Item 1. Financial Statements.
CONSTELLATION ACQUISITION CORP I
CONDENSED BALANCE SHEETS
| |
September 30, 2022 | | |
December 31, 2021 | |
| |
(unaudited) | | |
| |
Assets: | |
| | |
| |
Current Assets: | |
| | |
| |
Cash | |
$ | 118,567 | | |
$ | 223,378 | |
Prepaid expenses | |
| 157,563 | | |
| 404,737 | |
Total current assets | |
| 276,130 | | |
| 628,115 | |
| |
| | | |
| | |
Prepaid expenses - noncurrent | |
| — | | |
| 26,396 | |
Investments held in Trust Account | |
| 311,894,535 | | |
| 310,043,588 | |
Total Assets | |
$ | 312,170,665 | | |
$ | 310,698,099 | |
| |
| | | |
| | |
Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accrued expenses | |
$ | 940,207 | | |
$ | 709,390 | |
Promissory notes – related party | |
| 258,780 | | |
| — | |
Total current liabilities | |
| 1,198,987 | | |
| 709,390 | |
Deferred underwriting fee | |
| 10,850,000 | | |
| 10,850,000 | |
Warrant liability | |
| 717,320 | | |
| 9,983,299 | |
Total Liabilities | |
| 12,766,307 | | |
| 21,542,689 | |
| |
| | | |
| | |
Commitments and Contingencies (see Note 6) | |
| | | |
| | |
Class A ordinary shares subject to possible redemption, 31,000,000 shares at redemption value at $10.06 and $10.00 per share as of September 30, 2022 and December 31, 2021, respectively | |
| 311,894,535 | | |
| 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; no shares issued and outstanding (excluding 31,000,000 shares subject to possible redemption) at September 30, 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 September 30, 2022 and December 31, 2021 | |
| 775 | | |
| 775 | |
Additional paid-in capital | |
| — | | |
| — | |
Accumulated deficit | |
| (12,490,952 | ) | |
| (20,845,365 | ) |
Total Shareholders’ Deficit | |
| (12,490,177 | ) | |
| (20,844,590 | ) |
Total Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | |
$ | 312,170,665 | | |
$ | 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 September 30, | | |
For the Nine Months Ended September 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
Formation and operating costs | |
$ | 277,365 | | |
$ | 901,995 | | |
$ | 867,978 | | |
$ | 1,264,741 | |
Loss from Operations | |
| (277,365 | ) | |
| (901,995 | ) | |
| (867,978 | ) | |
| (1,264,741 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income: | |
| | | |
| | | |
| | | |
| | |
Interest earned on investments held in Trust Account | |
| 1,615,577 | | |
| 3,989 | | |
| 1,850,947 | | |
| 37,509 | |
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 | |
| 1,514,949 | | |
| 3,581,847 | | |
| 9,265,979 | | |
| 20,245,701 | |
Total other income, net | |
| 3,130,526 | | |
| 3,585,836 | | |
| 11,116,926 | | |
| 16,535,751 | |
| |
| | | |
| | | |
| | | |
| | |
Net income | |
$ | 2,853,161 | | |
$ | 2,683,841 | | |
$ | 10,248,948 | | |
$ | 15,271,010 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding, Class A ordinary shares | |
| 31,000,000 | | |
| 31,000,000 | | |
| 31,000,000 | | |
| 27,706,960 | |
Basic and diluted net income per share, Class A ordinary shares | |
$ | 0.07 | | |
$ | 0.07 | | |
$ | 0.26 | | |
$ | 0.43 | |
Weighted average shares outstanding, Class B ordinary shares | |
| 7,750,000 | | |
| 7,750,000 | | |
| 7,750,000 | | |
| 7,724,359 | |
Basic and diluted net income per share, Class B ordinary shares | |
$ | 0.07 | | |
$ | 0.07 | | |
$ | 0.26 | | |
$ | 0.43 | |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
CONSTELLATION ACQUISITION CORP I
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(UNAUDITED)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 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 | ) |
Accretion of Class A ordinary shares subject to redemption | |
| — | | |
| — | | |
| — | | |
| (278,958 | ) | |
| (278,958 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| 2,879,452 | | |
| 2,879,452 | |
Balance as of June 30, 2022 (unaudited) | |
| 7,750,000 | | |
| 775 | | |
| — | | |
| (13,728,536 | ) | |
| (13,727,761 | ) |
Accretion of Class A ordinary shares subject to redemption | |
| — | | |
| — | | |
| — | | |
| (1,615,577 | ) | |
| (1,615,577 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| 2,853,161 | | |
| 2,853,161 | |
Balance as of September 30, 2022 (unaudited) | |
| 7,750,000 | | |
$ | 775 | | |
$ | — | | |
$ | (12,490,952 | ) | |
$ | (12,490,177 | ) |
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
| |
Class B
Ordinary
Shares | | |
Additional
Paid-in | | |
Accumulated | | |
Total Shareholders’
Equity | |
| |
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) | |
| 7,750,000 | | |
| 775 | | |
| — | | |
| (19,592,803 | ) | |
| (19,592,028 | ) |
Net loss | |
| — | | |
| — | | |
| — | | |
| (4,392,549 | ) | |
| (4,392,549 | ) |
Balance as of June 30, 2021 (unaudited) | |
| 7,750,000 | | |
| 775 | | |
| — | | |
| (23,985,351 | ) | |
| (23,984,577 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| 2,683,841 | | |
| 2,683,841 | |
Balance as of September 30, 2021 (unaudited) | |
| 7,750,000 | | |
$ | 775 | | |
$ | — | | |
$ | (21,301,511 | ) | |
$ | (21,300,736 | ) |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
CONSTELLATION ACQUISITION CORP I
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| |
Nine Months Ended September 30, | |
| |
2022 | | |
2021 | |
Cash Flows from Operating Activities: | |
| | |
| |
Net income | |
$ | 10,248,948 | | |
$ | 15,271,010 | |
Adjustments to reconcile net income to net cash used in operating activities: | |
| | | |
| | |
Interest earned on investments held in Trust Account | |
| (1,850,947 | ) | |
| (37,509 | ) |
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 | |
