NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND GOING CONCERN
SDCL
EDGE Acquisition Corporation (the “Company”) is a blank check company incorporated in the Cayman Islands on February 16,
2021. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization
or similar business combination with one or more businesses or entities (a “Business Combination”). The Company is
not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is
an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage
and emerging growth companies.
As
of September 30, 2022, the Company had not commenced any operations. All activity for the period from February 16, 2021 (inception)
through September 30, 2022 relates to the Company’s formation, the initial public offering (“Initial Public Offering”)
as described below, and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination.
The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The
Company will generate non-operating income or loss in the form of interest income or gains (losses) on investments on the cash
and investments held in a trust account from the proceeds derived from the Initial Public Offering. In addition, the Company will
recognize non-operating income or loss on the change in fair value of the warrant liabilities.
The
registration statement for the Company’s Initial Public Offering was declared effective on October 28, 2021. On November
2, 2021, the Company consummated the Initial Public Offering of 17,500,000 units (the “Units” and, with respect to
the Class A ordinary shares included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross
proceeds of $175,000,000, which is discussed in Note 3. Each Unit consists of one Class A ordinary share and one-half of one redeemable
warrant (“Public Warrant”).
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 8,250,000 warrants (the “Private Placement
Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to SDCL EDGE Sponsor LLC (the “Sponsor”),
Sustainable Investors Fund, LP (“Capricorn”), and Seaside Holdings (Nominee) Limited (“Seaside” and, together
with Capricorn, the “A Anchor Investors”) generating gross proceeds of $8,250,000, which is described in Note 4.
The
Company had granted the underwriters in the Initial Public Offering (the “Underwriters”) a 45-day option to purchase
up to 2,625,000 additional Units to cover over-allotments, if any. On November 16, 2021, the Underwriters partially exercised
the over-allotment option and purchased an additional 2,495,246 Units (the “Over-Allotment Units”), generating gross
proceeds of $24,952,460, and incurred $499,049 in cash underwriting fees.
Simultaneously
with the closing of the exercise of the over-allotment option, the Company consummated the sale of 748,574 warrants (the “Over-Allotment
Warrants”) at a purchase price of $1.00 per warrant in a private placement to the Sponsor and the A Anchor Investors generating
gross proceeds of $748,574.
Following
the closing of the Initial Public Offering, the sale of the Private Placement Warrants, the sale of the Over-Allotment Units, and
the sale of the Over-Allotment Warrants, an amount of $201,951,985
($10.10
per Unit) was placed in a trust account (the “Trust Account”) and was invested in U.S. government treasury obligations
with maturities of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company
Act which invest only in direct U.S. government treasury obligations, until the earlier of: (i) the completion of the initial
Business Combination; (ii) the redemption of any Public Shares properly tendered in connection with a shareholder vote to amend the
amended and restated memorandum and articles of association (the “Amended and Restated Memorandum and Articles of
Association”) to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the
Company does not complete the initial Business Combination within 24 months from the closing of the Initial Public Offering; and
(iii) absent an initial Business Combination occurring prior to November 2, 2023 or with respect to any other material provisions
relating to shareholders’ rights or pre-initial Business Combination activity, the return of the funds held in the Trust
Account to the Public Shareholders as part of the redemption of the Public Shares. If the Company does not invest the proceeds as
discussed above, the Company may be deemed to be subject to the Investment Company Act. If the Company is deemed to be subject to
the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which the
Company has not allotted funds and may hinder the Company’s ability to complete a Business Combination. If the Company is
unable to complete the initial Business Combination, the Company’s public shareholders may only receive their pro rata portion
of the funds in the Trust Account that are available for distribution to public shareholders, and the warrants will expire
worthless.
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
In
addition, the Sponsor agreed to forfeit up to 656,250 Class B ordinary shares (the “Founder Shares”) to the extent
that the over-allotment option was not exercised in full by the underwriters. As a result of the underwriters’ partial exercise
of the over-allotment option, the Company repurchased and cancelled 32,439 Founders Shares. No other Founder Shares remain subject
to forfeiture.
The
Company will provide its public shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion
of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii)
by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or
conduct a tender offer will be made by the Company, in its sole discretion. The public shareholders will be entitled to redeem
their Public Shares for a pro rata portion of the amount held in the Trust Account ($10.10 per share), calculated as of two business
days prior to the completion of a Business Combination, including any pro rata interest earned on the funds held in the Trust
Account and not previously released to the Company. There will be no redemption rights upon the completion
of a Business Combination with respect to the Company’s warrants. The Class A ordinary shares are recorded at redemption
value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with the Financial
Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing
Liabilities from Equity (“ASC 480”).
The
Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon consummation
of such Business Combination and a majority of the shares voted are voted in favor of the Business Combination. If a shareholder
vote is not required under applicable law or stock exchange listing requirements and the Company does not decide to hold a shareholder
vote for business or other reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association
as then in effect, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”),
and file tender offer documents containing substantially the same information as would be included in a proxy statement with the
SEC prior to completing a Business Combination. If the Company seeks shareholder approval in connection with a Business Combination,
the initial shareholders, Anchor Investors (as defined in Note 5), and management team have agreed to vote any Founder Shares
held by them, and any Public Shares purchased in or after the Initial Public Offering in favor of approving a Business Combination.
