☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
________ to _______
Cayman Islands | 001-39865 | 98-1574497 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) |
Albany Financial Center, South Ocean Blvd, Suite #507, P.O. Box SP-63158, New Providence, Nassau, The Bahamas | n/a | |
(Address Of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
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Item 2. | ||||||
Item 3. | ||||||
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Item | 23 | |||||
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Item 1. | 24 | |||||
Item 1A. | 24 | |||||
Item 2. | 24 | |||||
Item 3. | 25 | |||||
Item | 25 | |||||
Item | 25 | |||||
Item | 25 | |||||
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March 31, 2021 | December 31, 2020 | |||||||
(Unaudited) | ||||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash | $ | 723,611 | $ | — | ||||
Prepaid expenses | 808,616 | 16,771 | ||||||
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Total current assets | 1,532,227 | 16,771 | ||||||
Investments held in Trust Account | 375,004,727 | — | ||||||
Deferred offering costs associated with the initial public offering | — | 381,478 | ||||||
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Total Assets | $ | 376,536,954 | $ | 398,249 | ||||
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Liabilities and Shareholders’ Equity (Deficit): | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 70,006 | $ | — | ||||
Accounts payable - related party | 26,452 | — | ||||||
Accrued expenses | 99,500 | 245,000 | ||||||
Note payable - related party | — | 162,127 | ||||||
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Total current liabilities | 195,958 | 407,127 | ||||||
Deferred underwriting commissions | 13,125,000 | — | ||||||
Warrant liabilities | 12,031,250 | — | ||||||
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Total liabilities | 25,352,208 | 407,127 | ||||||
Commitments and Contingencies (Note 6) | ||||||||
Class A ordinary shares, $0.0001 par value; 34,618,474 shares subject to possible redemption at $10.00 per share as of March 31, 2021 | 346,184,740 | — | ||||||
Shareholders’ Equity (Deficit): | ||||||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 2,881,526 shares issued and outstanding (excluding 34,618,474 shares subject to possible redemption) as of March 31, 2021 | 288 | — | ||||||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 9,375,000 and 10,062,500 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively (1) | 937 | 1,006 | ||||||
Additional paid-in capital | 5,361,604 | 23,994 | ||||||
Accumulated deficit | (362,823 | ) | (33,878 | ) | ||||
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Total shareholders’ equity (deficit) | 5,000,006 | (8,878 | ) | |||||
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Total Liabilities and Shareholders’ Equity (Deficit) | $ | 376,536,954 | $ | 398,249 | ||||
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September 30, 2021 | December 31, 2020 | |||||||
(Unaudited) | ||||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash | $ | 447,622 | $ | — | ||||
Prepaid expenses | 566,604 | 16,771 | ||||||
Total current assets | 1,014,226 | 16,771 | ||||||
Investments held in Trust Account | 375,023,633 | — | ||||||
Deferred offering costs associated with the initial public offering | — | 381,478 | ||||||
Total Assets | $ | 376,037,859 | $ | 398,249 | ||||
Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 74,716 | $ | — | ||||
Accounts payable - related party | 23,345 | — | ||||||
Accrued expenses | 128,500 | 245,000 | ||||||
Note payable - related party | — | 162,127 | ||||||
Total current liabilities | 226,561 | 407,127 | ||||||
Deferred underwriting commissions | 13,125,000 | — | ||||||
Warrant liabilities | 10,266,667 | — | ||||||
Total liabilities | 23,618,228 | 407,127 | ||||||
Commitments and Contingencies (Note 6) | 0 | 0 | ||||||
Class A ordinary shares subject to possible redemption, $0.0001 par value; 37,500,000 and 0 shares at $10.00 per share as of September 30, 2021 and December 31, 2020, respectively | 375,000,000 | — | ||||||
Shareholders’ Deficit: | ||||||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; NaN issued and outstanding | 0— | — | ||||||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized ; 0 non-redeemable shares issued or outstanding | 0 | — | ||||||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 9,375,000 and 10,062,500 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively (1) | 937 | 1,006 | ||||||
Additional paid-in capital | 0 | 23,994 | ||||||
Accumulated deficit | (22,581,306 | ) | (33,878 | ) | ||||
Total shareholders’ deficit | (22,580,369 | ) | (8,878 | ) | ||||
Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | $ | 376,037,859 | $ | 398,249 | ||||
(1) | As of December 31, 2020, included up to 1,312,500 Class B ordinary shares subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters. On January 12, 2021, the underwriters partially exercised the over-allotment option; thus, 687,500 shares were forfeited. |
For the Three Months Ended March 31, 2021 | ||||
