.
The Company's management does not believe that
any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying
financial statements.
Note 4 — Initial Public Offering
On March 19, 2021, the Company consummated the
IPO of 38,500,000 Units, at a price of $10.00 per Unit. Each Unit consists of one share of Class A common stock of the Company, par value
$0.0001 per share, and one-third of one redeemable warrant of the Company. Each whole warrant entitles the holder thereof to purchase
one share of Class A Common Stock for $11.50 per share, subject to adjustment. The Units were sold at a price of $10.00 per Unit, generating
gross proceeds to the Company of $385.00 million, and incurring offering costs of approximately $22.23 million, including approximately
$7.70 million of underwriting commission, $13.47 million of deferred underwriting commission and $1.06 million of other offering costs.
The Company also granted the IPO underwriters
a 45-day option to purchase up to an additional 5,775,000 units to cover over-allotments, if any. On April 30, 2021, the over-allotment
option expired unexercised.
Note 5 — Private Placement
Concurrent with the closing of the IPO, the Company
consummated the Private Placement of 7,366,667 Private Placement Warrants at a price of $1.50 per Private Placement Warrant
to the Sponsor, generating proceeds of approximately $11.05 million.
Each whole Private Placement Warrant is exercisable
to purchase one share of Class A common stock at $11.50 per share, subject to adjustment. 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 6 — Related Party Transactions
Founder Shares
On December 4, 2017, the Company issued 100 shares
of common stock, par value $0.01 per share, for an aggregate consideration of $25,000. As of December 31, 2020, March 31, 2020 and March
31, 2019, the Company recorded a stock subscription receivable of $25,000. The proceeds were received on January 11, 2021.
On January 22, 2021, the Company effectuated
a recapitalization in the form of a 90,562.5 for 1 stock split, and as a result, the Sponsor held 9,056,250 shares of our Class B common stock (up to 1,181,250 of which were
subject to forfeiture depending on the extent to which the underwriters’ option to purchase additional units was exercised, if
at all).
On January 22, 2021, the Company issued to Dan
Hesse 1,006,250 shares of our Class B common stock (up to 131,250 of which were subject to forfeiture depending on the extent to which
the underwriters’ option to purchase additional units was exercised, if at all) in exchange for an initial investment of $2,467.
As of January 22, 2021, the Founder Shares outstanding were 10,062,500, of which the Sponsor held 9,056,250 and Dan Hesse held 1,006,250.
On January 22, 2021, the Company filed an amended
and restated certificate of incorporation to change its par value of its Class A and B common stock from $0.01 to $0.0001. Information
contained in the financial statements has been adjusted for this split.
On March 16, 2021, the Company effectuated an
11-for-10 stock split of the Class B common stock, resulting in an aggregate outstanding amount of 11,068,750 shares of the Class B common
stock (up to 1,443,750 shares of which are subject to forfeiture depending on the extent to which the underwriters’ option to purchase
additional units is exercised, if at all), of which the Sponsor holds 9,961,875 shares and Dan Hesse holds 1,106,875 shares. All shares
and associated amounts have been retroactively restated to reflect the split (see Note 8).
The Founder Shares will automatically convert
into shares of Class A common stock on a one-for-one basis, subject to adjustment, at the time of the Company’s initial Business
Combination and are subject to certain transfer restrictions (see Note 8).
Holders of Founder Shares may also elect to convert
their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment, at any time. The initial
stockholders agreed to forfeit up to 1,443,750 Founder Shares to the extent that the over-allotment option was not exercised in full by
the underwriter. On April 30, 2021, upon the expiration of the 45-day period and the underwriters not exercising the over-allotment option,
1,443,750 shares of Class B Common Stock were forfeited by the Sponsor and Mr. Hesse in order for the Sponsor, Mr. Hesse and the Independent
Directors to maintain ownership of 20.0% of the issued and outstanding shares of common stock of the Company (excluding private units
held by the Sponsor). Such forfeited shares were cancelled by the Company.
The initial stockholders have agreed, subject
to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the
completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the last reported sale price
of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20-trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination,
or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results
in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Related Party Loans
In order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may,
but are not obligated to, lend the Company funds as may be required (“Working Capital Loans”). If the Company completes a
Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company.
Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination
does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital
Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either
be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such
Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants
would be identical to the warrants included in the Private Placement Warrants. As of September 30, 2021, there were no amounts outstanding
under any Working Capital Loans.
