Item
1. Financial Statements.
CONSTELLATION
ACQUISITION CORP I
CONDENSED BALANCE SHEETS
| |
March 31 2022 | | |
December 31, 2021 | |
| |
(unaudited) | | |
| |
Assets: | |
| | |
| |
Current Assets: | |
| | |
| |
Cash | |
$ | 98,331 | | |
$ | 223,378 | |
Prepaid Expenses | |
| 339,704 | | |
| 404,737 | |
Total current assets | |
| 438,035 | | |
| 628,115 | |
| |
| | | |
| — | |
Prepaid expenses - noncurrent | |
| — | | |
| 26,396 | |
Investments held in Trust
Account | |
| 310,047,919 | | |
| 310,043,588 | |
Total Assets | |
$ | 310,485,954 | | |
$ | 310,698,099 | |
| |
| | | |
| | |
Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accrued expenses | |
$ | 724,308 | | |
$ | 709,390 | |
Promissory note – related party | |
| — | | |
| — | |
Total current liabilities | |
| 724,308 | | |
| 709,390 | |
Deferred underwriting fee | |
| 10,850,000 | | |
| 10,850,000 | |
Warrant liability | |
| 5,239,901 | | |
| 9,983,299 | |
Total Liabilities | |
| 16,814,209 | | |
| 21,542,689 | |
| |
| | | |
| | |
Commitments and Contingencies (see Note 6) | |
| | | |
| | |
Class A ordinary shares subject to possible redemption, 31,000,000 shares at redemption value ($10.00 per share) at March 31, 2022 and December 31, 2021 | |
| 310,000,000 | | |
| 310,000,000 | |
| |
| | | |
| | |
Shareholders’ Deficit: | |
| | | |
| | |
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;
0 shares issued and outstanding (excluding 31,000,000 shares subject to possible redemption) at March 31, 2022 and December 31, 2021 | |
| — | | |
| — | |
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized;
7,750,000 shares issued and outstanding at March 31, 2022 and December 31, 2021 | |
| 775 | | |
| 775 | |
Additional paid-in capital | |
| — | | |
| — | |
Accumulated deficit | |
| (16,329,030 | ) | |
| (20,845,365 | ) |
Total Shareholders’ Deficit | |
| (16,328,255 | ) | |
| (20,844,590 | ) |
Total Liabilities and Shareholders’ Deficit | |
$ | 310,485,954 | | |
$ | 310,698,099 | |
The
accompanying notes are an integral part of these unaudited condensed financial statements.
CONSTELLATION
ACQUISITION CORP I
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| |
For the Three Months Ended March 31, | |
| |
2022 | | |
2021 | |
Formation and operating costs | |
$ | 231,395 | | |
$ | 121,659 | |
Loss from Operations | |
| (231,395 | ) | |
| (121,659 | ) |
| |
| | | |
| | |
Other income (expense): | |
| | | |
| | |
Interest earned on cash and investments held in Trust Account | |
| 4,332 | | |
| 19,635 | |
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 | |
| 4,743,398 | | |
| 20,829,201 | |
Total other income, net | |
| 4,747,730 | | |
| 17,101,377 | |
| |
| | | |
| | |
Net income | |
$ | 4,516,335 | | |
$ | 16,979,718 | |
| |
| | | |
| | |
Weighted average shares outstanding, Class A ordinary shares | |
| 31,000,000 | | |
| 21,011,111 | |
Basic and diluted net income per share, Class A ordinary shares | |
$ | 0.12 | | |
$ | 0.59 | |
Weighted average shares outstanding, Class B ordinary shares | |
| 7,750,000 | | |
| 7,669,444 | |
Basic and diluted net income per share, Class B ordinary shares | |
$ | 0.12 | | |
$ | 0.59 | |
The
accompanying notes are an integral part of these unaudited condensed financial statements.
