Item 1. Financial Statements.
CONSTELLATION ACQUISITION CORP I
CONDENSED BALANCE SHEETS
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Assets:
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
1,282,979
|
|
|
$
|
—
|
|
Prepaid Expenses
|
|
|
648,995
|
|
|
|
—
|
|
Total current assets
|
|
|
1,931,974
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Deferred offering costs
|
|
|
—
|
|
|
|
227,924
|
|
Cash and Investments held in Trust Account
|
|
|
310,033,520
|
|
|
|
—
|
|
Total Assets
|
|
$
|
311,965,494
|
|
|
$
|
227,924
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accrued offering costs and expenses
|
|
$
|
109,604
|
|
|
$
|
204,767
|
|
Promissory note – related party
|
|
|
699,999
|
|
|
|
1,300
|
|
Total current liabilities
|
|
|
809,603
|
|
|
|
206,067
|
|
Deferred underwriting fee
|
|
|
10,850,000
|
|
|
|
—
|
|
Warrant liability
|
|
|
14,290,467
|
|
|
|
—
|
|
Total liabilities
|
|
|
25,950,070
|
|
|
|
206,067
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
Class A ordinary shares subject to possible redemption, 28,101,542 and no shares at redemption value ($10.00 per share) at June 30, 2021 and December 31, 2020, respectively
|
|
|
281,015,420
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity:
|
|
|
|
|
|
|
|
|
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 2,898,458 and 0 shares issued and outstanding (excluding 28,101,542 and no shares subject to possible redemption) at June 30, 2021 and December 31, 2020, respectively
|
|
|
290
|
|
|
|
—
|
|
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 7,750,000 and 8,625,000 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
|
|
|
775
|
|
|
|
863
|
|
Additional paid-in capital
|
|
|
—
|
|
|
|
24,137
|
|
Retained earnings (accumulated deficit)
|
|
|
4,998,939
|
|
|
|
(3,143
|
)
|
Total shareholders’ equity
|
|
|
5,000,004
|
|
|
|
21,857
|
|
Total Liabilities and Shareholders’ Equity
|
|
$
|
311,965,494
|
|
|
$
|
227,924
|
|
The accompanying notes are an integral part of
these unaudited condensed financial statements.
CONSTELLATION ACQUISITION CORP I
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2021
(UNAUDITED)
|
|
For the
Three Months
Ended
June 30,
2021
|
|
|
For the
Six Months
Ended
June,
2021
|
|
Formation and operating costs
|
|
$
|
241,086
|
|
|
$
|
362,745
|
|
Loss from Operations
|
|
|
(241,086
|
)
|
|
|
(362,745
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Interest earned on cash and marketable securities held in Trust Account
|
|
|
13,885
|
|
|
|
33,520
|
|
Offering costs allocated to warrants
|
|
|
—
|
|
|
|
(1,143,138
|
)
|
Excess of fair value over cash received for private placement warrants
|
|
|
—
|
|
|
|
(2,604,321
|
)
|
Change in fair value of warrant liability
|
|
|
(4,165,347
|
)
|
|
|
16,663,854
|
|
Total other income (expense)
|
|
|
(4,151,462
|
|
|
|
12,949,915
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(4,392,548
|
)
|
|
$
|
12,587,170
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A ordinary shares, basic and diluted
|
|
|
31,000,000
|
|
|
|
31,000,000
|
|
Basic and diluted net income per share, Class A redeemable ordinary shares
|
|
$
|
—
|
|
|
$
|
—
|
|
Weighted average shares outstanding of Class B ordinary shares, basic and diluted
|
|
|
7,750,000
|
|
|
|
7,711,326
|
|
Basic and diluted net income per share, Class B
|
|
$
|
(0.57
|
)
|
|
$
|
1.63
|
|
The accompanying notes are an integral part of
these unaudited condensed financial statements.
CONSTELLATION ACQUISITION CORP I
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2021
(UNAUDITED)
|
|
Class A
|
|
|
Class B
|
|
|
Additional
|
|
|
Retained
Earnings
|
|
|
Total
|
|
|
|
Ordinary Shares
|
|
|
Ordinary Shares
|
|
|
Paid-in
|
|
|
(Accumulated
|
|
|
Shareholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit)
|
|
|
Equity
|
|
Balance as of December 31, 2020
|
|
|
—
|
|
|
$
|
—
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
24,137
|
|
|
$
|
(3,143
|
)
|
|
$
|
21,857
|
|
Sale of 31,000,000 Units, net of underwriting discount and offering expenses and fair value of public warrants
|
|
|
31,000,000
|
|
|
|
3,100
|
|
|
|
—
|
|
|
|
—
|
|
|
|
273,403,297
|
|
|
|
—
|
|
|
|
273,406,397
|
|
Forfeiture of Class B ordinary shares by initial shareholders
|
|
|
|
|
|
|
|
|
|
|
(875,000
|
)
|
|
|
(88
|
)
|
|
|
88
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,979,718
|
|
|
|
16,979,718
|
|
Change in Class A ordinary shares subject to possible redemption
|
|
|
(28,540,797
|
)
|
|
|
(2,854
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(273,427,522
|
)
|
|
|
(11,977,594
|
)
|
|
|
(285,407,970
|
)
|
Balance as of March 31, 2021 (unaudited)
|
|
|
2,459,203
|
|
|
$
|
246
|
|
|
|
7,750,000
|
|
|
$
|
775
|
|
|
$
|
—
|
|
|
$
|
4,998,981
|
|
|
$
|
5,000,002
|
|
Net income (loss)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,392,548
|
)
|
|
|
(4,392,548
|
)
|
Change in Class A ordinary shares subject to possible redemption
|
|
|
439,255
|
|
|
|
44
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,392,506
|
|
|
|
4,392,550
|
|
Balance as of June 30, 2021 (unaudited)
|
|
|
2,898,458
|
|
|
$
|
290
|
|
|
|
7,750,000
|
|
|
$
|
775
|
|
|
$
|
—
|
|
|
$
|
4,998,939
|
|
|
$
|
5,000,004
|
|
The accompanying notes are an integral part of
these unaudited condensed financial statements.
