NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 Description of Organization and Proposed Business Combination
Organization and General
Cerberus Telecom
Acquisition Corp. (the Company) is a blank check company incorporated in the Cayman Islands on September 8, 2020. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase,
reorganization or similar business combination with one or more businesses or entities.
At March 31, 2021, the Company had not yet commenced operations.
All activity for the period from September 8, 2020 (inception) through December 31, 2020 relates to the Companys formation and its preparation for the initial public offering (Initial Public Offering), which is described below, and
since the offering, the search for a prospective initial Business Combination. The Company will not generate any operating revenue until after the completion of its initial Business Combination, at the earliest. The Company will generate
non-operating income in the form of income earned on investments held in the Trust Account (as defined below).
The Companys sponsor is Cerberus
Telecom Acquisition Holdings, LLC, a Delaware limited liability company (the Sponsor). The registration statement for the Companys Initial Public Offering was declared effective on October 21, 2020. On October 26, 2020, the Company
consummated its Initial Public Offering of 25,000,000 units (the Units and, with respect to the Class A ordinary shares included in the Units sold, the Public Shares), generating gross proceeds of $250.0 million, and
incurring offering costs of approximately $14.5 million, inclusive of approximately $8.8 million in deferred underwriting commissions (Note 5). On November 10, 2020, the underwriters partially exercised the over-allotment option and purchased an
additional 916,900 Units (the Over-Allotment Units), generating gross proceeds of approximately $9.2 million (the Over-Allotment), and incurred additional offering costs of approximately $0.5 million in underwriting fees
(inclusive of approximately $0.3 million in deferred underwriting fees).
Simultaneously with the closing of the Initial Public Offering, the Company
consummated the private placement (Private Placement) of 800,000 Units (the Private Placement Units) at a price of $10.00 per Private Placement Unit, generating total gross proceeds of $8.0 million (Note 4). If the
over-allotment option is exercised, the Sponsor will purchase an additional amount of up to 75,000 Private Placement Units at a price of $10.00 per Private Placement Unit. On November 10, 2020, simultaneously with the sale of the Over-Allotment
Units, the Company consummated a private sale of an additional 18,338 Private Placement Units to Cerberus Telcom Acquisition Holdings, LLC, a Delaware limited liability company (the Sponsor), generating gross proceeds of $183,380 (See
Note 4).
Upon the closing of the Initial Public Offering, the Over-Allotment, and the Private Placement, $259.2 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), located in the United States with Continental Stock Transfer & Trust Company acting as
trustee, and were subsequently invested only in U.S. government securities within the meaning of 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 United States Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the Trust
Account as described below.
The Companys management has broad discretion with respect to the specific application of the net proceeds of the
Initial Public Offering and the sale of Private Placement Units, 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 net assets held in the Trust Account (as defined below) (excluding the
amount of deferred underwriting commissions and taxes payable on the interest earned on the Trust Account) at the time of the signing 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.
5
CERBERUS TELECOM ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company will provide the holders of its 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 Public Share). 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 5). These Public Shares have been classified as temporary equity upon the completion of the Proposed Public Offering in accordance with the 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 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 the Company will be adopted upon the consummation of the Proposed 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 (SEC) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, 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
Sponsor and each member of its management team have agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during or after the Proposed Public Offering in favor of a Business Combination. Subsequent to the
consummation of the Proposed Public Offering, the Company will adopt an insider trading policy which will require insiders to: (i) refrain from purchasing shares during certain blackout periods and when they are in possession of any material
non-public information and (ii) to clear all trades with the Companys legal counsel prior to execution. In addition, the Sponsor and each member of our management team have agreed to waive their redemption rights with respect to their Founder
Shares and Public Shares in connection with the completion of a Business Combination.
Notwithstanding the foregoing, the 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 15% or more of the Class A ordinary shares sold in the Proposed Public Offering,
without the prior consent of the Company.)
The Companys Sponsor, officers and directors (the Initial Shareholders) have agreed not to
propose an amendment to the Amended and Restated Memorandum and Articles of Association (a) that would modify the substance or timing of the Companys obligation to redeem 100% of its Public Shares if the Company does not complete a Business
Combination within 24 months from the closing of the Initial Public Offering, or October 26, 2022 (the Combination Period) or (b) with respect to any other provision relating to shareholders rights or pre-initial Business
Combination activity, unless the Company provides the Public Shareholders with the opportunity to redeem their Class A ordinary shares in conjunction with any such amendment.