CONSTELLATION
ACQUISITION CORP I
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
THREE
MONTHS ENDED MARCH 31, 2022
| |
Class B Ordinary Shares | | |
Additional Paid-in | | |
(Accumulated | | |
Total Shareholders’ | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit) | | |
Deficit | |
Balance as of December 31, 2021 | |
| 7,750,000 | | |
$ | 775 | | |
$ | — | | |
$ | (20,845,365 | ) | |
$ | (20,844,590 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
| — | | |
| — | | |
| — | | |
| 4,516,335 | | |
| 4,516,335 | |
Balance as of March 31, 2022 (unaudited) | |
| 7,750,000 | | |
$ | 775 | | |
$ | — | | |
$ | (16,329,030 | ) | |
$ | (16,328,255 | ) |
THREE
MONTHS ENDED MARCH 31, 2021
| |
Class B Ordinary Shares | | |
Additional Paid-in | | |
(Accumulated | | |
Total Shareholders’ | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit) | | |
Deficit | |
Balance as of December 31, 2020 | |
| 8,625,000 | | |
$ | 863 | | |
$ | 24,137 | | |
$ | (3,143 | ) | |
$ | 21,857 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Accretion of Class A ordinary shares subject to redemption | |
| — | | |
| — | | |
| (24,137 | ) | |
| (36,569,466 | ) | |
| (36,593,603 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Forfeiture of Class B ordinary shares by initial shareholders | |
| (875,000 | ) | |
| (88 | ) | |
| — | | |
| 88 | | |
| — | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
| — | | |
| — | | |
| — | | |
| 16,979,718 | | |
| 16,979,718 | |
Balance as of March 31, 2021 (unaudited) (as restated) | |
| 7,750,000 | | |
$ | 775 | | |
$ | — | | |
$ | (19,592,803 | ) | |
$ | (19,592,028 | ) |
The
accompanying notes are an integral part of these unaudited condensed financial statements.
CONSTELLATION
ACQUISITION CORP I
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| |
Three Months Ended March 31, | |
| |
2022 | | |
2021 | |
Cash flows from operating activities: | |
| | |
| |
Net income | |
$ | 4,516,335 | | |
$ | 16,979,718 | |
Adjustments to reconcile net income to net cash used in operating activities: | |
| | | |
| | |
Interest earned on cash and investments held in Trust Account | |
| (4,332 | ) | |
| (19,635 | ) |
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 | |
| (4,743,398 | ) | |
| (20,829,201 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid assets | |
| 65,033 | | |
| (755,760 | ) |
Accrued expenses | |
| 14,918 | | |
| 38,991 | |
Prepaid assets - noncurrent | |
| 26,396 | | |
| — | |
Net cash used in operating activities | |
| (125,048 | ) | |
| (838,428 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities: | |
| | | |
| | |
Investment of cash in Trust Account | |
| — | | |
| (310,000,000 | ) |
Net cash used in investing activities | |
| — | | |
| (310,000,000 | ) |
| |
| | | |
| | |
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 | |
| (125,048 | ) | |
| 1,346,687 | |
Cash, beginning of the period | |
| 223,378 | | |
| — | |
Cash, end of the period | |
$ | 98,331 | | |
$ | 1,346,687 | |
| |
| | | |
| | |
Supplemental disclosure of non-cash financing activities: | |
| | | |
| | |
Deferred underwriters’ discount payable | |
$ | — | | |
$ | 30,954,321 | |
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 March 31, 2022, the Company had not commenced any operations. All activity through March 31, 2022 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 condensed financial statements. The condensed financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Liquidity
and Going Concern Consideration
As
of March 31, 2022, the Company had approximately $98,331 in its operating bank account, and a negative working capital of approximately
$286,273.
The
Company is within 12 months of its mandatory liquidation as of the time of filing. In connection with the Company’s assessment
of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties
about an Entity’s Ability to Continue as a Going Concern,” the liquidity condition and mandatory liquidation raise substantial
doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of the Business Combination
or the date the Company is required to liquidate, January 29, 2023.