Additionally, each public shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against
the proposed transaction or whether they were a public shareholder on the record date for the general meeting held to approve
the proposed transaction.
Notwithstanding
the foregoing, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant
to the tender offer rules, the Company’s Amended and Restated Memorandum and Articles of Association provides that a public
shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert
or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares
without the Company’s prior written consent.
The
initial shareholders and A Anchor Investors have agreed to (i) waive their redemption rights with respect to any Founder Shares
and Public Shares they hold in connection with the completion of an initial Business Combination, (ii) waive their redemption
rights with respect to any Founder Shares and Public Shares they hold in connection with a shareholder vote to approve an amendment
to the Amended and Restated Memorandum and Articles of Association to modify the substance or timing of the Company’s obligation
to redeem 100% of the Public Shares if the Company has not consummated an initial Business Combination within 24 months from the
closing of the Initial Public Offering or with respect to any other material provisions relating to shareholders’ rights
or pre-initial Business Combination activity and (iii) waive their rights to liquidating distributions from the Trust Account
with respect to any Founder Shares they hold if the Company fails to complete an initial Business Combination within 24 months
from the Initial Public Offering. However, if the initial shareholders or Anchor Investors (as defined in Note 5) acquire additional
Public Shares after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust
Account if the Company fails to complete a Business Combination within the Combination Period (as defined below).
The
Company will have until November 2, 2023 to complete
a Business Combination. If the Company is unable to complete a Business Combination within the Combination Period, the Company
will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than
ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the Trust Account, including interest earned on the funds held in the Trust Account (which interest shall be payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public
Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to
receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of the Company’s remaining shareholders and board of directors, liquidate and dissolve, subject, in each
case, to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other
applicable law.
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The
underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account
in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts
will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares.
In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution
will be less than the redemption price per Unit ($10.10).
In
order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any
claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the
Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.10
per Public Share or (2) 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 $10.10 per Public Share due to reductions in the value of the trust assets, provided that such liability will
not apply to any claims by a third-party or prospective target business that executed a waiver of any and all rights to seek access
to 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 Initial Public Offering against certain liabilities, including liabilities under the Securities Act of
1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable
against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company
will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by
endeavouring to have all vendors, service providers (other than the Company’s independent registered public accounting firm),
prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving
any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Going Concern Consideration
As
of September 30, 2022, the Company had $730,997 in cash held outside of the Trust Account and a working capital deficit of
$1,049,006.
If a Business Combination is not consummated by
November 2, 2023, there be a mandatory liquidation and subsequent dissolution of the Company.
In connection with the Company’s
assessment of going concern considerations in accordance with FASB’s Accounting Standards Update (“ASU”)
2014-15, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management has
determined the November 2, 2023 Combination Period deadline raises a substantial doubt about the Company’s ability to continue
as a going concern from the date that these unaudited condensed financial statements are filed, if it does not complete a Business
Combination prior to such date. 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.
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus
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.
As a result of this action and related economic sanctions, the Company’s ability to consummate a Business Combination, or
the operations of a target business with which the Company ultimately consummates a Business Combination, may be materially and
adversely affected. In addition, the Company’s ability to consummate a transaction may be dependent on the ability to raise
equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased
market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of this action
and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations
and/or ability to consummate a Business Combination are not yet determinable. The unaudited condensed financial statements do
not include any adjustments that might result from the outcome of this uncertainty.
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying condensed financial statements of the Company are presented in conformity with accounting principles generally accepted
in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. Certain information
or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted,
pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information
and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion
of management, the accompanying condensed financial statements include all adjustments, consisting of a normal recurring nature,
which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying condensed financial statements should be read in conjunction with the Company’s Form 10-K as filed with
the SEC on April 7, 2022. 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 periods.
Emerging
Growth Company
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 independent registered public accounting firm attestation requirements of Section 404 of
the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval
of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The
Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and
it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the
new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s
financial statements with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use
of Estimates
The
preparation of financial statements in conformity with US GAAP requires the Company’s management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of expenses during the reporting period.
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. Accordingly, the actual
results could differ from those estimates.
Cash
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 or December 31, 2021.
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Investments
Held in Trust Account
At
September 30, 2022, the assets held in the Trust Account are $202,971,925, and are held in money market funds, which are
invested in U.S. Treasury securities. All of the Company’s investments held in the Trust Account are classified as trading
securities. Such trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains
and losses resulting from the change in fair value of investments held in Trust Account are included in gain (loss) on investments
held in Trust Account in the accompanying statements of operations. The estimated fair values of investments held in the Trust
Account are determined using available market information.
At
December 31, 2021 the Company held cash in the Trust Account of $201,951,985.
Class
A Ordinary Shares Subject to Possible Redemption
All
of the 19,995,246 Class A ordinary shares sold as part of the Units in the Initial Public Offering and the partial exercise of
the over-allotment option 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 Amended and Restated Memorandum and Articles of Association. 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. Therefore, all Class A ordinary shares has been classified outside of permanent equity.
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. The redemption value
of the redeemable ordinary shares as of September 30, 2022 increased as the income earned on the Trust Account exceeds the
Company’s expected dissolution expenses (up to $100,000)
from December 31, 2021. As such, the Company recorded an increase in the carrying amount of the redeemable ordinary shares of $919,940
during the nine months ended September 30, 2022.