CONSTELLATION ACQUISITION CORP I
CONDENSED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2021
(UNAUDITED)
|
|
For the
Six Months
Ended
June 30,
2021
|
|
Cash flows from operating activities:
|
|
|
|
|
Net income (loss)
|
|
$
|
12,587,170
|
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
Interest earned on marketable securities held in Trust Account
|
|
|
(33,520
|
)
|
Offering costs allocated to warrants
|
|
|
1,143,138
|
|
Excess fair value over cash received for private placement warrants
|
|
|
2,604,321
|
|
Change in fair value of warrant liability
|
|
|
(16,663,854
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
Prepaid assets
|
|
|
(648,995
|
)
|
Accrued expenses
|
|
|
109,604
|
|
Net cash used in operating activities
|
|
|
(902,136
|
)
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
Investment of cash in Trust Account
|
|
|
(31,000,000
|
)
|
Net cash used in investing activities
|
|
|
(31,000,000
|
)
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
Proceeds from sale of Units, net of underwriters’ fees
|
|
|
303,800,000
|
|
Proceeds from issuance of Private Placement Warrants
|
|
|
8,200,000
|
|
Proceeds from promissory note – related party
|
|
|
788,539
|
|
Repayment of promissory note – related party
|
|
|
(89,840
|
)
|
Payment of offering costs
|
|
|
(513,584
|
)
|
Net cash provided by financing activities
|
|
|
312,185,115
|
|
Net change in cash
|
|
|
1,282,979
|
|
Cash, beginning of the period
|
|
|
—
|
|
Cash, end of the period
|
|
$
|
1,282,979
|
|
|
|
|
|
|
Supplemental disclosure of non-cash financing activities:
|
|
|
|
|
Initial value of Class A ordinary shares subject to possible redemption
|
|
$
|
264,676,109
|
|
Change in Class A ordinary shares subject to possible redemption
|
|
|
16,339,311
|
|
Deferred underwriters’ discount payable charged to additional paid-in capital
|
|
$
|
10,850,000
|
|
The accompanying notes are an integral part of
these unaudited condensed financial statements.
CONSTELLATION ACQUISITION CORP I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 — Organization and Business Operations
Constellation Acquisition Corp I (the “Company”)
is a newly organized blank check company incorporated in Cayman Islands on November 20, 2020. The Company was formed for the purpose of
effecting a merger, capital share exchange, asset acquisition, share purchase, reorganization or similar business combination with one
or more businesses (“Business Combination”).
As of June 30, 2021, the Company had not
commenced any operations. All activity through June 30, 2021 relates to the Company’s formation and the Initial Public Offering
(“IPO”) which is described below, and identifying a target company for a Business Combination. The Company will not generate
any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income
in the form of interest income from the proceeds derived from the IPO.
The registration
statement for the Company’s IPO was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on
January 26, 2021 (the “Effective Date”). On January 29, 2021, the Company consummated the IPO of 31,000,000 units (the
“Units” and, with respect to the shares of Class A ordinary shares included in the Units sold, the “Public Shares”),
including 1,000,000 Units issued pursuant to the partial exercise of the underwriters’ over-allotment
option, at $10.00 per Unit, generating gross proceeds of $310,000,000, which is discussed in Note 3. Each Unit consists of one
Class A ordinary share, and one-third of one redeemable warrant to purchase one Class A ordinary share at a price of $11.50 per whole
share.
Simultaneously with the closing of the IPO,
the Company consummated the sale of 5,466,667 Private Placement Warrants (the “Private Placement Warrants”), at a price of
$1.50 per Private Placement Warrant, in a private placement to certain affiliates of the Company’s Sponsor, GmbH
& Co. KG, a German limited partnership (the “Sponsor”), generating gross proceeds of $8,200,000, which is discussed
in Note 4.
Transaction costs of the IPO amounted to
$17,586,741 consisting of $6,200,000 of underwriting fees, $10,850,000 of deferred underwriting fees, and $536,741 of other offering costs.