The Sponsor, executive officers and directors have agreed not to propose an amendment to the Amended and Restated Memorandum and Articles of Association (a)
that would modify the substance or timing of the Companys obligation provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial Business Combination or to redeem 100% of our public
shares if the Company does not complete its initial Business Combination within 24 months from the closing of the Proposed Public Offering (the Combination Period) or (b) with respect to any other provision relating rights of holders of
Class A ordinary shares, 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 the Combination Period, the Company will (i) cease all operations except for the purpose of
winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including
interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the 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 Companys obligations under Cayman Islands law to provide for claims of creditors
and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to consummate an initial Business Combination within 24 months from
the closing of our Initial Public Offering. Our Amended and Restated Memorandum and Articles of Association provides that, if we wind up for any other reason prior to the consummation of our initial Business Combination, we will follow the foregoing
procedures with respect to the liquidation of the trust account as promptly as reasonably possible but not more than ten business days thereafter, subject to applicable Cayman Islands law.
6
CERBERUS TELECOM ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Sponsor and each member of its management team 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 Sponsor or members of the Companys management team 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 have agreed to waive their rights to
their deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other funds
held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the 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 third party for
services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. 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 Companys indemnity of the underwriters of the Proposed
Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the Securities Act). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the
Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have
all vendors, service providers (except for the Companys Independent Registered 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.
Proposed Business Combination
On March 12, 2021, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) by and among the Company, King Pubco, Inc.
(Pubco), a Delaware corporation and wholly owned subsidiary of Cerberus Telecom Acquisition Holdings, LLC (the Sponsor), an affiliate of the Company, King Corp Merger Sub, Inc. (Corp Merger Sub), a Delaware
corporation and direct, wholly owned subsidiary of the Sponsor, King LLC Merger Sub, LLC (LLC Merger Sub), a Delaware limited liability company and direct, wholly owned subsidiary of Pubco, and Maple Holdings Inc. (KORE), a
Delaware corporation.
Pursuant to the Merger Agreement, the parties thereto will enter into a business combination transaction (the Business
Combination) pursuant to which, among other things, (i) on the day immediately prior to the Closing Date (as defined in the Merger Agreement), the Company will merge with and into LLC Merger Sub, a subsidiary of Pubco (the Pubco
Merger), with LLC Merger Sub being the surviving entity of the Pubco Merger and Pubco as parent of the surviving entity, (ii) on the Closing Date and immediately prior to the First Merger (as defined below), Sponsor will contribute 100%
of its equity interests in Corp Merger Sub to Pubco (the Corp Merger Sub Contribution), as a result of which Corp Merger Sub will become a wholly owned subsidiary of Pubco, (iii) following the Corp Merger Sub Contribution, Corp
Merger Sub will merge with and into KORE (the First Merger), with KORE being the surviving corporation of the First Merger; and (iv) immediately following the First Merger and as part of the same overall transaction as the First
Merger, KORE will merge with and into LLC Merger Sub (the Second Merger and, together with the First Merger, being collectively referred to as the Mergers and, together with the other transactions contemplated by the Merger
Agreement, the Transactions and the closing of the Transactions, the Closing), with LLC Merger Sub being the surviving entity of the Second Merger and Pubco being the sole member of LLC Merger Sub.
Consummation of the transactions contemplated by the Merger Agreement are subject to customary conditions of the respective parties, including the receipt of
the required approval by the shareholders of the Company and the satisfaction or waiver of certain other conditions stated in the 8-K filed on March 12, 2020.
On March 12, 2021, concurrently with the execution of the Merger Agreement, the Company entered into subscription agreements (the Subscription
Agreements) with certain investors (collectively, the PIPE Investors), pursuant to, and on the terms and subject to the conditions of which, the PIPE Investors have collectively subscribed for 22,500,000 shares of Pubco Common
Stock for an aggregate purchase price equal to $225,000,000 (the PIPE Investment). The PIPE Investment will be consummated substantially concurrently with the Closing.
