ZANITE ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, Income Taxes. Deferred tax assets
and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2021 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. The Company is subject to income tax examinations by major taxing authorities since inception.
The Company may be subject to potential examination by federal, state and city taxing authorities in the areas of income taxes. These
potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal, state and city tax laws. The Companys management does not expect that the
total amount of unrecognized tax benefits will materially change over the next twelve months. The Company is subject to income tax examinations by major taxing authorities since inception.
Recent Accounting Standards
In
August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06, Debt Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts
in Entitys Own Equity (Subtopic 815-40) (ASU 2020-06) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features
from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entitys own equity. The new standard also introduces additional disclosures for convertible debt and
freestanding instruments that are indexed to and settled in an entitys own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU
2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on
its financial position, results of operations or cash flows.
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 Companys condensed financial statements.
NOTE 3.
INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold 23,000,000 Units, which includes the full exercise
by the underwriters of their option to purchase an additional 3,000,000 Units, at a price of $10.00 per Unit. Each Unit consisted of one share of Class A common stock and one-half of one redeemable
warrant (Public Warrant). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 8).
All of the 23,000,000 Class A common stock sold as part of the Units in the Public Offering contain a redemption feature which allows for the
redemption of such public shares in connection with the Companys liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in connection the Companys amended and restated certificate of
incorporation. In accordance with SEC and its staffs guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to
redemption to be classified outside of permanent equity. Given that the Class A common stock was issued with other freestanding instruments (i.e., public warrants), the initial carrying value of Class A Common Stock classified as temporary equity is
the allocated proceeds based on the guidance in ASC 470-20.
Our Class A common stock is subject to SEC and its staffs guidance on
redeemable equity instruments, which has been codified in ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date
of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the
carrying amount of the instrument to equal the redemption value at the end of each reporting period. The accretion or remeasurement is treated as a deemed dividend (i.e., a reduction to retained earnings, or in absence of retained earnings,
additional paid-in capital). The Company elected to remeasure the Class A common stock to the redemption amount immediately upon the closing of the Initial Public Offering.
As of March 31, 2020, the Class A common stock reflected on the balance sheet are reconciled in the following table:
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As of December 31, 2020
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Gross proceeds
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$
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230,000,000
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Less:
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Proceeds allocated to public warrants
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$
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(14,950,000
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)
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Class A common stock issuance costs
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$
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(12,288,792
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)
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Plus:
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Immediate remeasurement of the Class A common stock to the redemption amount
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$
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29,538,792
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Contingently redeemable Class A common stock
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$
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232,300,000
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The immediate remeasurement of the Class A common stock to the redemption amount includes $2,300,000
related to the difference between the issuance price of $10 per Unit and the redemption price of $10.10 for the 23,000,000 Class A shares issued.
NOTE
4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 9,650,000
Private Placement Warrants at a price of $1.00 per Private Placement Warrant or $9,650,000. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment
(see Note 8). The proceeds from the sale of the Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination
Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire
worthless. There will be no redemption rights or liquidating distributions from the Trust Account with respect to the Private Placement Warrants. Additionally, our Sponsor is required to purchase an additional 2,300,000 Private Place Warrants for
each 6-month extension of the Companys period to consummate an initial business combination. As the fair value of the Private Placement Warrants exceeded the purchase price, the Company recorded an
expense of $3,088,000 related to the sale of the Private Placement Warrants. This amount is reflected in the Companys statement of operations for the period ended December 31, 2020 as part of the change in fair value of derivative liabilities
expense.
Additionally, the Company is obligated to issue an additional 2,300,000 Private Place Warrants to the Sponsor at a price of
$1.00 per Private Placement Warrant, or $2,300,000, for each 6-month extension of the Companys period to consummate an initial business combination. The terms of the additional Private Placement Warrants, if issued, will be consistent with the
initial 9,650,000 Private Placement Warrants issued to the Sponsors at the Initial Public Offering. The Company recorded an expense of $1,104,000 for the initial recognition of the forward contract derivative liability. This amount is reflected in
the Companys statement of operations as part of the change in fair value of derivative liabilities expense.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
The
Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 5,750,000 shares of Class B common stock (the Founder Shares).
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur
of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the closing price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits,
stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the
date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of common stock for cash, securities or other
property.
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