Following the closing of the IPO on January
29, 2021, $310,000,000 ($10.00 per Unit) from the net offering proceeds of the sale of the Units in the IPO and the sale of the Private
Placement Warrants was placed in a trust account (the “Trust Account”) and invested
in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity
of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which
invest only in direct U.S. government treasury obligations. Except with respect to interest
earned on the funds held in the Trust Account that may be released to the Company to pay the income taxes, if any, the Company’s
amended and restated memorandum and articles of association will provide that the proceeds from the IPO and the sale of the Private Placement
Warrants held in the Trust Account will not be released from the Trust Account (1) to the Company, until the completion of the initial
Business Combination, or (2) to the public shareholders, until the earliest of (a) the completion of the initial Business Combination,
and then only in connection with those Class A ordinary shares that such shareholders properly elected to redeem, subject to the limitations,
(b) the redemption of any Public Shares properly tendered in connection with a (A) shareholder vote to amend the amended and restated
memorandum and articles of association to modify the substance or timing of the Company’s obligation to provide holders of the Class
A ordinary shares the right to have their shares redeemed in connection with the initial Business Combination or to redeem 100% of the
Public Shares if the Company does not complete the initial Business Combination within 24 months from January 29, 2021 (the “Combination
Period”), or (B) with respect to any other provision relating to the rights of holders of the Class A ordinary shares or pre-initial
Business Combination activity, and (c) the redemption of the Public Shares if the Company has not consummated the initial Business Combination
within the Combination Period. Public shareholders who redeem their Class A ordinary shares in connection with a shareholder vote described
in clause (b) in the preceding sentence shall not be entitled to funds from the Trust Account upon the subsequent completion of an initial
Business Combination or liquidation if the Company has not consummated an initial Business Combination within the Combination Period,
with respect to such Class A ordinary shares so redeemed. The proceeds deposited in the Trust Account could become subject to the claims
of the Company’s creditors, if any, which could have priority over the claims of the public shareholders.
The Company
will provide its public shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of the
initial Business Combination either (i) in connection with a shareholder meeting called to approve the initial Business Combination or
(ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed initial Business
Combination or conduct a tender offer will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem
their shares for a pro rata portion of the amount then on deposit in the Trust Account (initially approximately $10.00 per share, plus
any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
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, 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 the income taxes, 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 Company’s board
of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to the 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 the warrants, which will expire worthless if the Company fails to consummate an initial Business Combination within the
Combination Period.
The Sponsor,
officers and directors have agreed to waive their redemption rights with respect to their Founder Shares and any Public Shares purchased
during or after the IPO in connection with (i) the completion of the initial Business Combination and (ii) a shareholder vote to approve
an amendment to the Company’s amended and restated memorandum and articles of association, and (iii) waive their rights to liquidating
distributions from the Trust Account with respect to their Founder Shares if the Company fails to complete its initial Business Combination
within the Combination Period.
The Company’s
Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products
sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality
or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00
per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the trust
account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability
will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies
held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity
of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. However, the Company has not
asked its Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether its Sponsor has
sufficient funds to satisfy its indemnity obligations and believe that the Company’s Sponsor’s only assets are securities
of the Company. Therefore, the Company cannot assure that its Sponsor would be able to satisfy those obligations.
Risks and Uncertainties
Management is continuing to evaluate the impact
of the COVID-19 pandemic and has concluded that while it is reasonably possible that it could have a negative effect on the Company’s
financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of
the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of
this uncertainty.
Correction of previously issued financial statement
In preparation of the Company’s Form 10-Q for
June 30, 2021, the Company concluded it should correct the amounts previously recorded in Additional Paid-in Capital and Retained Earnings
due to a negative balance in Additional Paid-in Capital as of March 31, 2021. The following shareholders’ equity balances as of March
31, 2021 were impacted: an increase of $11,977,594 in Additional Paid-in Capital for a closing balance of $0 and a decrease of $11,977,594
million in Retained Earnings (Accumulated Deficit) for a closing balance of $4,998,981.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying
unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in
the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly,
they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial
statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and
results for the periods presented. The interim results for the three months and six months ended June 30, 2021 are not necessarily
indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.
Emerging Growth Company Status
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
shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act
exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies
(that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s financial 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 US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during
the reporting period. Accordingly, actual results could differ from those estimates.
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.
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 June 30, 2021 and December 31, 2020.
Marketable Securities Held in Trust Account
At June 30, 2021, the assets held in the Trust
Account were held in money market mutual funds which invest in U.S. Treasury securities. During the three months and six months ended
June 30, 2021, the Company did not withdraw any of the interest income from the Trust Account to pay its tax obligations.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal
Depository Insurance Corporation coverage of $250,000. The Company has not experienced losses on these accounts and management believes
the Company is not exposed to significant risks on such accounts.
Warrant Liabilities
The Company evaluated the Public Warrants and
Private Placement Warrants (collectively, “Warrants”, which are discussed in Notes 3, 4, and 8) in accordance with ASC 815-40,
“Derivatives and Hedging — Contracts in Entity’s Own Equity”, and concluded that a provision in the Warrant Agreement
related to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants
meet the definition of a derivative as contemplated in ASC 815, the Warrants are recorded as derivative liabilities on the Condensed Balance
Sheet and measured at fair value at inception (on the date of the IPO) and at each reporting date in accordance with ASC 820, “Fair
Value Measurement”, with changes in fair value recognized in the Condensed Statement of Operations in the period of change.
Offering Costs Associated
with the Initial Public Offering
The Company complies
with the requirements of the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees and other costs incurred
through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the
separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds
received. Offering costs associated with warrant liabilities are expensed as incurred, presented as non-operating expenses in the
statement of operations. Transaction costs amounted to $17,586,741, of which $1,143,138 were allocated to expense associated with
the warrant liability. Offering costs associated with the Class A ordinary shares were charged to shareholders’ equity upon the
completion of the Initial Public Offering.