Promissory Note- Related Party
On December 16, 2020, the Sponsor made available
to the Company, under a promissory note, up to $950,000 to be used for a portion of the expenses of the IPO. The promissory note was non-interest
bearing and due on the earlier of September 30, 2021 or the completion of the IPO. The Promissory Note funds borrowed of $275,000 were
repaid upon the consummation of the IPO on March 19, 2021.
Note 7 — Commitments & Contingencies
Registration and Shareholder Rights
The holders of Founder Shares, Private Placement
Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, will be entitled to registration rights (in
the case of the Founder Shares, only after conversion of such shares to shares of Class A common stock) pursuant to a registration rights
agreement to be signed on or before the date of the prospectus for the IPO. These holders will be entitled to certain demand and “piggyback”
registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed
under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered.
The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriter a 45-day option
to purchase up to 5,775,000 additional Units to cover over-allotments, if any, at the IPO price less the underwriting discounts and commission.
On April 30, 2021, the over-allotment option expired unexercised.
On March 19, 2021, the Company paid an underwriting commission of $7.70
million.
The underwriters are entitled to a deferred fee
of $0.35 per Unit, or $13,475,000 in the aggregate, excluding any amounts raised pursuant to the option to purchase additional units.
The deferred fee will be paid in cash from the amounts held in the Trust Account solely in the event 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 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, cash flows 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.
Note 8 — Stockholders’ Equity
Class B common stock —
The Company is authorized to issue 50,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class
B common stock are entitled to one vote for each share. As of September 30, 2021 and March 31, 2021, there were 9,625,000 and
11,068,750 shares of Class B common stock outstanding.
Prior to the initial Business Combination, holders
of Class B common stock have the exclusive right to elect, remove and replace any director, and the holders of Class A Common Stock have
no right to vote on the election, removal or replacement of any director. This provisions of the certificate of incorporation may only
be amended by a resolution passed by a majority of holders of at least 90% of the outstanding Common Stock entitled to vote thereon. With
respect to any other matter submitted to a vote of the stockholders, including any vote in connection with the initial Business Combination,
except as required by applicable law or stock exchange rule, holders of the Class A common stock and holders of the Class B common stock
will vote together as a single class, with each share entitling the holder to one vote.
The shares of Class B common stock will automatically
convert into shares of Class A common stock at the time of the initial Business Combination on a one-for-one basis, subject to adjustment.
In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the
amounts sold in the IPO and related to the closing of the initial Business Combination, the ratio at which shares of Class B common stock
shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class
B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class
A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis,
20% of the sum of the total number of all shares of common stock outstanding upon the completion of the IPO plus all shares of Class A
common stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination (excluding any shares
or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination and any private placement-equivalent
warrants issued to the Sponsor or its affiliates upon conversion of loans made to the Company). Holders of Founder Shares may also elect
to convert their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided
above, at any time.
Note 9 — Derivative Warrant Liabilities
As of September 30, 2021, the Company has 12,833,333
Public Warrants and 7,366,667 Private Placement Warrants outstanding.
Public Warrants may only be exercised for a whole
number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable
on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the IPO; provided in each
case that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon
exercise of the Public Warrants and a current prospectus relating to them is available.
The Company has agreed that as soon as practicable,
but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file
with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon
exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness
of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with
the provisions of the warrant agreement. Notwithstanding the foregoing, if a registration statement covering the shares of Class A common
stock issuable upon exercise of the Public Warrants is not effective within a specified period following the consummation of Business
Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company
shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided
by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available,
holders will not be able to exercise their warrants on a cashless basis. The Public Warrants will expire five years after the completion
of a Business Combination or earlier upon redemption or liquidation.
The Private Placement Warrants are identical to
the Public Warrants underlying the Units being sold in the IPO, except that the Private Placement Warrants and the Class A common stock
issuable upon the exercise of the warrants included in the Private Placement Warrants will not be transferable, assignable or salable
until 30 days after the completion of a Business Combination, subject to certain limited exceptions.
Additionally, the Private Placement Warrants will
be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees.
If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement
Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The Private Placement
Warrants are not subject to redemption.
Redemption of warrants for cash when the price
per share of Class A common stock equals or exceeds $18.00:
Once the warrants become exercisable, the Company may redeem the outstanding
Public Warrants:
|
●
|
in whole and not in part;
|
|
●
|
at a price of $0.01 per warrant;
|
|
●
|
upon not less than 30 days’ prior written notice of redemption to each warrant holder; and
|
|
●
|
if, and only if, the last reported sale price of Class A common stock for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and the like).
|
If and when the warrants become redeemable by
the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale
under all applicable state securities laws.