These
unaudited condensed financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification
of the liabilities that might be necessary should the Company be unable to continue as a going concern.
As
such, the management plans to consummate a business combination prior to the mandatory liquidation date. If the Company’s estimates
of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than
the actual amount necessary to do so, the Company may have insufficient funds available to operate its business prior to an Initial Business
Combination. Moreover, the Company may need to obtain additional financing either to complete an Initial Business Combination or because
it becomes obligated to redeem a significant number of its public shares upon completion of an Initial Business Combination, in which
case the Company may issue additional securities or incur debt in connection with such Initial Business Combination.
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 ended March 31, 2022 are not necessarily
indicative of the results to be expected for the year ending December 31, 2022 or for any future period.
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 unaudited condensed 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 unaudited
condensed 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 March 31, 2022 and December 31, 2021.
Investments
Held in Trust Account
At
March 31, 2022 and December 31, 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 ended March 31, 2022 and 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 and trust account 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 Sheets 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 temporary
equity upon the completion of the Initial Public Offering.
Class
A Ordinary Shares Subject to Possible Redemption
All
of the 31,000,000 Class A Ordinary shares sold as part of the Units in the Public Offering contain a redemption feature which
allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a shareholder vote or
tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s second amended
and restated certificate of incorporation. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which
has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require Ordinary shares subject
to redemption to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation
of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. Accordingly, at March 31, 2022 and December
31, 2021, all shares of Class A Ordinary shares subject to possible redemption is presented as temporary equity, outside of the
shareholders’ equity section of the Company’s condensed balance sheets, respectively.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of the Class A Ordinary shares
subject to possible redemption to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying
amount of the Class A Ordinary shares subject to possible redemption are affected by charges against additional paid-in capital and accumulated
deficit.
The Class A ordinary shares subject to possible
redemption reflected on the condensed balance sheets as of March 31, 2022 and December 31, 2021 are reconciled in the following table:
Gross Proceeds | |
$ | 310,000,000 | |
Less: | |
| | |
Proceeds allocated to public warrants | |
| (20,150,000 | ) |
Class A ordinary shares issuance costs | |
| (16,443,603 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 36,593,603 | |
Class A ordinary shares subject to possible redemption | |
$ | 310,000,000 | |
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 March 31, 2022 and
December 31, 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 March 31, 2022 and December 31, 2021. The Company is currently not aware of any
issues under review that could result in significant payments, accruals or material deviation from its position. The Company 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
The
Company complies with accounting and disclosure requirements of FASB ASC Topic 260, Earnings Per Share. Net income per share is computed
by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares
subject to forfeiture. The Company has not considered the effect of the warrants sold in the IPO and the Private Placement to purchase
an aggregate of 15,800,000 Class A ordinary shares in the calculation of diluted income per ordinary share, since the exercise of the
warrants are contingent upon the occurrence of future events. As a result, diluted income per share is the same as basic income per share
for the period presented.
Basic
and diluted net income per ordinary share for Class A ordinary shares and Class B ordinary shares is calculated by dividing net income
attributable to the Company by the weighted average number of Class A ordinary shares and Class B ordinary shares outstanding, allocated
proportionally to each class of ordinary shares. This presentation assumes a business combination as the most likely
outcome. Accretion associated with the redeemable Class A ordinary shares is excluded from earnings
per share as the redemption value approximates fair value.