Class A Ordinary Shares Subject to Possible
Redemption
The Company
accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) is classified as liability instruments
and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that
features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain
events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A ordinary shares
is classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are
considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at June
30, 2021, 28,101,542 Class A ordinary shares subject to possible redemption were presented as temporary equity, outside of the shareholders’
equity section of the Company’s unaudited condensed balance sheet. At December 31, 2020, there were no Class A ordinary shares
yet issued or subject to redemption.
Income Taxes
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. There were no unrecognized tax benefits as of June 30, 2021. The Company’s management
determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of June
30, 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 is subject to income tax examinations by major taxing authorities since inception.
The Company is considered to be an exempted Cayman
Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing
requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the period presented.
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 Per Ordinary Share
Net income (loss) per ordinary share is computed
by dividing net income (loss) by the weighted-average number of ordinary shares outstanding during the period. The
Company’s condensed statements of operations include a presentation of income (loss) per ordinary share for ordinary shares subject
to redemption in a manner similar to the two-class method of income (loss) per share. Net income per ordinary share, basic and diluted
for Class A redeemable ordinary shares is calculated by dividing the interest income earned on the Trust Account, by the weighted
average number of Class A redeemable ordinary shares outstanding since original issuance. Net income (loss) per ordinary share, basic
and diluted for Class B non-redeemable ordinary shares is calculated by dividing the net income (loss), adjusted for income attributable
to the Class A redeemable ordinary shares, by the weighted average number of Class B non-redeemable ordinary shares outstanding for
the period. Class B non-redeemable ordinary shares includes the Founder Shares as these shares do not have any redemption features and
do not participate in the income earned on the Trust Account.
The Company has not considered the effect of the
warrants sold in the IPO and Private Placement to purchase an aggregate of 15,800,000 Class A ordinary shares in
the calculation of diluted income (loss) per share, since the exercise of the warrants are contingent upon the occurrence of future
events. As a result, diluted net income (loss) per ordinary share is the same as basic net income (loss) per ordinary share for the periods
presented.
Reconciliation of Net Income per Ordinary Share
The Company’s
condensed statement of operations includes a presentation of income (loss) per share for ordinary shares subject to redemption in a manner
similar to the two-class method of income (loss) per share. Accordingly, basic and diluted income per Class
A ordinary shares and Class B ordinary shares is calculated as follows:
|
|
Three Months Ended
June 30,
2021
|
|
|
Six Months Ended
June 30,
2021
|
|
Net Income per share for Class A ordinary shares:
|
|
|
|
|
|
|
Interest income earned on securities held in the Trust Account
|
|
$
|
13,885
|
|
|
$
|
33,520
|
|
Less: Interest income available to the Company for taxes
|
|
|
—
|
|
|
|
—
|
|
Adjusted net income
|
|
$
|
13,885
|
|
|
$
|
33,520
|
|
Weighted average shares outstanding of Class A ordinary shares
|
|
|
31,000,000
|
|
|
|
31,000,000
|
|
Basic and diluted net income per share, Class A ordinary shares
|
|
$
|
—
|
|
|
$
|
—
|
|
Net Income (loss) per share for Class B ordinary shares:
|
|
|
|
|
|
|
|
|
Net Income (loss)
|
|
$
|
(4,392,548
|
)
|
|
$
|
12,587,170
|
|
Less: Income attributable to Class A ordinary shares
|
|
|
(13,885
|
)
|
|
|
(33,520
|
)
|
Adjusted net income (loss)
|
|
$
|
(4,406,433
|
)
|
|
$
|
12,553,650
|
|
Weighted average shares outstanding of Class B ordinary shares
|
|
|
7,750,000
|
|
|
|
7,711,326
|
|
Basic and diluted net income (loss) per share, Class B ordinary shares
|
|
$
|
(0.57
|
)
|
|
$
|
1.63
|
|
Fair Value of Financial Instruments
The Company follows the guidance in ASC 820, “Fair
Value Measurement,” for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period,
and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1 —
|
Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.
|
Level 2 —
|
Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means.
|
Level 3 —
|
Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
|
See Note 9 for additional information on assets
and liabilities measured at fair value.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt-Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies
accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement
conditions that are required for equity-linked contracts to qualify for 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 effective, accounting standards, if currently adopted, would have a material effect on the accompanying
financial statements.
Note 3 — Initial Public Offering
Public Units
On January 29, 2021, the Company sold 31,000,000
Units, at a purchase price of $10.00 per Unit, including 1,000,000 Units issued pursuant to the
partial exercise of the underwriters’ over-allotment option. Each Unit consists of one Class A ordinary share, and one-third
of one redeemable warrant to purchase one Class A ordinary share (the “Public Warrants”).
Public Warrants
Each whole
warrant will entitle the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment. Each
warrant will become exercisable on the later of 30 days after the completion of the initial Business Combination or 12 months from the
closing of the IPO and will expire five years after the completion of the initial Business Combination, or earlier upon redemption or
liquidation.
The Company
will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle
such warrant exercise unless a registration statement under the Securities Act with respect to the Class A ordinary shares underlying
the warrants is then effective and a prospectus relating thereto is current, or a valid exemption from registration is available. No warrant
will be exercisable and the Company will not be obligated to issue a Class A ordinary share upon exercise of a warrant unless the Class
A ordinary share issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of
the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences
are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant
may have no value and expire worthless. In no event will the Company be required to net cash settle any warrant. In the event that a registration
statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase
price for the unit solely for the Class A ordinary share underlying such unit.