The Subscription Agreements for the PIPE Investors provide for certain registration rights. In particular, the Company is required to, as soon as practicable
but no later than 15 calendar days following the Closing, submit to or file with the SEC a registration statement registering the resale of such shares. Additionally, the Company is required to use its commercially reasonable efforts to have the
registration statement declared effective as soon as practicable after the filing thereof. Upon the reasonable request of a PIPE Investor, the Company must use commercially reasonable efforts to keep the registration statement continuously effective
with respect to such PIPE Investor until the earliest of: (a) the date such PIPE Investor no longer holds any registrable shares, (b) the date all registrable shares held by such PIPE Investor may be sold without restriction under Rule 144
and (c) two years from the date of effectiveness of the registration statement.
The Subscription Agreements will terminate with no further force and
effect upon the earliest to occur of: (i) three business days after the termination of the Merger Agreement in accordance with its terms, (ii) the mutual written agreement of the parties to such Subscription Agreement, or (iii) the
failure to close by December 12, 2021.
Liquidity and Capital Resources
As of March 31, 2021, the Company had approximately $1.7 million in its operating bank accounts and working capital deficit of approximately $1.0 million.
7
CERBERUS TELECOM ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Prior to the completion of the Initial Public Offering, the Companys liquidity needs had been satisfied
through the payment of $25,000 from the Sponsor to cover certain offering costs of the Company in exchange for the issuance of the Founder Shares, and a loan of approximately $128,000 pursuant to the Note issued to the Sponsor (Note 4). The Company
repaid the Note in full on October 26, 2020. Subsequent to the consummation of the Initial Public Offering and Private Placement, the proceeds from the consummation of the Private Placement not held in the Trust Account will be used to satisfy the
Companys liquidity. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor may, but is not obligated to, provide the Company Working Capital Loans (see Note 4). 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 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 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 (U.S. 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 U.S. GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments
necessary for the fair presentation of the balances and results for the period presented. Operating results for the period from January 1, 2021 through March 31, 2021 are not necessarily indicative of the results that may be expected through
December 31, 2021 or any future period.
The accompanying unaudited condensed financial statements should be read in conjunction with the audited
financial statements and notes thereto included in the Form 10-K/A filed by the Company with the SEC on May 13, 2021.
8
CERBERUS TELECOM ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Use of Estimates
The preparation of the unaudited condensed financial statements in conformity with U.S. GAAP requires the Companys 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 expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition,
situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant
accounting estimates included in these financial statements is the determination of the fair value of the warrant liability. Such estimates may be subject to change as more current information becomes available and accordingly, the actual results
could differ significantly from those estimates.
Emerging Growth Company
As an emerging growth company, the Company 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 of 2002, reduced disclosure obligations regarding
executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or
revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or
private companies, the Company, as an emerging growth company can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Companys 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. This may make comparison of the Companys 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.
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times, may exceed the federal depository insurance coverage of $250,000, and any cash held in Trust
Account. At March 31, 2021 and December 31, 2020 the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. The Companys investments held in the Trust Account
as of March 31, 2021 and December 31, 2020 are comprised of investments in U.S. Treasury securities with an original maturity of 185 days or less or investments in a money market funds that comprise only U.S. treasury securities money market funds.
Investments Held in the Trust Account
The
Companys 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 Companys 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. Gains and losses resulting from the change in fair value of these securities is included in net gain from investments held in 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, other than for investments in open-ended money market funds with published daily net asset values (NAV), in which case the Company uses
NAV as a practical expedient to fair value. The NAV on these investments is typically held constant at $1.00 per unit.
Fair Value of Financial
Instruments
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. U.S. 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:
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
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
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.
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, prepaid expenses, accounts payable, accrued expenses, and due to related party
approximate their fair values, primarily due to their short-term nature. The Companys investments held in Trust Account are comprised of investments in U.S. Treasury securities with an original maturity of 185 days or less or investments in
money market funds that comprise only U.S. treasury securities and are recognized at fair value. The fair value of investments held in Trust Account is determined using quoted prices in active markets.
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 $259,179,864 and $259,173,294 of cash equivalents held in the Trust Account as of March 31, 2021 and December 31,
2020, respectively. The Company had no cash equivalents in its operating account as of March 31, 2021 and December 31, 2020.