As
of September 30, 2022 and December 31, 2021, the Class A ordinary shares subject to redemption reflected in the condensed
balance sheets are reconciled in the following table:
Schedule of redemption of Class A ordinary shares | |
| | |
Gross proceeds | |
$ | 199,952,460 | |
Less: | |
| | |
Proceeds allocated to Public
Warrants | |
| (9,797,808 | ) |
Issuance costs allocated to
Class A ordinary shares | |
| (29,576,119 | ) |
Plus: | |
| | |
Remeasurement
of carrying value to redemption value | |
| 41,373,452 | |
Class A
ordinary shares subject to possible redemption as of December 31, 2021 | |
| 201,951,985 | |
Plus: | |
| | |
Remeasurement
of carrying value to redemption value | |
| 68,904 | |
Class A
ordinary shares subject to possible redemption as of June 30, 2022 | |
$ | 202,020,889 | |
Plus: | |
| | |
Remeasurement
of carrying value to redemption value | |
| 851,036 | |
Class
A ordinary shares subject to possible redemption as of September 30, 2022 | |
$ | 202,871,925 | |
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Offering
Costs associated with the Initial Public Offering
The
Company complies with the requirements of ASC Topic 340, Other Assets and Deferred Costs and SEC Staff Accounting Bulletin
Topic 5A - Expenses of Offering (“SAB Topic 5A”). Offering costs consist principally of professional and registration
fees incurred through the balance sheet date that are related to the Initial Public Offering. Offering costs directly attributable
to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. Offering costs for equity
contracts that are classified as assets and liabilities are expensed immediately. The Company incurred offering costs amounting to
$32,005,743
as a result of the Initial Public Offering (consisting of a $3,999,049
underwriting discount, $6,998,336
of deferred underwriting fees, $18,958,165
of Anchor Investor offering costs, and $2,050,193
of other offering costs). The Company recorded $29,576,119
of offering costs as a reduction of temporary equity in connection with the shares of Class A ordinary shares included in the Units.
The Company immediately expensed $2,429,624
of offering costs in connection with the Public Warrants and Private Placement Warrants that were classified as liabilities. The
Company incurred additional offering costs amounting to $1,969,181
and $1,289,149 for which payment is contingent upon the completion of a Business Combination. These are recorded as accrued
contingent legal costs within the condensed balance sheets as of September 30, 2022 and December 31, 2021.
Income
Taxes
The
Company accounts for income taxes under ASC 740, Income Taxes (“ASC 740”). ASC 740 requires the recognition
of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis
of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC
740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred
tax assets will not be realized.
ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and
prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position
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. ASC 740 also provides guidance on derecognition, classification, interest
and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been
concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements.
The
Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of 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 considered an exempted Cayman Islands Company and is presently not subject to income taxes or income
tax filing requirements in the Cayman Islands or the United States. Consequently, income taxes are not reflected in the Company’s
financial statements.
Net
Income (Loss) Per Ordinary Share
The
Company complies with accounting and disclosure requirements of ASC 260, Earnings Per Share. Net income (loss) per ordinary
share is computed by dividing net income (loss) by the weighted-average number of ordinary shares outstanding during the period.
The immediate re-measurement associated with the redeemable Class A ordinary shares is excluded from net income (loss) per share
as the redemption value approximates fair value. Therefore, the net income (loss) per share calculation allocates income and losses
shared pro rata between Class A and Class B ordinary shares. As a result, the calculated net income (loss) per share is the same
for Class A and Class B ordinary shares. The Company has not considered the effect of the warrants sold in the Initial Public
Offering, the partial exercise of the over-allotment option, and private placement to purchase an aggregate of 18,996,197 shares
in the calculation of diluted income (loss) per share, since the exercise of the warrants is contingent upon the occurrence of
future events. As a result, diluted income (loss) per share is the same as basic income (loss) per share for the periods presented.
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The
following table reflects the calculation of basic and diluted net income (loss) per ordinary share (in dollars, except per share
amounts):
Schedule of basic and diluted net income per ordinary share | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Three
Months Ended
September 30,
2022 | | |
Three
Months Ended
September 30,
2021 | | |
Nine
Months Ended
September 30,
2022 | | |
For
the period from February 16, 2021 (inception) through
September 30,
2021 | |
| |
| Class
A | | |
| Class
B | | |
| Class
A | | |
| Class
B | | |
| Class
A | | |
| Class
B | | |
| Class
A | | |
| Class
B | |
Basic and diluted net income
(loss) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Numerator: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income (loss) | |
$ | 1,745,474 | | |
$ | 436,369 | | |
$ | — | | |
$ | — | | |
$ | 4,355,922 | | |
$ | 1,088,981 | | |
$ | — | | |
$ | (9,647 | ) |
Denominator: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted
average shares outstanding | |
| 19,995,246 | | |
| 4,998,811 | | |
| — | | |
| 4,375,000 | | |
| 19,995,246 | | |
| 4,998,811 | | |
| — | | |
| 4,375,000 | |
Basic and diluted net income
(loss) per share | |
$ | 0.09 | | |
$ | 0.09 | | |
$ | — | | |
$ | (0.00 | ) | |
$ | 0.22 | | |
$ | 0.22 | | |
$ | — | | |
$ | (0.00 | ) |
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on this
account and management believes the Company is not exposed to significant risks on such account.