Reconciliation
of Net Income per Ordinary Share
The
Company’s condensed statement of operations includes a presentation of income per share for ordinary shares subject to redemption
in a manner similar to the two-class method of income per share. Accordingly, basic and diluted income per Class
A ordinary shares and Class B ordinary shares is calculated as follows:
| |
For the Three Months Ended March 31, | |
| |
2022 | | |
2021 | |
Class A Ordinary Shares | |
| | |
| |
Allocation of net income to Class A ordinary shares | |
$ | 3,613,068 | | |
$ | 12,439,185 | |
Weighted Average Class A ordinary shares | |
| 31,000,000 | | |
| 21,011,111 | |
Basic and diluted net income per share | |
$ | 0.12 | | |
$ | 0.59 | |
| |
| | | |
| | |
Class B Ordinary Shares | |
| | | |
| | |
Allocation of net income to Class B ordinary shares | |
$ | 903,267 | | |
$ | 4,540,533 | |
Weighted Average Class B ordinary shares | |
| 7,750,000 | | |
| 7,669,444 | |
Basic and diluted weighted average shares outstanding | |
$ | 0.12 | | |
$ | 0.59 | |
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 8 for additional information on assets and liabilities measured at fair value on a recurring basis.
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.
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. On 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 March 31, 2022 and December 31, 2021, there were no amounts outstanding under the
Note, respectively.
Administrative Support Agreement
As of January 26, 2021 the Company had agreed,
commencing on the date of the securities of the Company are first listed on The New York Stock Exchange (the “Listing Date”),
to pay the Sponsor up to $10,000 per month for office space, utilities and secretarial and administrative support, and other obligations
of the sponsor. Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying
these monthly fees. For the three months ended March 31, 2022 and 2021, the sponsor agreed to waive such fees, and as such, the Company
has recorded no administrative service fees.
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 will 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 March 31, 2022 and December 31, 2021, there were $0 outstanding under the Working Capital Loans.
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 March 15, 2021, the remaining over-allotment option 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’ Deficit
Preference Shares — The Company
is authorized to issue a total of 1,000,000 preference shares at par value of $0.0001 each. On March 31, 2022 and December
31, 2021, 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. On
March 31, 2022 and December 31, 2021, there were no shares issued and outstanding, excluding 31,000,000 and no shares
subject to possible redemption.
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. On
March 31, 2022 and December 31, 2021, there were 7,750,000 shares issued and outstanding.
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 March 31, 2022 and December 31, 2021, and indicates the
fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | |
Level | |
March 31, 2022 | | |
Level | |
December 31, 2021 | |
Assets: | |
| |
| | | |
| |
| | |
Investments held in Trust Account | |
1 | |
$ | 310,047,919 | | |
1 | |
$ | 310,043,588 | |
Liabilities | |
| |
| | | |
| |
| | |
Public Warrant Liability | |
1 | |
$ | 3,408,967 | | |
1 | |
$ | 6,510,000 | |
Private Warrant Liability | |
3 | |
$ | 1,830,934 | | |
3 | |
$ | 3,473,299 | |
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 March 31, 2022 and December
31, 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 March 31, 2022 and December 31, 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, 2021 | |
$ | 3,473,299 | |
Change in fair value | |
| (1,642,365 | ) |
Fair Value as of March 31, 2022 | |
$ | 1,830,934 | |
| |
Private Placement Warrants | | |
Public Warrants | | |
Warrant Liabilities | |
Fair Value as of December 31, 2020 | |
$ | - | | |
$ | - | | |
$ | - | |
Initial measurement on January 29, 2021 | |
| 10,804,321 | | |
| 20,150,000 | | |
| 30,954,321 | |
Change in fair value | |
| (7,292,534 | ) | |
| (13,536,667 | ) | |
| (20,829,201 | ) |
Transfer to level 1 | |
| - | | |
| (6,613,333 | ) | |
| (6,613,333 | ) |
Fair Value as of March 31, 2021 | |
$ | 3,511,787 | | |
$ | - | | |
$ | 3,511,787 | |
On March 31, 2022 and December 31, 2021, the estimated
fair value of the Private Placement Warrants is determined using Level 3 inputs. Inherent in level 3 inputs assumptions related to expected
share-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 March 31, 2022 and December 31, 2021 were as follows:
Inputs | |
December 31, 2021 | | |
March 31, 2022 | |
Risk-free interest rate | |
| 1.31 | % | |
| 2.42 | % |
Dividend rate | |
| 0.00 | % | |
| 0.00 | % |
Expected term remaining (years) | |
| 5.54 | | |
| 5.41 | |
Volatility before Initial Business Combination | |
| 5.0 | % | |
| 5.0 | % |
Share price | |
$ | 9.76 | | |
$ | 9.81 | |
Exercise Price | |
$ | 11.50 | | |
$ | 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 condensed financial statements were issued. Based on this review, the
Company determined no events have occurred that would require adjustments to the disclosures in the 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 shareholders”) 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 Going Concern Consideration
As of March 31, 2022, the Company had approximately $98,331 in its
operating bank account, and a negative working capital of approximately $286,273.