| (9,265,979 | ) | |
| (20,245,701 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| 247,174 | | |
| (537,763 | ) |
Accrued expenses | |
| 230,817 | | |
| 801,286 | |
Prepaid expenses - noncurrent | |
| 26,396 | | |
| — | |
Net cash used in operating activities | |
| (363,591 | ) | |
| (1,001,218 | ) |
| |
| | | |
| | |
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 | |
| 258,780 | | |
| 788,539 | |
Repayment of promissory note – related party | |
| — | | |
| (789,839 | ) |
Payment of offering costs | |
| — | | |
| (513,584 | ) |
Net cash provided by financing activities | |
| 258,780 | | |
| 311,485,116 | |
| |
| | | |
| | |
Net change in cash | |
| (104,811 | ) | |
| 483,898 | |
Cash, beginning of the period | |
| 223,378 | | |
| — | |
Cash, end of the period | |
$ | 118,567 | | |
$ | 483,898 | |
| |
| | | |
| | |
Supplemental disclosure of non-cash financing activities: | |
| | | |
| | |
Deferred underwriters’ discount payable | |
$ | — | | |
$ | 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 September 30, 2022, the Company had not
commenced any operations. All activity through September 30, 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 continues to evaluate the impact of
the COVID-19 pandemic on the industry 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.
In February 2022, the Russian Federation and
Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States,
have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions
on the world economy are not determinable as of the date of these condensed financial statements. The specific impact on the Company’s
financial condition, results of operations, and cash flows is also not determinable as of the date of these condensed financial statements.
Liquidity and Going Concern Consideration
As of September 30, 2022, the Company had approximately
$118,567 in its operating bank account, and a working capital deficit of approximately $922,857.
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, 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 and nine months ended September 30, 2022 are not necessarily indicative of the results
to be expected for the year ending December 31, 2022 or for any future period.
The accompanying unaudited condensed financial
statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form
10-K filed by the Company with the SEC on March 18, 2022.
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 September 30, 2022 and December 31, 2021.
Investments Held in Trust Account
At September 30, 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
and nine months ended September 30, 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 Deposit 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 September 30, 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’ deficit section of the Company’s
condensed balance sheets.
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 September 30, 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 as of December 31, 2021 | |
| 310,000,000 | |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| — | |
Class A ordinary shares subject to possible redemption as of March 31, 2022 | |
| 310,000,000 | |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 278,958 | |
Class A ordinary shares subject to possible redemption as of June 30, 2022 | |
| 310,278,958 | |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 1,615,577 | |
Class A ordinary shares subject to possible redemption as of September 30, 2022 | |
$ | 311,894,535 | |
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 September 30, 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 September
30, 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 periods 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 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 ordinary share is the same as basic income per ordinary share for the periods 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
September 30, | | |
For the
Nine Months Ended
September 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
Class A Ordinary Shares | |
| | |
| | |
| | |
| |
Allocation of net income to Class A ordinary shares subject to possible redemption | |
$ | 2,282,529 | | |
$ | 2,147,073 | | |
$ | 8,199,158 | | |
$ | 11,941,787 | |
Weighted average Class A ordinary shares subject to possible redemption | |
| 31,000,000 | | |
| 31,000,000 | | |
| 31,000,000 | | |
| 27,706,690 | |
Basic and diluted net income per share | |
$ | 0.07 | | |
$ | 0.07 | | |
$ | 0.26 | | |
$ | 0.43 | |
| |
| | | |
| | | |
| | | |
| | |
Class B Ordinary Shares | |
| | | |
| | | |
| | | |
| | |
Allocation of net income to Class B ordinary shares | |
$ | 570,623 | | |
$ | 536,768 | | |
$ | 2,049,790 | | |
$ | 3,329,223 | |
Weighted average Class B ordinary shares | |
| 7,750,000 | | |
| 7,750,000 | | |
| 7,750,000 | | |
| 7,724,359 | |
Basic and diluted net income per share | |
$ | 0.07 | | |
$ | 0.07 | | |
$ | 0.26 | | |
$ | 0.43 | |
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. |
The fair value of the Company’s assets
and liabilities, which qualify as financial instruments under ASC Topic 820 (other than warrant liability) approximates the carrying
amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
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
condensed 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 Notes — 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 September 30, 2022 and December 31, 2021, there were no amounts
outstanding under the Note, respectively.