In addition,
if (x) the Company issues additional Class A ordinary shares or equity linked securities for capital raising purposes in connection with
the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per Class A ordinary share
(with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such
issuance to the initial shareholders or their affiliates, without taking into account any Founder Shares held by the initial shareholders
or such affiliates, as applicable, prior to such issuance including any transfer or reissuance of such shares (the “Newly Issued
Price”)), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest,
available for the funding of the initial Business Combination, and (z) the volume-weighted average trading price of the Class A ordinary
shares during the 10 trading day period starting on the trading day after the day on which the Company consummates the initial Business
Combination is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of
the higher of the Market Value and the Newly Issued Price, and the $10.00 and $18.00 per share redemption trigger prices adjacent to “Redemption
of warrants for Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00.” and “Redemption
of warrants for Class A ordinary shares when the price per Class A ordinary share equals or exceeds $18.00.” will be adjusted (to
the nearest cent) to be equal to 100% and 180% of the higher of the Market Value and the Newly Issued Price, respectively.
The Company will not be obligated to deliver any
shares of Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise
unless a registration statement under the Securities Act with respect to the shares of Class A ordinary shares underlying the warrants
is then effective and a prospectus is current. No warrant will be exercisable and the Company will not be obligated to issue shares of
Class A ordinary shares upon exercise of a warrant unless Class A ordinary shares issuable upon such warrant exercise has been
registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for
the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for
the share of Class A ordinary shares underlying such unit.
Redemptions 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 call the warrants for redemption (except as described herein 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 to each warrant holder; and
|
|
|
|
|
●
|
if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for share sub-divisions, 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 notice of the redemption is given to the warrant holders (the “Reference Value”).
|
Redemptions of warrants for cash when the price
per Class A ordinary share equals or exceeds $10.00.
Once the warrants become exercisable, the
Company may call the warrants for redemption (except as described herein with respect to the Private Placement 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 during such 30 day period holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table in the registration statement, based on the redemption date and the “fair market value” of the Class A ordinary shares (as defined below) except as otherwise described below; provided, further, that if the warrants are not exercised on a cashless basis or otherwise during such 30 day period, the Company shall redeem such warrants for $0.10 per share;
|
|
|
|
|
●
|
if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted for share subdivisions, share dividends, reorganizations, recapitalizations and the like) on the trading day before the Company sends the notice of redemption to the warrant holders; and
|
|
|
|
|
●
|
if the Reference Value is less than $18.00 per share (as adjusted for share subdivisions, share dividends, reorganizations, recapitalizations and the like), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding public warrants.
|
|
|
|
The “fair market value” of the
Class A ordinary shares shall mean the volume-weighted average price of the Class A ordinary shares for the 10 trading days immediately
following the date on which the notice of redemption is sent to the holders of warrants. This redemption feature differs from the typical
warrant redemption features used in other blank check offerings. The Company will provide the warrant holders with the final fair market
value no later than one business day after the 10-day trading period described above ends. In no event will the warrants be exercisable
in connection with this redemption feature for more than 0.361 Class A ordinary shares per warrant (subject to adjustment).
Note 4 — Private Placement
Simultaneously with the closing of the IPO, the
Sponsor purchased an aggregate of 5,466,667 Private Placement Warrants at a price of $1.50
per Private Placement Warrant, for an aggregate purchase price of $8,200,000, in a private placement. A portion of the proceeds from the
private placement was added to the proceeds from the IPO held in the Trust Account.
Each Private
Placement Warrants are identical to the warrants sold as part of the Units in the IPO except that, so long as they are held by the Sponsor
or its permitted transferees: (1) they will not be redeemable by the Company; (2) they (including the Class A Ordinary Shares issuable
upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until
30 days after the completion of the initial Business Combination; (3) they may be exercised by the holders on a cashless basis; and (4)
they (including the Class A Ordinary Shares issuable upon exercise of these warrants) are entitled to registration rights.
If the Company does not complete a Business Combination
within the Combination Period, the Private Placement Warrants will expire worthless.
Note 5 — Related Party Transactions
Founder Shares
On November
23, 2020, an executive officer of the Company purchased 8,625,000 shares of the Company’s Class B ordinary shares for $25,000, or
approximately $0.003 per share, in connection with formation (the “Founder Shares”). On December 23, 2020, such 8,625,000
shares of the Company’s Class B ordinary shares were transferred to the Sponsor for $25,000. The Founder Shares included an aggregate
of up to 1,125,000 shares subject to forfeiture if the over-allotment option was not exercised by the underwriters in full. On January
29, 2021, the underwriters partially exercised their over-allotment option, hence, 250,000 Founder Shares were no longer subject to forfeiture,
and on March 1, 2021, the remaining 875,000 Founder Shares were forfeited by the Sponsor.
The Sponsor,
officers and directors have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of (i) one year
after the date of the consummation of the initial Business Combination or (ii) 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 sub-divisions, 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 complete a liquidation, merger, share exchange, reorganization
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.
Promissory Note — Related Party
In November,
2020, the Company issued an unsecured promissory note to an executive officer of the Company. This loan was non-interest bearing, unsecured
and due at the earlier of December 31, 2021 or the closing of the IPO. At December 31, 2020, the amount borrowed under the note was $1,300.