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. Shares of 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 Companys control)
are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders equity. The Companys Class A ordinary shares feature certain redemption rights that are considered to be outside of the
Companys control and subject to the occurrence of uncertain future events. Accordingly, at March 31, 2021 and December 31, 2020, 23,471,862 and 23,477,448 Class A ordinary shares subject to possible redemption are presented as temporary
equity, outside of the shareholders equity section of the Companys balance sheet, respectively.
Offering Costs
Offering costs consist of legal, accounting, underwriting fees and other costs incurred in connection with the Initial Public Offering. These costs are
allocated to the Class A Ordinary Shares and the Warrants issued based on their estimated fair value as a percentage of proceeds. Offering costs attributable to Class A Ordinary Shares were charged to additional paid-in capital upon the completion
of the Initial Public Offering and offering costs attributable to the Warrants were expensed as incurred.
Income Taxes
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Companys management determined that the Cayman Islands is the
Companys only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of September 30, 2020, there were no unrecognized tax benefits and no amounts were
accrued for the payment of interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax
examinations by major taxing authorities since inception.
There is currently no taxation imposed on income by the Government of the Cayman Islands. In
accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Companys financial statements. The Companys management does not expect that the total amount
of unrecognized tax benefits will materially change over the next twelve months.
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 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 issued 8,333,333 warrants to purchase Class A ordinary shares to investors in our Initial Public Offering and issued 266,666 Private Placement
Warrants. All of our outstanding warrants are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, we recognize the warrant instruments as liabilities at fair value and adjust 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 our statement of operations. The fair value of warrants issued in connection with our Initial
Public Offering and Private Placement was initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants has been estimated using a Monte Carlo simulation model each
measurement date. The fair value of warrants issued in connection with our Initial Public Offering has subsequently been measured based on the listed market price of such warrants.
9
CERBERUS TELECOM ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Net Loss Per Ordinary Share
The Company complies with accounting and disclosure requirements of ASC Topic 260, Earnings Per Share. Net income (loss) per share is computed by
dividing net income (loss) 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 Private Placement to purchase an aggregate
of 8,911,745 Class A ordinary shares in the calculation of diluted income (loss) per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted income (loss) per share is the same as basic
loss per share for the period presented.
The Companys statement of operations includes a presentation of net income (loss) per share for ordinary
shares subject to redemption in a manner similar to the two-class method of income (loss) per share. Net loss per share, basic and diluted for Class A ordinary shares is calculated by
dividing the investment income earned on the Trust Account of approximately $6,500 for the period from January 1, 2021 through March 31, 2021 by the weighted average number of Class A ordinary shares outstanding for the period. Net
loss per share, basic and diluted for Class B ordinary shares is calculated by dividing the net loss of approximately $0.2 million for the period from January 1, 2021 through March 31, 2021, less gains attributable to
Class A ordinary shares, by the weighted average number of Class B ordinary shares outstanding for the period.
Recent Accounting
Pronouncements
In August 2020, the FASB issued Accounting Standard Update (the ASU) No. 2020-06, DebtDebt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and HedgingContracts in Entitys Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entitys Own Equity, which simplifies accounting for
convertible instruments by removing major separation models required under current U.S. GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also
simplifies the diluted earnings per share calculation in certain areas. The Company early adopted the ASU on January 1, 2021. Adoption of the ASU did not impact the Companys financial position, results of operations or cash flows.
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the
accompanying unaudited condensed financial statements.
Note 3 Initial Public Offering
On October 26, 2020, the Company consummated its Initial Public Offering of 25,000,000 Units at $10.00 per Unit, generating gross proceeds of
$250.0 million, and incurring offering costs of approximately $14.4 million, inclusive of approximately $8.8 million in deferred underwriting commissions. The underwriters were granted a 45-day
option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 3,750,000 additional Units to cover over-allotments, if any, at $10.00 per Unit. On November 10, 2020, the underwriters partially exercised the
over- allotment option and purchased an additional 916,900 Units (the Over-Allotment Units), generating gross proceeds of approximately $9.2 million, and incurring additional offering costs of approximately $0.5 million in
underwriting fees (inclusive of approximately $0.3 million in deferred underwriting fees).