The Company is within 12 months of its mandatory liquidation as of
the time of filing this 10K. In connection with the Company’s assessment of going concern considerations in accordance with Accounting
Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going
Concern,” the liquidity condition and mandatory liquidation raise substantial doubt about the Company’s ability to continue
as a going concern until the earlier of the consummation of the Business Combination or the date the Company is required to liquidate,
January 29, 2023.
These financial statements do not include any adjustments relating
to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to
continue as a going concern.
If the Company’s estimates of the costs of identifying a target
business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so,
the Company may have insufficient funds available to operate its business prior to an Initial Business Combination. Moreover, the Company
may need to obtain additional financing either to complete an Initial Business Combination or because it becomes obligated to redeem a
significant number of its public shares upon completion of an Initial Business Combination, in which case the Company may issue additional
securities or incur debt in connection with such Initial Business Combination.
Results of Operations
Our entire activity from inception through March
31, 2022 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 March 31, 2022, we
had a net income of approximately $4.5 million, which included a gain from the change in fair value of warrant liabilities of $4.7 million
and a loss from operations of $0.23 million.
For the three months ended March 31, 2021, we
had a net income of approximately $17.0 million, which included by a gain from the change in fair value of warrant liabilities of $20.8
million and interest earned on investments held in Trust Account of $0.02 million, offset by a loss from operations of $0.12 million,
excess fair value over cash received for private warrants of $2.60 million and offering cost expense allocated to warrants of $1.15 million.
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 filing on Form 10-K filed by us with the
SEC on March 18, 2022.
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.
Class A Ordinary Shares Subject to Possible
Redemption
All of the 31,000,000 Class
A Ordinary shares sold as part of the Units in the Public Offering contain a redemption feature which allows for the redemption of such
public shares in connection with the Company’s liquidation, if there is a shareholder vote or tender offer in connection with the
Business Combination and in connection with certain amendments to the Company’s second amended and restated certificate of incorporation.
In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption
provisions not solely within the control of the Company require Ordinary shares subject to redemption to be classified outside of permanent
equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are
excluded from the provisions of ASC 480. Accordingly, at March 31, 2022 and December 31, 2021, all
shares of Class A Ordinary shares subject to possible redemption is presented as temporary
equity, outside of the shareholders’ equity section of the Company’s condensed balance sheets, respectively.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of redeemable Ordinary shares to equal the redemption value at the end of each
reporting period. Increases or decreases in the carrying amount of redeemable Ordinary shares are affected by charges against additional
paid in capital and accumulated deficit.
Net Income Per Ordinary Share
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, Earnings Per Share. Net income per share is computed by dividing net income (loss) by the weighted
average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. At March 31, 2022, the
Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares
and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period
presented.
The Company’s condensed statement of operations
applies the two-class method in calculating net income (loss) per share. Basic and diluted net income per ordinary share for Class A ordinary
shares and Class B ordinary shares is calculated by dividing net income attributable to the Company by the weighted average number of
Class A ordinary shares and Class B ordinary shares outstanding, allocated proportionally to each class of ordinary shares.
Recent Accounting Pronouncements
Our 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 March 31, 2022, 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.