During the period from January 1, 2021 to January 28, 2021, an additional $88,540 was borrowed under the promissory note, and on January
29, 2021, the balance of $89,840 repaid in full from the proceeds of the IPO, and is no longer available to be drawn upon.
On February 23, 2021, the Company issued an unsecured
promissory note (the “Note”) in the amount of up to $699,999 to certain affiliates of Constellation Sponsor GmbH & Co.
KG (the “Sponsor”). The proceeds of the Note, which may be drawn down from time to time until the Company consummates its
initial business combination, will be used as general working capital purposes. The Note bears no interest and is payable in full upon
the earlier to occur of (i) twenty-four (24) months from the closing of the initial public offering (or such later date as may be extended
in accordance with the terms of the Company’s memorandum and articles of association) or (ii) the consummation of the Company’s
business combination. A failure to pay the principal within five business days of the date specified above or the commencement of a voluntary
or involuntary bankruptcy action shall be deemed an event of default, in which case the Note may be accelerated. The affiliates of the
Sponsor had the option to convert any unpaid balance of the Note into private placement warrants (the “Conversion Warrants”),
each warrant exercisable for one ordinary share of the Company at an exercise price of $1.50 per share. The terms of the Conversion Warrants
would be identical to the warrants issued by the Company to affiliates of the Sponsor in a private placement that was consummated in connection
with the Company’s initial public offering. The affiliates of the Sponsor shall be entitled to certain registration rights relating
to the Conversion Warrants. On May 3, 2021, the Note was amended to remove the option to convert any unpaid balance of the Note into private
placement warrants. As of June 30, 2021 and December 31, 2020, there were $699,999 and $0 outstanding
under the Note, respectively
Working Capital Loans
In order
to finance transaction costs in connection with a Business Combination, the Sponsor or any of its affiliates or certain of the Company’s
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 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 the working capital held outside the Trust Account
to repay the Working Capital Loans but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000
of such Working Capital Loans may be convertible into warrants of the post-Business Combination company at a price of $1.50 per warrant
at the option of the lender. As of June 30, 2021 and December 31, 2020, there were $0 outstanding under the Working Capital Loans,
respectively.
Note 6 — Commitments and Contingencies
Registration Rights
The holders
of the Founder Shares, Private Placement Warrants, Class A ordinary shares underlying the Private Placement Warrants and warrants that
may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement
Warrants and warrants that may be issued upon conversion of Working Capital Loans) will be entitled to registration rights pursuant to
a registration and shareholder rights agreement to be signed prior to or on the effective date of the IPO. The holders of these securities
are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders
have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of
the initial Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration
statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such
securities pursuant to Rule 415 under the Securities Act. In addition, if the Sponsor affiliates acquire shares in the IPO, they would
become affiliates (as defined in the Securities Act) of the Company following the IPO, and the Company would file a registration statement
following the IPO to register the resale of the Public Shares purchased by the Sponsor affiliates (or their nominees) in the IPO. The
Sponsor affiliates will not be subject to any lock-up period with respect to any Public Shares they may purchase. The registration rights
agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering the Company’s
securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriter had a 45-day option from the date
of the IPO to purchase up to an aggregate of 4,500,000 additional Units at the public offering price less the underwriting commissions
to cover over-allotments, if any. On January 29, 2021, the underwriters partially exercised the
over-allotment option to purchase 1,000,000 Units, and was paid an underwriting discount in aggregate of $6,200,000. As of June 30, 2021,
the remaining over-allotment option has expired.
Additionally,
the underwriters will be entitled to a deferred underwriting discount of 3.5% of the gross proceeds of the IPO held in the Trust Account,
or $10,850,000, upon the completion of the Company’s initial Business Combination subject to the terms of the underwriting agreement.
Note 7 — Shareholders’ Equity
Preference Shares — The
Company is authorized to issue a total of 1,000,000 preference shares at par value of $0.0001 each. At June 30, 2021 and December
31, 2020, there were no shares of preference shares issued or outstanding.
Class A Ordinary Shares —
The Company is authorized to issue a total of 200,000,000 Class A ordinary shares at par value of $0.0001 each. At June 30, 2021
and December 31, 2020, there were 2,898,548 and 0 shares issued and outstanding, excluding 28,101,542 and no shares subject to possible
redemption, respectively.
Class B Ordinary Shares —
The Company is authorized to issue a total of 20,000,000 Class B ordinary shares at par value of $0.0001 each. At June 30, 2021 and
December 31, 2020, there were 7,750,000 and 8,625,000 shares issued and outstanding, respectively.
The Sponsor,
officers and directors have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of (i) one year
after the date of the consummation of the initial Business Combination or (ii) 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 sub-divisions, 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 complete a liquidation, merger, share exchange, reorganization
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.
The Founder
Shares will automatically convert into Class A ordinary shares on the first business day following the consummation 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 IPO, plus (ii) the sum of 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 Warrants issued to the Sponsor, officers and directors or any of their affiliates upon conversion of Working Capital Loans.
In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one to one.
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 the Company’s shareholders, with each share of ordinary shares entitling the holder to one vote.