Each Unit consists of one Class A ordinary share,
and one-third of one redeemable warrant (each, a Public Warrant). Each whole Public Warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject
to adjustment (see Note 6).
Note 4 Related Party Transactions
Founder Shares
On September 10, 2020, the Sponsor
paid $25,000 to cover certain expenses on behalf of the Company in exchange for the issuance of 11,500,000 Class B ordinary shares, par value $0.0001 (the Founder Shares). On October 16, 2020, the Sponsor effected a surrender of
2,875,000 Founder Shares to the Company for no consideration. On October 21, 2020, the Sponsor effected a surrender of an additional 1,437,500 Founder Shares to the Company, for no consideration, resulting in a decrease in the total number of Class
B ordinary shares outstanding to 7,187,500 shares. All share and per share amounts have been retroactively restated for the share surrenders. The Sponsor agreed to forfeit up to 937,500 Founder Shares to the extent that the over-allotment option was
not exercised in full by the underwriters. The forfeiture was to be adjusted to the extent that the over-allotment option was not exercised in full by the underwriters so that the Founder Shares would represent 20.0% of the Companys issued and
outstanding shares, excluding the Private Placement Shares (as defined below), after the Initial Public Offering. On November 10, 2020, the underwriters partially exercised the over-allotment option and purchased an additional 916,900 Units, and on
December 7, 2020, as a result of the remaining over-allotment option expiring unexercised, 708,275 Founder Shares were forfeited resulting in 6,479,225 Founder Shares issued and outstanding.
The Sponsor and management team agreed, subject to limited exceptions, not to transfer, assign or sell (i) any of their Founder Shares until the earlier to
occur of: (A) one year after the completion of the initial Business Combination and (B) subsequent to the initial Business Combination, (x) if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share
splits, share capitalizations, 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, share exchange or other similar transaction that results in all of the Public Shareholders having the right to exchange their ordinary shares for cash, securities or other property.
10
CERBERUS TELECOM ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Private Placement Units
Simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 800,000 Private Placement Units at a price of
$10.00 per Private Placement Unit, generating total gross proceeds of $8.0 million. If the over-allotment option is exercised, the Sponsor will purchase an additional amount of up to 75,000 Private Placement Units at a price of $10.00 per
Private Placement Unit. The Private Placement Units (including the Private Placement Shares, the Private Placement Warrants (as defined below) and Class A ordinary shares issuable upon exercise of such warrants) will not be transferable or
salable until 30 days after the completion of the initial Business Combination. On November 10, 2020, simultaneously with the sale of the Over-Allotment Units, the Company consummated a private sale of an additional 18,338 Private Placement Units
the Sponsor, generating gross proceeds of $183,380.
Each Private Placement Unit consists of one Class A ordinary share (Private Placement
Shares), and one-third of one redeemable warrant (each, a Private Placement Warrant). Each whole Private Placement Warrant underlying the Private Placement Units is exercisable for one whole
Class A ordinary share at a price of $11.50 per share. Certain proceeds from the Private Placement Units were added to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business
Combination within the Combination Period, the Private Placement Units and the underlying securities will expire worthless. The Private Placement Units will be non-redeemable and exercisable on a cashless
basis so long as they are held by the Sponsor or its permitted transferees. The Private Placement Warrants will be non-redeemable (except as described in Note 6 below under Redemption of warrants for
Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00) and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
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 Companys officers and directors 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 may repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans may 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 the 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 lenders discretion, up to $1.5 million of such Working Capital Loans may be convertible into units, at the price of $10.00 per unit at the option of the
lender. Such units would be identical to the Private Placement Units. As of March 31, 2021, and December 31, 2020, the Company had no outstanding borrowings under the Working Capital Loans.
Administrative Support Agreement
Commencing on
the effective date of the Companys Initial Public Offering, the Company agreed to pay its Sponsor or an affiliate of its Sponsor a total of up to $10,000 per month for office space, secretarial and administrative support services. Upon
completion of a Business Combination or the Companys liquidation, the Company will cease paying these monthly fees. As of March 31, 2021 and for the three month period then ended, the Company incurred and accrued $30,000 in fees. These
expenses are included in general and administrative expenses related party on the condensed statement of operations and in due to related party on the condensed balance sheets.