Fair
Value of Financial Instruments
The
Company applies ASC Topic 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring
fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which
is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous
market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in
ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability
and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect
the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants
would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.
The
carrying amounts reflected in the balance sheet for current assets and current liabilities approximate fair value due to their
short-term nature.
The following reflects the fair value hierarchy
established by ASC 820:
Level
1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement
are observable inputs, such as quoted prices in active markets for identical assets or liabilities.
Level
2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar
underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable
at commonly quoted intervals.
Level
3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques
when little or no market data exists for the assets or liabilities.
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Share-Based
Compensation
Share-based
compensation is accounted for based on the requirements of ASC 718, Compensation–Stock Compensation (“ASC 718”),
which requires recognition in the financial statements of the cost of employee, non-employee and director services received in
exchange for an award of equity instruments over the period the employee, non-employee or director is required to perform the
services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee,
non-employee and director services received in exchange for an award based on the grant-date fair value of the award. For the
nine months ended September 30, 2022, the Company recognized $1,963,265 of share-based compensation related to 659,844 Founder
Shares to be transferred to Sustainable Development Capital LLP for certain services performed per the Investment Advisory Agreement
(See Note 5).
Derivative
Financial Instruments
The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives in accordance with ASC 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity
(“ASC 815”). For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair
value reported in the statements of operations. The classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified
in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could
be required within 12 months of the balance sheet date.
The
Public Warrants and Private Placement Warrants are accounted for as derivative instruments in accordance with ASC 815 and are
presented as warrant liabilities on the balance sheet. The Public Warrants and Private Placement Warrants were measured at fair
value at the Initial Public Offering and on a recurring basis, with subsequent changes in fair value to be recorded in the statement
of operations.
Recent
Accounting Standards
Management
does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on the Company’s financial statements.
NOTE
3. INITIAL PUBLIC OFFERING
The
registration statement for the Company’s Initial Public Offering was declared effective on October 28, 2021. On November
2, 2021, the Company completed its Initial Public Offering of 17,500,000 Units, at $10.00 per Unit, generating gross proceeds
of $175,000,000. Each Unit consists of one Class A ordinary share and one-half of one Public Warrant. Each Public Warrant entitles
the holder to purchase one Class A ordinary share at an exercise price of $11.50 per whole share (see Note 7). On November 16,
2021, the underwriters partially exercised the over-allotment option and purchased an additional 2,495,246 Over-Allotment Units,
generating gross proceeds of $24,952,460, for an aggregate total of $199,952,460 in gross proceeds from the Initial Public Offering
and closing of the exercise of the over-allotment option.
NOTE
4. PRIVATE PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, the Sponsor and A Anchor Investors purchased an aggregate of 8,250,000 warrants
at a price of $1.00 per Private Placement Warrant ($8,250,000 in the aggregate). Simultaneously with the closing of the exercise
of the over-allotment option, the Company consummated the sale of 748,574 Over-Allotment Warrants at a purchase price of $1.00
per warrant in a private placement to the Sponsor and A Anchor Investors, generating gross proceeds of $748,574, for an aggregate
total of $8,998,574 in gross proceeds from the sale of the Private Warrants and Over-Allotment Warrants. Each Private Placement
Warrant is exercisable to purchase one Class A ordinary share at a price of $11.50 per share. A portion of the proceeds from the
sale of the Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account.
If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private
Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and
the Private Placement Warrants will expire worthless.
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
5. RELATED PARTY TRANSACTIONS
Founder
Shares
On
February 23, 2021, the Sponsor was issued Class B ordinary shares (the “Founder Shares”) for an aggregate
of $ paid to cover certain expenses on behalf of the Company. On July 14, 2021, the Company repurchased 2,156,250 Founder
Shares from the Company’s Sponsor for an aggregate consideration of $0.001, resulting in an aggregate of 5,031,250 Founder
Shares outstanding. The Founder Shares included an aggregate of up to 656,250 Class B ordinary shares subject to repurchase by
the Sponsor to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the
holders of the Founder Shares will own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after
the Initial Public Offering. Following the partial exercise of the underwriters’ over-allotment option on November 16, 2021,
32,439 Founder Shares were repurchased and cancelled by the Company. No other Founder Shares remain subject to forfeiture.
The
Sponsor has agreed that, subject to certain limited exceptions, the Founder Shares will not be transferred, assigned, or sold
until the earlier of (i) one year after the completion of a Business Combination or (ii) subsequent to an initial Business Combination,
(x) if the closing price of Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share
capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing
at least 150 days after an initial Business Combination, or (y) the date on which the Company completes a liquidation, merger,
share exchange or other similar transaction that results in all of the public shareholders having the right to exchange their
ordinary shares for cash, securities or other property.
The
A Anchor Investors purchased a total of 4,000,000 units in the Initial Public Offering at the offering price of $10.00 per unit.