Note 8 — 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 at June 30, 2021, and indicates the fair
value hierarchy of the valuation inputs the Company utilized to determine such fair value:
|
|
June 30,
|
|
|
Quoted
Prices In
Active
Markets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Other
Unobservable
Inputs
|
|
|
|
2021
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S Treasury Securities held in Trust Account
|
|
$
|
310,033,520
|
|
|
$
|
310,033,520
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
310,033,520
|
|
|
$
|
310,033,520
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public Warrant Liability
|
|
$
|
9,310,333
|
|
|
$
|
9,310,333
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Private Warrant Liability
|
|
|
4,980,134
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,980,134
|
|
|
|
$
|
14,290,467
|
|
|
$
|
9,310,333
|
|
|
$
|
-
|
|
|
$
|
4,980,134
|
|
There were no assets or liabilities measured at
fair value on a recurring basis as of December 31, 2020. The Warrants are accounted for as liabilities in accordance with ASC 815-40 and
are presented within warrant liabilities on the Condensed Balance Sheets. The warrant liabilities are measured at fair value at inception
and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the Condensed Statement
of Operations.
The Company established the initial fair value
for the Public Warrants on January 29, 2021, the date of the Company’s Initial Public Offering, using a Monte Carlo simulation model,
and for the Private Warrants on January 29, 2021, using a Black Scholes Model. As of June 30, 2021, the fair value for the Private Warrants
was estimated using a Black Scholes Model, and the fair value of the Public Warrants by reference to the quoted market price of the warrants.
The Public and Private Warrants were classified as Level 3 at the initial measurement date, and the Private Warrants were classified as
Level 3 as of June 30, 2021 due to the use of unobservable inputs. Transfers between levels are recognized at the end of each quarterly
reporting period. As of March 31, 2021, the Public Warrants were reclassified from a Level 3
to a Level 1 classification due to use of the observed trading price of the separated Public Warrants.
The following table presents the changes in the
fair value of Level 3 warrant liabilities:
|
|
Warrant
Liabilities
|
|
Fair Value as of December 31, 2020
|
|
$
|
-
|
|
Initial measurement on January 29, 2021
|
|
|
30,954,321
|
|
Change in valuation
|
|
|
(20,829,201
|
)
|
Public Warrant Liability transferred to Level 1
|
|
|
(6,613,333
|
)
|
Fair Value as of March 31, 2021
|
|
|
3,511,787
|
|
Change in valuation
|
|
|
1,468,347
|
|
Fair Value as of June 30, 2021
|
|
$
|
4,980,134
|
|
The estimated fair value of the Private Placement Warrants is determined using Level 3 inputs. Inherent in level 3 inputs assumptions
related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility
of its ordinary share warrants based on implied volatility from the Company's traded warrants and from historical volatility of select
peer companies. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar
to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual
term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
The key inputs into the Black Scholes Model as
of June 30, 2021 were as follows:
Inputs
|
|
June 30,
2021
|
|
Risk-free interest rate
|
|
|
1.00
|
%
|
Dividend rate
|
|
|
0.00
|
%
|
Expected term remaining (years)
|
|
|
5.79
|
|
Volatility
|
|
|
14.0
|
%
|
Stock price
|
|
$
|
9.79
|
|
Exercise Price
|
|
$
|
11.50
|
|
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the financial statements were issued. Based on this review, the Company
determined no events have occurred that would require adjustments to the disclosures in the unaudited condensed financial statements.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
References to the “Company,” “Constellation
Acquisition Corp I,” “our,” “us” or “we” refer to Constellation Acquisition Corp I. The following
discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited
interim condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange
Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking
statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of
activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such
as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,”
“believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors
that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
Overview
We are a blank check company incorporated in Cayman
Islands on November 20, 2020. We were formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase,
reorganization or similar business combination with one or more businesses (the “Business Combination”).
Our Sponsor is Constellation Sponsor GmbH &
Co. KG, a German limited partnership. The registration statement for the Initial Public Offering was declared effective on January 26,
2021. On January 29, 2021, we consummated the Initial Public Offering of 31,000,000 Units, at $10.00 per Unit, generating gross proceeds
of $310.0 million, and incurring offering costs of $17,586,741 million, inclusive of $10,850,000 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial
Public Offering, we consummated the Private Placement of 5,466,667 Private Placement Warrants, at a price of $1.50 per Private Placement
Warrant to our Sponsor, generating gross proceeds to us of $8.2 million.
Upon the closing of the Initial Public Offering
and the Private Placement, $310.00 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds
of the Private Placement was placed in the Trust Account and was invested in permitted United States “government securities”
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, having a maturity of 185 days or less or in
money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act that invest only in direct
U.S. government treasury obligations.
Our management has broad discretion with respect
to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although
substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
We will only have 24 months from the closing of
the Initial Public Offering, or January 29, 2023, to complete our initial Business Combination (the “Combination Period”).
If we do not complete a Business Combination within this period of time, we will (i) cease all operations except for the purposes of winding
up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the Public Shares for a per share
pro rata portion of the Trust Account, including interest and not previously released to us to fund our working capital requirements (less
taxes payable and up to $100,000 of such net interest to pay dissolution expenses) and (iii) as promptly as possible following such redemption,
dissolve and liquidate the balance of our net assets to our remaining shareholders, as part of our plan of dissolution and liquidation.