Consulting and Advisory Services Agreements
Commencing on the effective date of the Companys Initial Public Offering, the Company agreed to pay Cerberus Operations and Advisory Company, LLC
(COAC) and Cerberus Technology Solutions, LLC (CTS) certain fees and direct and allocable compensation costs, as well as reimbursement for any
out-of-pocket expenses, to the extent that COAC or CTS provide advisory services to the Company prior to the completion of a Business Combination. As of March 31, 2020
and for the three month period then ended, the Company has incurred and accrued $0.4 million in fees. These expenses are included in general and administrative expenses related party on the condensed statement of operations and in
due to related party on the condensed balance sheets.
11
CERBERUS TELECOM ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 5 Commitments & Contingencies
Registration Rights
The holders of Founder Shares,
Private Placement Shares, Private Placement Warrants, Class A ordinary shares underlying the Private Placement Warrants and units that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon
the exercise of any Private Warrants underlying the Private Placement Units that may be issued upon conversion of working capital loans), if any, will be entitled to registration rights pursuant to a registration and shareholder rights agreement to
be signed upon consummation of the Initial Public Offering. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. These holders will be entitled to certain
demand and piggyback registration rights. However, the registration and shareholder rights agreement provide 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, which occurs, (i) in the case of the Founder Shares, in accordance with the letter agreement the Companys initial shareholders entered into and
(ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares underlying such Private Placement Warrants, 30 days after the completion of the Business Combination. The Company will bear the expenses incurred
in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day option from the final prospectus relating to the Initial Public Offering
to purchase up to 3,750,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. The underwriters exercised the
over-allotment option in part for 916,900 Units on November 10, 2020.
The underwriters were entitled to an underwriting discount of $0.20 per Unit, or
$5.2 million in the aggregate, paid upon the closing of the Initial Public Offering and the Over-Allotment. In addition, $0.35 per unit, or approximately $9.1 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 is
currently evaluating 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 Companys 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 6 Shareholders Equity
Class A Ordinary Shares - The Company is authorized to issue 500,000,000 Class A ordinary shares with a par
value of $0.0001 per share. As of March 31, 2021 and December 31, 2020, there were no Class A ordinary shares issued or outstanding.
Class B Ordinary Shares The Company is authorized to issue 50,000,000 Class B ordinary shares with a
par value of $0.0001 per share. On September 10, 2020, the Company issued 11,500,000 Class B ordinary shares to the Sponsor. On October 16, 2020, the Sponsor effected a surrender of 2,875,000 Founder Shares to the Company for no
consideration. On October 21, 2020, the Sponsor effected a surrender of an additional 1,437,500 Class B ordinary shares, for no consideration, resulting in a decrease in the total number of Class B ordinary shares outstanding to
7,187,500 shares. All shares and associated amounts have been retroactively restated to reflect the surrenders of shares. Of the 7,187,500 shares outstanding, up to 937,500 shares were subject to forfeiture 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 approximately 20% of the Companys issued and outstanding ordinary shares (excluding the
Private Placement Shares). On November 10, 2020, the underwriters partially exercised the over-allotment option and on December 7, 2020, as a result of the remaining over-allotment option expiring unexercised, 708,275 shares were
forfeited. As of March 31, 2021 and December 31, 2020, there were 6,479,225 Class B ordinary shares issued and outstanding.
Holders of the
Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all matters submitted to a vote of our shareholders, except as required by law or stock exchange rule; provided that only holders of
the Class B ordinary shares have the right to vote on the election of the Companys directors prior to the initial Business Combination.
The
Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination 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 ordinary shares issued and outstanding upon completion of the Proposed Public Offering
(excluding the Private Placement Shares), 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 consummation of the initial Business Combination, 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 Units issued to the sponsor, its affiliates or any member of the Companys management team upon conversion of Working Capital Loans and the
Private Placement Shares. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one-to-one.
Preference Shares - The Company is authorized to issue 5,000,000 preference shares with such designations, voting and other rights and
preferences as may be determined from time to time by the Companys board of directors. As of March 30, 2021, there were no preference shares issued or outstanding.