In addition to the A Anchor Investors, two qualified institutional buyers or accredited investors not affiliated with the Company,
the Sponsor, the Company’s directors or any member of management (the “3.6% B Anchor Investors”), purchased
1,575,000 units each in the Initial Public Offering at the offering price of $10.00 per unit, three qualified institutional buyers
or accredited investors not affiliated with the Company, the Sponsor, the Company’s directors or any member of management
(the “4.0% B Anchor Investors”), purchased 1,749,999 units each in the Initial Public Offering at the offering price
of $10.00 per unit, and two qualified institutional buyers or accredited investors not affiliated with the Company, the Sponsor,
the Company’s directors or any member of management (the “Additional 4.0% B Anchor Investors” and, together
with the 3.6% B Anchor Investors and the 4.0% B Anchor Investors, the “B Anchor Investors”), purchased 1,732,500 units
each in the Initial Public Offering at the offering price of $10.00 per unit, or an aggregate of 15,864,997 units for all anchor
investors (the “Anchor Investors” which includes the A Anchor Investors and the B Anchor Investors).
As
the Anchor Investors purchased units during the Initial Public Offering, should they vote the shares included therein in favor
of the initial Business Combination, no votes from other public shareholders would be required to approve the initial Business
Combination. The Anchor Investors may have different interests with respect to a vote on an initial Business Combination than
other public shareholders due to their ownership interests in the Company.
Pursuant
to such units, the Anchor Investors have not been granted any shareholder or other rights in addition to those afforded to the
Company’s other public shareholders. Further, the Anchor Investors are not required to (i) hold any units, Class A ordinary
shares or warrants they purchased in the Initial Public Offering or thereafter for any amount of time, (ii) vote any Class A ordinary
shares they may own at the applicable time in favor of the Business Combination or (iii) refrain from exercising their right to
redeem their Public Shares at the time of the Business Combination. The Anchor Investors have the same rights to the funds held
in the Trust Account with respect to the Class A ordinary shares underlying the units they purchased in the Initial Public Offering
as the rights afforded to the Company’s other public shareholders.
Each
Anchor Investor has entered into separate investment agreements with the Company and the Sponsor. The A Anchor Investors purchased
503,125 Founder Shares each, or an aggregate of 1,006,250 Founder Shares, from the Sponsor for a purchase price of $2,500 each,
or an aggregate of $5,000, at the closing of the Initial Public Offering. The 3.6% B Anchor Investors purchased 181,125 Founder
Shares each, or an aggregate of 362,250 Founder Shares, from the Sponsor for a purchase price of $900 each, or an aggregate of
$1,800, at the closing of the Initial Public Offering. The 4.0% B Anchor Investors purchased 201,250 Founder Shares each, or an
aggregate of 603,750 Founder Shares, from the Sponsor for a purchase price of $1,000 each, or an aggregate of $3,000, at the closing
of the Initial Public Offering. The Additional 4.0% B Anchor Investors purchased 201,250 Founder Shares each, or an aggregate
of 402,500 Founder Shares from the Sponsor for a purchase price of $1,000 each, or an aggregate of $2,000, at the closing of the
Initial Public Offering (or an aggregate of 2,374,750 Founder Shares for all Anchor Investors for a total combined purchase price
of $11,800). Pursuant to the investment agreements, the Anchor Investors have agreed to (a) vote any Founder Shares held by them
in favor of the Business Combination and (b) subject any Founder Shares held by them to the same lock-up restrictions as the Founder
Shares held by the Sponsor and independent directors.
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Due
to the partial exercise of the over-allotment option by the underwriters on November 16, 2021, the Company repurchased and cancelled
32,439 Founder Shares, which included 3,244 Founder Shares from each A Anchor Investor (or an aggregate of 6,488 Founder Shares),
1,168 Founder Shares from each 3.6% B Anchor Investor (or an aggregate of 2,336 Founder Shares), 1,298 Founder Shares from each
4.0% B Anchor Investor, (or an aggregate of 3,894 Founder Shares), 1,298 Founder Shares from each Additional 4.0% B Anchor Investor,
(or an aggregate of 2,596 Founder Shares), and Founder Shares from the Company’s Sponsor. As a result 15,314 Founder
Shares held by Anchor Investors were repurchased and canceled by the Company, resulting in an aggregate of 2,359,436 Founder Shares
held by all Anchor Investors.
The
Company estimated the fair value of the Founder Shares attributable to the Anchor Investors to be $18,969,890 or $8.04 per share.
The excess of the fair value of the Founder Shares sold over the purchase price of $11,725 (or $0.005 per share) was determined
to be an offering cost in accordance with Staff Accounting Bulletin Topic 5A. Accordingly, the offering cost was 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 allocated to derivative warrant liabilities were expensed immediately in the statement of operations.
Offering costs allocated to the Public Shares were charged to shareholders’ deficit upon the completion of the Initial Public
Offering.
Due
to Sponsor
Due
to Sponsor consists of advances from the Sponsor to pay for offering costs and formation costs on behalf of the Company and are
payable on demand.
Administrative
Support Agreement
On
October 28, 2021, the Company entered into an agreement to pay an affiliate of the Sponsor a total of $20,000 per
month for office space, administrative and support services. Upon completion of the Business Combination or the Company’s
liquidation, the Company will cease paying these monthly fees. During the three and nine months ended September 30, 2022,
$60,000 and
$180,000,
respectively, of administrative support expenses were incurred. During the three months ended September 30, 2021 and the period from
February 16, 2021 (inception) through September 30, 2021, there were no expenses incurred related to the agreement.