During the nine months ended September 30, 2022,
the Company issued a number of unsecured promissory notes (the “Notes”) totaling $258,780 to certain executive officers
and affiliates of the Company. The proceeds of the Notes will be used as general working capital purposes.
The Notes bear 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. Failure to pay the principals 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 Notes may be accelerated.
As of September 30, 2022, $258,780 is outstanding under the Notes.
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 and nine months ended September 30, 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 September 30, 2022 and December 31, 2021, there were no borrowings 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 September 30, 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
September 30, 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
September 30, 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 September 30, 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 | | |
September 30,
2022 | | |
Level | | |
December 31,
2021 | |
Assets: | |
| | |
| | |
| | |
| |
Investments held in Trust Account | |
| 1 | | |
$ | 311,894,535 | | |
| 1 | | |
$ | 310,043,588 | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Public Warrant Liability | |
| 2 | | |
$ | 469,133 | | |
| 1 | | |
$ | 6,510,000 | |
Private Warrant Liability | |
| 3 | | |
$ | 248,187 | | |
| 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 statements 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 September 30, 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 September 30, 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 estimated fair value of the Public Warrants transferred from a Level 1 measurement to a Level 2 fair value measurement
during the three and nine months ended September 30, 2022 was $469,133.
The following table presents the changes in the
fair value of Level 3 warrant liabilities:
| |
Private Placement Warrants | |
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 | |
Change in fair value | |
| (1,021,565 | ) |
Fair Value as of June 30, 2022 | |
| 809,369 | |
Change in fair value | |
| (561,182 | ) |
Fair Value as of September 30, 2022 | |
$ | 248,187 | |
| |
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 | |
Change in fair value | |
| 1,468,347 | | |
| — | | |
| 1,468,347 | |
Fair Value as of June 30, 2021 | |
| 4,980,134 | | |
| — | | |
| 4,980,134 | |
Change in fair value | |
| (1,257,880 | ) | |
| — | | |
| (1,257,880 | ) |
Fair Value as of September 30, 2021 | |
$ | 3,722,254 | | |
$ | — | | |
$ | 3,722,254 | |
On September 30, 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 September 30, 2022 and December 31, 2021 were as follows:
Inputs | |
September 30, 2022 | | |
December 31, 2021 | |
Risk-free interest rate | |
| 4.05 | % | |
| 1.31 | % |
Dividend rate | |
| 0.00 | % | |
| 0.00 | % |
Expected term remaining (years) | |
| 5.00 | | |
| 5.54 | |
Volatility before Initial Business Combination | |
| 1.5 | % | |
| 5.0 | % |
Share price | |
$ | 9.93 | | |
$ | 9.76 | |
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 September 30, 2022, the Company had approximately
$118,567 in its operating bank account, and a working capital of approximately deficit of $922,857.
The Company is within 12 months of its mandatory
liquidation as of the time of filing this 10Q. 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 September
30, 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 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 September 30, 2022,
we had a net income of approximately $2.9 million, which included a gain from the change in fair value of warrant liabilities of $1.5
million and interest earned on investments held in Trust Account of $1.6 million, offset by a loss from operations of $0.28 million.
For the nine months ended September 30, 2022,
we had a net income of approximately $10.2 million, which included a gain from the change in fair value of warrant liabilities of $9.3
million and interest earned on investments held in Trust Account of $1.9 million, offset by a loss from operations of $0.87 million.
For the three months ended September 30, 2021,
we had a net income of approximately $2.7 million, which included a gain from the change in fair value of warrant liabilities of $3.6
million and interest earned on investments held in Trust Account of $3,989, offset by a loss from operations of $0.9 million.
For the nine months ended September 30, 2021,
we had a net income of approximately $15.3 million, which included by a gain from the change in fair value of warrant liabilities of
$20.2 million and interest earned on investments held in Trust Account of $0.04 million, offset by a loss from operations of $1.3 million,
excess in fair value from warrant liabilities of $2.6 million and offering cost expense allocated to warrants of $1.1 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.
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 September 30, 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 by the weighted average
number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. At September 30, 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 income per share is the same as basic income per share for the period
presented.
The Company’s condensed statement of operations
applies the two-class method in calculating net income 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 September 30, 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.