12
CERBERUS TELECOM ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 7 Fair Value Measurements
The fair value of the Companys financial assets and liabilities reflects managements estimate of amounts that the Company would have received in
connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the date of the underlying transaction, and at each reporting period for certain financial
instruments. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs
(internal assumptions about how market participants would price assets and liabilities).
The following table presents information about the
Companys assets and liabilities that are measured at fair value on a recurring basis at March 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account - U.S. Treasury Securities
|
|
$
|
259,179,864
|
|
|
$
|
259,179,864
|
|
|
$
|
|
|
|
$
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability - Public Warrants
|
|
$
|
9,070,914
|
|
|
$
|
9,070,914
|
|
|
$
|
|
|
|
$
|
|
|
Warrant Liability - Private Placement
|
|
$
|
286,416
|
|
|
$
|
|
|
|
$
|
286,416
|
|
|
$
|
|
|
Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were no transfers for the three
months ended March 31, 2021.
Subsequent Measurement
The Warrants are measured at fair value on a recurring basis. The subsequent measurement of the Public Warrants as of March 31, 2021 is classified as
Level 1 due to the use of an observable market quote in an active market under the ticker CTAC.WS. As the transfer of Private Placement Warrants to anyone outside of a small group of individuals who are permitted transferees would result in the
Private Placement Warrants having substantially the same terms as the Public Warrants, the Company determined that the fair value of each Private Placement Warrant is equivalent to that of each Public Warrant, with an insignificant adjustment for
short-term marketability restrictions. As such, the Private Placement Warrants are classified as Level 2.
As of March 31, 2020, the aggregate
values of the Private Placement Warrants and Public Warrants were $0.3 million and $9.1 million, respectively, based on the closing price of CTAC.WS on that date of $1.05.
The following table presents the changes in the fair value of warrant liabilities:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public
|
|
|
Private Placement
|
|
|
Warrant
Liabilities
|
|
Fair value as of December 31, 2020
|
|
$
|
11,662,600
|
|
|
$
|
368,250
|
|
|
$
|
12,030,850
|
|
Changes in valuation inputs or other assumptions
|
|
|
(2,591,686
|
)
|
|
|
(81,834
|
)
|
|
|
(2,673,520
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value as of March 31, 2021
|
|
$
|
9,070,914
|
|
|
$
|
286,416
|
|
|
$
|
9,357,330
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|
|
|
|
|
|
|
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|
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Note 8 Derivative Warrant Liabilities
As of March 31, 2021, and December 31, 2020, the Company had 8,638,966 and 272,778 Public Warrants and Private Placement Warrants, respectively,
outstanding.
Public Warrants may only be exercised for a whole number of shares. 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 Proposed 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 (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from
registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later than twenty business days after the closing of the initial Business Combination, the Company will use its commercially reasonable
efforts to file with the SEC a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective within 60
business days after the closing of the initial Business Combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed,
as specified in the warrant agreement provided that 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
13
CERBERUS TELECOM ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
of Public Warrants who exercise their warrants to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it
will not be required to file or maintain in effect a registration statement. 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, but the Company will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the
extent an exemption is not available.
The Public Warrants will expire five years after the completion of a Business Combination or earlier upon
redemption or liquidation.
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 the initial Business Combination (except pursuant to limited exceptions to the Companys officers and directors and other persons or entities affiliated with
the initial purchasers of the Private Placement Warrants) and they will not be redeemable by the Company (except as described below under Redemption of warrants for Class A ordinary shares when the price per Class A ordinary share
equals or exceeds $10.00) so long as they are held by the Sponsor or its permitted transferees. The Sponsor, or its permitted transferees, has the option to exercise the Private Placement Warrants on a cashless basis. Except as described
below, the Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement
Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the Public Warrant.
Redemption of warrants for cash
when the price per Class A ordinary share equals or exceeds $18.00. Once the warrants become exercisable, the Company may redeem the Public Warrants for cash (except with respect to 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
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|
|
if, and only if, the last reported sale price (the closing price) of the Class A ordinary shares
equals or exceeds $18.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the
third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
|
If and when the
warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. If the Company calls the Public
Warrants for redemption, as described above, management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a cashless basis, as described in the warrant agreement. Except as set forth
below, none of the Private Placement Warrants will be redeemable by us so long as they are held by our sponsor or its permitted transferees.