Investment
Advisory Agreement
On
October 28, 2021, the Company and the Sponsor entered into an agreement with Sustainable Development Capital LLP (the “Advisor”),
a London-based investment firm and affiliate of the Company and Sponsor, whereby the Advisor agreed to provide administrative,
consulting, and other services to affect the Company’s initial Business Combination. In consideration of the services performed:
(1) the Company and Sponsor shall procure the transfer of the legal and beneficial title to at least 659,844 Founder Shares, or
at the sole election of the Sponsor, the payment of an amount equal to the cash value (as determined as of the date of such payment)
of such number of Founder Shares, to the Advisor immediately prior to the winding up and liquidation of the Sponsor, or such other
date as shall be agreed in writing between the Sponsor and Advisor; and (2) the Sponsor shall pay to the Advisor the sum of $20,000
per month as an ongoing advisory fee and subject to the terms and conditions of the Investment Advisory Agreement (the “Advisory
Agreement”). The compensation expense related to the above Founder Share transfer of 659,844 shares is amortized on a straight-line
basis from the Grant Date of October 28, 2021 (the date at which the Investment Advisory Agreement was signed, and the date at
which all parties reached a mutual understanding of the key terms and conditions of the share-based payment) to November 2, 2023
(the date at which the combination period for the Company’s initial business combination expires). Such Advisory Agreement
is accounted for under ASC 718.
On August 5, 2022, the Company incurred
costs associated to web based services provided by the Advisor. For the period ended September 30, 2022 and December 31, 2021,
the total costs incurred are $24,062 and $0, respectively, and recorded in operating and formation costs within the condensed statements of operations.
Related
Party Loans
In
order to finance transaction costs in connection with an intended initial Business Combination, the Company’s sponsor or
an affiliate of the sponsor or certain of the officers and directors may, but are not obligated to, loan the Company funds as
may be required. If the Company completes an initial Business Combination, it may repay such loaned amounts out of the proceeds
of the Trust Account released to the Company. In the event that the initial Business Combination does not close, the Company may
use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Company’s
Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants at a price of
$1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants, including as
to exercise price, exercisability and exercise period. The terms of such loans by the officers and directors, if any, have not
been determined and no written agreements exist with respect to such loans. The Company does not expect to seek loans from parties
other than the Company’s sponsor, its affiliates or the management team as the Company does not believe third parties will
be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in the Company’s Trust
Account. As of September 30, 2022 and December 31, 2021, there were no such loans outstanding.
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
6. COMMITMENTS AND CONTINGENCIES
Registration
Rights
The
holders of the Founder Shares, Private Placement Warrants and Public Warrants that may be issued upon conversion of the Working
Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants issued
upon conversion of the Working Capital Loans) are entitled to registration rights pursuant to a registration rights agreement
signed on the effective date of the Initial Public Offering. The holders of these securities are entitled to make up to three
demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to consummation of a Business Combination. The Company
bears the expenses incurred in connection with the filing of any such registration statements.
Underwriters
Agreement
In
connection with the Initial Public Offering, the underwriters were granted a 45-day option from the date of the Initial Public
Offering to purchase up to 2,625,000 additional Units to cover over-allotments. On November 16, 2021, the underwriters partially
exercised the over-allotment option and purchased an additional 2,495,246 Units at an offering price of $10.00 per Unit, generating
additional gross proceeds of $24,952,460 to the Company.
The
underwriters received a cash underwriting discount of $0.20
per Unit, or $3,999,049
in the aggregate, which became payable at the closing of the Initial Public Offering. In addition, the underwriters
were entitled to a deferred fee of $0.35
per Unit, or $6,998,336
in the aggregate. In July 2022, a portion of the deferred underwriting fee in the amount of $4,898,835
was waived by Goldman Sachs & Co. LLC Securities, Inc., one of
the underwriters. Upon IPO, a portion of the entire deferred underwriting fee was allocated to public warrants, which resulted in a charge to the statement of operations. Therefore, a portion of this waived deferred underwriting fee was recorded as a gain in the condensed statements of operations in the amount of $240,082 for the three and nine months ended September 30, 2022. The remaining $4,658,753 was recorded as a reduction to accumulated deficit as of September 30, 2022.
On October 14, 2022, BofA Securities, Inc., the other underwriter, waived the remaining
underwriting fee outstanding of $2,099,501
in full. (see Note 10)
NOTE
7. WARRANTS
A
warrant holder may exercise their warrants only for a whole number of Class A ordinary shares. This means only a whole warrant
may be exercised at a given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only
whole warrants will trade. Accordingly, unless the warrant holder purchases at least two units, they will not be able to receive
or trade a whole warrant. The warrants will expire five years after the completion of the initial Business Combination, at 5:00
p.m., New York City time, 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 current prospectus relating thereto is current, subject to satisfying the
obligations described below with respect to registration. No warrant will be exercisable and the Company will not be obligated
to issue 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 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, if not cash settled, will have paid
the full purchase price for the unit solely for the Class A ordinary shares underlying such unit.
The
Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of the initial Business
Combination, the Company will use the commercially reasonable efforts to file with the SEC a registration statement covering the
issuance of the Class A ordinary shares issuable upon exercise of the warrants, and the Company will use the commercially reasonable
efforts to cause the same to become effective within 60 business days after the closing of the initial Business Combination and
to maintain the effectiveness of such registration statement and a current prospectus relating to those Class A ordinary shares
until the warrants expire or are redeemed; provided that if the Class A ordinary shares are at the time of any exercise of a warrant
not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section
18(b)(1) of the Securities Act, the Company may, at the option, require holders of Public Warrants who exercise their warrants
to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company
so elect, the Company will not be required to file or maintain in effect a registration statement.