Redemption of warrants for Class A common stock when the price
per share of Class A common stock equals or exceeds $10.00:
Once the warrants become exercisable, the Company may redeem the outstanding
warrants:
|
●
|
in whole and not in part;
|
|
●
|
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption, provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares;
|
|
●
|
if, and only if, Reference Value exceeds $10.00 per 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 our Class
A common stock for the above purpose shall mean the volume-weighted average price of the Class A common stock as reported during the ten
trading days immediately following the date on which the notice of redemption is sent to the holders of warrants. The Company will provide
our warrant holders with the final fair market value no later than one business day after the ten-trading day period described above ends.
In no event will the warrants be exercisable in connection with this redemption feature for more than 0.365 shares of Class A common stock
per whole warrant (subject to adjustment).
In addition, if (x) the Company issue additional
shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of an initial Business
Combination at an issue price or effective issue price of less than $9.20 per share (with such issue price or effective issue price to
be determined in good faith by the board of directors and, (i) in the case of any such issuance to the Sponsor or any of its affiliates,
without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance, and (ii)
to the extent that such issuance is made to the Sponsor or any of its affiliates, without taking into account the transfer of Founder
Shares or private placement warrants (including if such transfer is effectuated as a surrender to us and subsequent reissuance by the
Company) by the Sponsor in connection with 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 an initial Business
Combination on the date of the consummation of an initial Business Combination (net of redemptions), and (z) the volume weighted average
trading price of the common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates
an initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants
will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00
per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the
Newly Issued Price, and the $10.00 per share redemption trigger will be adjusted (to the nearest cent) to be equal to the higher of the
Market Value and the Newly Issued Price.
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 shares of Class
A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend,
or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Class A common
stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the 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 the respect to such warrants. Accordingly, the warrants may expire
worthless.
Note 10 — 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 September 30, 2021 and March 31,
2021 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value:
September 30, 2021:
Description
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant Other
Unobservable Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account
|
|
$
|
385,012,197
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative warrant liabilities – Public Warrants
|
|
$
|
8,598.333
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivative warrant liabilities – Private Placement Warrants
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,935,667
|
|
March 31, 2021:
Description
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant Other
Unobservable Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account
|
|
$
|
385,000,632
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative warrant liabilities – Public Warrants
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,421,666
|
|
Derivative warrant liabilities – Private Placement Warrants
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,556,334
|
|
Transfers to/from Levels 1, 2, and 3 are recognized at the end of the
reporting period. The estimated fair value of the Public Warrants transferred from a Level 3 measurement to a Level 1 fair value measurement
in May 2021, when the Public Warrants were separately listed and traded.
The fair value of the Warrants issued in connection
with the Public Offering and Private Placement Warrants were initially measured at fair value using a binomial lattice model, which is
considered to be a Level 3 fair value measurement. Subsequently, the fair value of the Public Warrants has been based on public market
quoted prices, a Level 1 measurement, which was $8,598,333 at September 30, 2021. The Company recognized an expense to the statement of
operations resulting from the decrease in the fair value of the derivative warrant liabilities of $6,739,667 in the six months to September
30, 2021, which is presented as change in fair value of derivative warrant liabilities on the accompanying statement of operations.
The estimated fair value of the Private Placement
Warrants, and the Public Warrants prior to being separately listed and traded, is determined using Level 3 inputs. Inherent in a
binomial lattice model are assumptions related to expected stock-price volatility. The Company estimates the volatility of its common
stock warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer company’s
common stock 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.
Following significant inputs to value the Private Placement Warrants:
|
|
As of
September 30,
2021
|
|
Risk-free interest rate
|
|
|
0.94
|
%
|
Trading days per year
|
|
|
|
|
Expected volatility
|
|
|
13.0
|
%
|
Exercise price
|
|
$
|
11.50
|
|
Stock Price
|
|
$
|
9.77
|
|
The change in the fair value of the level 3 derivative
warrant liabilities for the six months ended September 30, 2021 is summarized as follows:
Level 3 derivative warrant liabilities at March 31, 2021
|
|
$
|
17,978,000
|
|
Transfer of Public Warrants to Level 1
|
|
|
(8,598,333)
|
|
Change in fair value of derivative warrant liabilities
|
|
|
(4,444,000)
|
|
|
|
|
|
|
Level 3 derivative warrant liabilities at September 30, 2021
|
|
$
|
4,935,667
|
|
Note 11 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date through, the date that the unaudited condensed financial statements were issued. Based on this
review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed
financial statements.