Our Sponsor and our executive officers and independent director nominees (the “initial stockholders”) entered into a letter
agreement with us, pursuant to which they have waived their rights to participate in any redemption with respect to their Founder Shares;
however, if the initial shareholders or any of our officers, directors or affiliates acquire ordinary shares in or after the Initial Public
Offering, they will be entitled to a pro rata share of the Trust Account upon our redemption or liquidation in the event we do not complete
a Business Combination within the required time 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 less than the Initial Public Offering
price per Unit in the Initial Public Offering.
Liquidity and Capital Resources
As of June 30, 2021, we had approximately $1.3
million in our operating bank account and working capital of approximately $1.1 million.
Prior to the completion of the Initial Public
Offering, our liquidity needs were satisfied through the proceeds of $25,000 from our Sponsor in exchange for the issuance of the Founder
Shares, and an up to $250,000 note agreement initially issued to an executive officer of the Company, which was repaid by us on January
29, 2021. Subsequent to the consummation of the Initial Public Offering and Private Placement, our liquidity needs have been satisfied
with the proceeds from the consummation of the Private Placement not held in the Trust Account. In addition, on February 23, 2021, in
order to provide working capital for in transaction costs in connection with a Business Combination, we issued an unsecured promissory
note in the amount of $699,999 to certain affiliates of our Sponsor. The note is due to be repaid in cash upon the earlier of the consummation
of a business combination or 24 months from the closing of the IPO. The $699,999 balance on the note is outstanding as of June 30, 2021.
In addition, finance
transaction costs in connection with a Business Combination, the Sponsor or any of its affiliates or certain of the Company’s officers
and directors may, but are not obligated to, loan the Company funds as may be required. 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. As of June 30, 2021, there were no outstanding 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, we will be using these funds to pay 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.
Management continues to evaluate the impact of
the COVID-19 pandemic and has concluded that the specific impact is not readily determinable as of the date of the balance sheet. The
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Results of Operations
Our entire activity from inception through June
30, 2021 related to our formation, the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering,
the search for a prospective initial Business Combination. We have neither engaged in any operations nor generated any revenues to date.
We will not generate any operating revenues until after completion of our initial Business Combination. We will generate non-operating
income in the form of interest income and dividends on investments held in Trust Account. We expect to incur increased expenses as a result
of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended June 30, 2021, we had
a net loss of approximately $4.4 million, which included a loss from the change in fair value of warrant liabilities of $4.2 million and
a loss from operations of $0.2 million.
For the six months ended June 30, 2021, we had
a net income of approximately $12.6 million, which included by a gain from the change in fair value of warrant liabilities of $14.1 million,
offset by a loss from operations of $0.4 million and offering cost expense allocated to warrants of $1.1 million.
Our business activities from inception to June
30, 2021 consisted primarily of our formation and completing our IPO, and since the offering, our activity has been limited to identifying
and evaluating prospective acquisition targets for a Business Combination.
Contractual Obligations
We do not have any long-term debt obligations,
capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
Registration Rights
The initial shareholders and holders of the Private
Placement Warrants will be entitled to registration rights pursuant to a registration rights agreement. The initial shareholders and holders
of the Private Placement Warrants will be entitled to make up to three demands, excluding short form registration demands, that register
such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to
include their securities in other registration statements filed by us. We will bear the expenses incurred in connection with the filing
of any such registration statements.
Underwriting Agreement
We paid an underwriting discount of 2% of the
per Unit offering price, or approximately $6,200,000 million in the aggregate at the closing of the Initial Public Offering, and agreed
to pay an additional fee (the “Deferred Underwriting Fees”) of 3.5% of the gross offering proceeds, or approximately $10,850,000
in the aggregate upon the Company’s completion of an Initial Business Combination. The Deferred Underwriting Fees will become payable
to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its initial Business Combination.
Critical Accounting Policies
This management’s
discussion and analysis of our financial condition and results of operations is based on our unaudited condensed financial statements,
which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed financial statements requires us to
make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent
assets and liabilities in our unaudited condensed financial statements. On an ongoing basis, we evaluate our estimates and judgments,
including those related to fair value of financial instruments and accrued expenses. We base our estimates on historical experience, known
trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.
Except as set forth below,
there have been no significant changes in our critical accounting policies as discussed in the final prospectus filed by us with the SEC
on January 29, 2021.
Warrant Liability
We evaluated the Warrants
in accordance with ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity”, and concluded that
a provision in the Warrant Agreement related to certain tender or exchange offers as well as provisions that provided for potential changes
to the settlement amounts dependent upon the characteristics of the holder of the warrant, precludes the Warrants from being accounted
for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815 and are not eligible for an
exception from derivative accounting, the Warrants are recorded as derivative liabilities on the Balance Sheet and measured at fair value
at inception (on the date of the IPO) and at each reporting date in accordance with ASC 820, “Fair Value Measurement”, with
changes in fair value recognized in the Statement of Operations in the period of change.
Recent Accounting Pronouncements
The Company’s management does not believe
that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the accompanying
financial statements.
Off-Balance Sheet Arrangements
As of June 30, 2021, we did not have any off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Inflation
We do not believe that inflation had a material
impact on our business, revenues or operating results during the period presented.
JOBS Act
The Jumpstart Our Business Startups Act of 2012
(the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public
companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or
revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which
adoption of such standards is required for non-emerging growth companies. As a result, the financial statements may not be comparable
to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating
the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth
in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to
Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank
Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting
Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information
about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related
items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median
employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering
or until we are no longer an “emerging growth company,” whichever is earlier.