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Redemption
of warrants when the price per Class A ordinary share equals or exceeds $18.00. Once the Public Warrants become exercisable,
the Company may redeem the outstanding Public Warrants (except with respect to the Private Placement Warrants):
| ● | in
whole and not in part; |
| ● | at
a price of $0.01 per warrant; |
| ● | upon
a minimum of thirty (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 adjustments to the number of shares issuable upon exercise
or the exercise price of a warrant from share divisions, share capitalizations, reorganizations,
recapitalizations and the like) for any twenty (20) trading days within a 30-trading
day period ending three (3) trading days before the Company sends the notice of redemption
to the warrant holders. |
The
Company will not redeem the warrants for cash unless a registration statement under the Securities Act covering the issuance of
the shares of Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating
to those Class A ordinary shares is available throughout the 30-day redemption period, unless the warrants may be exercised on
a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become
redeemable, the Company may exercise the redemption right even if the Company are unable to register or qualify the underlying
securities for sale under all applicable state securities laws.
Redemption
of warrants when the price per share of Class A ordinary share equals or exceeds $10.00. Commencing ninety days after the
Public Warrants become exercisable, the Company may redeem the outstanding Public 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 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
below, based on the redemption date and the fair market value of the Company’s
Class A ordinary shares except as otherwise described below; |
| ● | if,
and only if, the closing price of the Company’s Class A ordinary shares equals
or exceeds $10.00 per Public Share (as adjusted for adjustments to the number of shares
issuable upon exercise or the exercise price of a warrant from share divisions, share
capitalizations, reorganizations, recapitalizations and the like) for any 20 trading
days within the 30-trading day period ending three trading days before the Company sends
the notice of redemption to the warrant holders; and |
| ● | if
the closing price of the Company’s Class A ordinary shares for any 20 trading days
within a 30-trading day period ending on the third trading day prior to the date on which
the Company sends the notice of redemption to the warrant holders is less than $18.00
per share (as adjusted for adjustments to the number of shares issuable upon exercise
or the exercise price of a warrant from share divisions, share capitalizations, 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, as described
above. |
In
addition, if (x) the Company issues additional 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 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 Sponsor, Anchor Investors, or its affiliates, without taking into account any founder shares held
by the Sponsor, the Company’s Anchor Investors or such affiliates, as applicable, prior to such issuance) (the “Newly
Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for the funding of the initial Business Combination on the date of the completion of the initial
Business Combination (net of redemptions), and (z) the volume weighted average trading price of the shares of Class A ordinary
shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummate the initial
Business Combination (such price, the “Market Value”) 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
$18.00 per share redemption trigger prices described below under “Redemption of warrants when the price per Class A ordinary
share equals or exceeds $18.00” and “Redemption of warrants when the price per Class A ordinary share equals or exceeds
$10.00” will be adjusted (to the nearest cent) to be equal to 100% and 180%, respectively, of the higher of the Market Value
and the Newly Issued Price.
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The
private placement warrants are identical to the warrants sold as part of the units in the Initial Public Offering except that,
so long as they are held by the Sponsor, the A Anchor Investors, or their permitted transferees: (1) they will not be redeemable
(except as described above under “Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00”);
(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,
as described below; (3) they may be exercised by the holders on a cashless basis; and (4) they (including the ordinary shares
issuable upon exercise of these warrants) are entitled to registration rights.
The
Company accounts for the 18,996,197 warrants that were issued in connection with the Initial Public Offering (9,997,623 Public
Warrants and 8,998,574 Private Placement Warrants) in accordance with the guidance contained in ASC 815-40. Such guidance provides
that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability
due to the existence of provisions whereby adjustments to the exercise price of the warrants is based on a variable that is not
an input to the fair value of a “fixed-for-fixed” option and the existence of the potential for net cash settlement
for the warrant holders (but not all shareholders) in the event of a tender offer.
The
accounting treatment of derivative financial instruments requires that the Company record the warrants as derivative liabilities
at fair value upon the closing of the Initial Public Offering. The Public Warrants were allocated a portion of the proceeds from
the issuance of the Units equal to its fair value. This liability is subject to re-measurement at each balance sheet date. With
each such re-measurement, the warrant liability will be adjusted to its current fair value, with the change in fair value recognized
in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the
classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event
that causes the reclassification.
NOTE
8. SHAREHOLDERS’ EQUITY (DEFICIT)
Preference
shares — The Company is authorized to issue 5,000,000 preference shares, $0.0001 par value, with such designations,
voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of
September 30, 2022 and December 31, 2021, there were no preference shares issued or outstanding.
Class
A ordinary shares — The Company is authorized to issue 500,000,000 Class A ordinary shares with a par value of
$0.0001 per share. At September 30, 2022 and December 31, 2021, there were 19,995,246 Class A ordinary shares issued and
outstanding, including 19,995,246 Class A ordinary shares subject to possible redemption.
Class
B ordinary shares — The Company is authorized to issue 50,000,000 Class B ordinary shares with a par value of
$0.0001 per share. As of September 30, 2022 and December 31, 2021, there were 4,998,811 Class B ordinary shares
outstanding.