Redemption of warrants for Class A ordinary shares when the price per Class A ordinary
share equals or exceeds $10.00. Once the warrants become exercisable, the Company may redeem the outstanding
Public Warrants:
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|
in whole and not in part;
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|
|
at $0.10 per warrant upon a minimum of 30 days prior written notice of redemption; provided that holders
will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the agreed redemption date and the fair market value of the Companys Class A ordinary shares;
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if, and only if, the last reported sale price (the closing price) of the Companys Class A
ordinary shares equals or exceeds $10.00 per Public Share (as adjusted) for any 20 trading days within the 30-trading day period ending three trading days before we send the notice of redemption to the warrant
holders; and
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if the closing price of the Class A ordinary shares 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 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.
|
If
the Company has not completed the initial 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 Companys assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
If the Company is unable to complete the initial 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 Companys assets held outside of the Trust Account with respect to such warrants. Accordingly, the
warrants may expire worthless.
14
CERBERUS TELECOM ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 9 Restatement of Previously Issued Financial Statements
In May 2021, the Company concluded that, because of a misapplication of the accounting guidance related to its Public and Private Placement Warrants, the
Companys previously issued financial statements for the period ended December 31, 2020, as well as the audited balance sheet and unaudited pro forma balance sheet as of October 26, 2020 (collectively, the Affected
Periods), should no longer be relied upon. As such, the Company has restated its financial statements for the Affected Periods included in this Annual Report.
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 such warrants to be classified as liabilities on a SPACs balance sheet as opposed to equity. Since issuance on October 26, 2020 and, subsequently, on November 10, 2020,
our outstanding public and private placement warrants (the Warrants) to purchase common stock were accounted for as equity within the Companys previously reported balance sheets. After discussion and evaluation, management
concluded that the warrants should be presented as liabilities with subsequent fair value remeasurement.
Historically, the Warrants were reflected as a
component of equity as opposed to liabilities on the balance sheets and the statements of operations did not include the subsequent non-cash changes in estimated fair value of the Warrants, based on our
application of FASB ASC Topic 815-40, Derivatives and Hedging, Contracts in Entitys Own Equity (ASC 815-40). The views expressed in the SEC Staff
Statement were not consistent with the Companys historical interpretation of the specific provisions within its warrant agreement and the Companys application of ASC 815-40 to the warrant
agreement. We reassessed our accounting for Warrants in light of the SEC Staffs Statement. Based on this reassessment, we determined that the Warrants should be classified as liabilities measured at fair value upon issuance, with subsequent
changes in fair value reported in our Statement of Operations each reporting period. Additionally, offering costs attributable to warrants, based on their fair value as a percentage of proceeds, are no longer included as an offset to equity but
expensed as incurred.
Therefore, the Company, in consultation with its Audit Committee, concluded that its previously issued Financial Statements for the
Affected Periods should be restated because of a misapplication in the guidance around accounting for the Warrants and should no longer be relied upon.
Impact of the Restatement
The following
summarizes the effect of the Restatement on each financial statement line item for each period presented herein
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|
|
|
|
|
|
|
|
|
As filed
|
|
|
Restatement
Adjustment
|
|
|
As Restated
|
|
Balance Sheet as of December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability
|
|
|
|
|
|
|
12,030,850
|
|
|
|
12,030,850
|
|
Ordinary shares subject to possible redemption
|
|
|
246,805,330
|
|
|
|
12,030,850
|
|
|
|
234,774,480
|
|
Class A ordinary shares
|
|
|
206
|
|
|
|
120
|
|
|
|
326
|
|
Additional paid-in capital
|
|
|
5,667,824
|
|
|
|
4,225,201
|
|
|
|
9,893,025
|
|
Accumulated deficit
|
|
|
(668,674
|
)
|
|
|
(4,225,321
|
)
|
|
|
(4,893,995
|
)
|
Note 10 Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the condensed balance sheet date up to the date that the unaudited condensed
financial statements were issued and determined that there have been no other events other than already disclosed that have occurred that would require adjustments to or disclosure in the unaudited condensed financial statements.
15