Ordinary
shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders. Holders of
Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to
a vote of the Company’s shareholders except as required by law.
The
Class B ordinary shares and will automatically convert into the Company’s Class A ordinary shares at the time of the initial
Business Combination at a ratio such that the number of Class A ordinary shares issuable upon conversion of all founder shares
will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding
upon completion of the Company’s Initial Public Offering, plus (ii) the total number of Class A ordinary shares issued or
deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the
Company in connection with or in relation to the consummation of the initial Business Combination, excluding any Class A ordinary
shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be
issued, to any seller in the initial Business Combination and any private placement warrants issued to the Company’s Sponsor,
the A Anchor Investors, the Company’s affiliates or any member of the management team upon conversion of the 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.
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
9. FAIR VALUE MEASUREMENTS
The
following table presents information about the Company’s financial 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:
Schedule of fair value warrant liability | |
| | | |
| | | |
| | | |
| | |
Description | |
Amount
at
Fair Value | | |
Level
1 | | |
Level
2 | | |
Level
3 | |
September
30, 2022 | |
| | | |
| | | |
| | | |
| | |
Assets | |
| | | |
| | | |
| | | |
| | |
Investments held in Trust Account: | |
| | | |
| | | |
| | | |
| | |
Money Market investments | |
$ | 202,971,925 | | |
$ | 202,971,925 | | |
$ | — | | |
$ | — | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Warrant liability – Public
Warrants | |
$ | 899,786 | | |
$ | 899,786 | | |
$ | — | | |
$ | — | |
Warrant
liability – Private Placement Warrants | |
| 809,872 | | |
| — | | |
| — | | |
| 809,872 | |
| |
$ | 1,709,658 | | |
$ | 899,786 | | |
$ | — | | |
$ | 809,872 | |
December
31, 2021 | |
| | | |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Warrant liability – Public
Warrants | |
$ | 4,998,812 | | |
$ | 4,998,812 | | |
$ | — | | |
$ | — | |
Warrant
liability – Private Placement Warrants | |
| 4,499,287 | | |
| — | | |
| — | | |
| 4,499,287 | |
| |
$ | 9,498,099 | | |
$ | 4,998,812 | | |
$ | — | | |
$ | 4,499,287 | |
The
measurement of the Public Warrants as of September 30, 2022 is classified as Level 1 due to the use of an observable market
quote in an active market under the ticker SEDA.WS. The quoted price of the Public Warrants was $0.09 and $0.50 per warrant as
of September 30, 2022 and December 31, 2021, respectively. At December 31, 2021, the amount in the Trust Account was comprised
solely of cash.
The
Company utilizes a Monte Carlo simulation model to value the Private Placement Warrants at each reporting period, with changes
in fair value recognized in the statement of operations. The estimated fair value of the Private Placement warrant liability is
determined using Level 3 inputs. Inherent in a Monte Carlo Simulation model are assumptions related to expected share-price volatility,
expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its ordinary shares based on
historical volatility that matches the expected remaining life of the warrants. 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 to remain at zero.
The
aforementioned warrant liabilities are not subject to qualified hedge accounting.
Transfers
to/from Levels 1, 2 and 3 are recognized at the end of the reporting period.
The
following table provides the significant inputs to the Monte Carlo simulation model for the fair value of the Private Placement
Warrants:
Schedule of fair value of the private placement warrants | |
| | | |
| | |
| |
As of
September 30,
2022 | | |
As of
December 31,
2021 | |
Stock price | |
$ | 9.89 | | |
$ | 9.74 | |
Exercise price | |
$ | 11.50 | | |
$ | 11.50 | |
Dividend yield | |
| — | % | |
| — | % |
Expected term (in years) | |
| 5.59 | | |
| 6.34 | |
Volatility | |
| 5.1 | % | |
| 8.3 | % |
Risk-free rate | |
| 3.95 | % | |
| 1.37 | % |
Fair value | |
$ | 0.09 | | |
$ | 0.50 | |
SDCL
EDGE ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The
following table presents the changes in the fair value of the Company’s Level 3 financial instruments that are measured
at fair value:
Schedule of fair value financial instruments | |
| | |
Fair value as
of December 31, 2021 - private placement warrants | |
$ | 4,499,287 | |
Change
in fair value | |
| (1,529,757 | ) |
Fair value as of March 31,
2022 - private placement warrants | |
| 2,969,530 | |
Change
in fair value | |
| (1,079,829 | ) |
Fair value as of June 30,
2022 - private placement warrants | |
| 1,889,701 | |
Change
in fair value | |
| (1,079,829 | ) |
Fair
value as of September 30, 2022 - private placement warrants | |
$ | 809,872 | |
The
Company recognized gains in connection with changes in the fair value of the Public Warrants and Private Placement Warrants of
$2,279,544 and $7,788,441, respectively, in the condensed Statements of Operations for the three and nine months ended September 30,
2022.
NOTE
10. SUBSEQUENT EVENTS
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial
statements were issued. Based upon this review, other than noted below, the Company did not identify any subsequent events that would have required adjustment
or disclosure in the financial statements.
On October 14, 2022, BofA Securities, Inc.,
one of the underwriters, waived the remaining underwriting fee outstanding of $2,099,501
in full (Note 6).