Operating expenses | ||||
General and administrative expenses | $ | 429,621 | ||
Administrative fee - related party | 26,452 | |||
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Loss from Operations | (456,073 | ) | ||
Change in fair value of warrant liabilities | 547,917 | |||
Offering costs associated with issuance of warrants | (425,516 | ) | ||
Net gain from investments held in Trust Account | 4,727 | |||
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Net loss | $ | (328,945 | ) | |
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Weighted average shares outstanding of Class A ordinary shares, basic and diluted | 37,500,000 | |||
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Basic and diluted net income per share, Class A ordinary shares | $ | 0.00 | ||
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Weighted average shares outstanding of Class B ordinary shares, basic and diluted | 9,298,611 | |||
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Basic and diluted net loss per share, Class B ordinary shares | $ | (0.04 | ) | |
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For the Period from | ||||||||||||
For the Three Months Ended | For the Nine Months Ended | September 1, 2020 (Inception) | ||||||||||
September 30, 2021 | September 30, 2021 | through September 30, 2020 | ||||||||||
Operating expenses | ||||||||||||
General and administrative expenses | $ | 276,638 | $ | 905,085 | $ | 11,885 | ||||||
General and administrative expenses - related party | 43,345 | 99,592 | — | |||||||||
Loss from operations | (319,983 | ) | (1,004,677 | ) | (11,885 | ) | ||||||
Other income (expenses): | ||||||||||||
Change in fair value of warrant liabilities | 5,293,750 | 2,312,500 | — | |||||||||
Offering costs associated with issuance of warrants | 0 | (425,516 | ) | — | ||||||||
Net gain from investments held in Trust Account | 9,454 | 23,633 | — | |||||||||
Net income (loss) | $ | 4,983,221 | $ | 905,940 | $ | (11,885 | ) | |||||
Weighted average shares outstanding of Class A ordinary shares, basic and diluted | 37,500,000 | 35,989,011 | — | |||||||||
Basic and diluted net income per share, Class A ordinary shares | $ | 0.11 | $ | 0.02 | $ | — | ||||||
Weighted average shares outstanding of Class B ordinary shares, basic | 9,375,000 | 9,349,817 | 8,750,000 | |||||||||
Weighted average shares outstanding of Class B ordinary shares, diluted | 9,375,000 | 9,375,000 | — | |||||||||
Basic and diluted net income (loss) per share, Class B ordinary shares | $ | 0.11 | $ | 0.02 | $ | (0.00 | ) | |||||
Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
Class A | Class B | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares (1) | Amount | Capital | Deficit | Equity (Deficit) | ||||||||||||||||||||||
Balance - December 31, 2020 | — | $ | — | 10,062,500 | $ | 1,006 | $ | 23,994 | $ | (33,878 | ) | $ | (8,878 | ) | ||||||||||||||
Sale of units in initial public offering, less fair value of warrant liabilities for public warrants | 37,500,000 | 3,750 | — | — | 367,683,750 | — | 367,687,500 | |||||||||||||||||||||
Offering costs | — | — | — | — | (20,898,264 | ) | — | (20,898,264 | ) | |||||||||||||||||||
Excess cash received over the fair value of the private warrants | — | — | — | — | 4,733,333 | — | 4,733,333 | |||||||||||||||||||||
Class B ordinary shares forfeited | — | — | (687,500 | ) | (69 | ) | 69 | — | — | |||||||||||||||||||
Class A ordinary shares subject to possible redemption | (34,618,474 | ) | (3,462 | ) | — | — | (346,181,278 | ) | — | (346,184,740 | ) | |||||||||||||||||
Net loss | — | — | — | — | — | (328,945 | ) | (328,945 | ) | |||||||||||||||||||
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Balance - March 31, 2021 (unaudited) | 2,881,526 | $ | 288 | 9,375,000 | $ | 937 | $ | 5,361,604 | $ | (362,823 | ) | $ | 5,000,006 | |||||||||||||||
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Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
Class A | Class B | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares (1) | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance - December 31, 2020 | 0 | $ | 0 | 10,062,500 | $ | 1,006 | $ | 23,994 | $ | (33,878 | ) | $ | (8,878 | ) | ||||||||||||||
Excess cash received over the fair value of the private warrants | — | — | — | — | 4,733,333 | — | 4,733,333 | |||||||||||||||||||||
Class B ordinary shares forfeited | — | — | (687,500 | ) | (69 | ) | 69 | — | — | |||||||||||||||||||
Accretion on Class A ordinary shares subject to possible redemption amount | — | — | — | — | (4,757,396 | ) | (23,453,368 | ) | (28,210,764 | ) | ||||||||||||||||||
Net loss | — | — | — | — | — | (328,945 | ) | (328,945 | ) | |||||||||||||||||||
Balance - March 31, 2021 (unaudited) | 0 | 0 | 9,375,000 | 937 | 0 | (23,816,191 | ) | (23,815,254 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (3,748,336 | ) | (3,748,336 | ) | |||||||||||||||||||
Balance - June 30, 2021 (unaudited) | 0 | 0 | 9,375,000 | 937 | 0 | (27,564,527 | ) | (27,563,590 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | 4,983,221 | 4,983,221 | |||||||||||||||||||||
Balance - September 30, 2021 (unaudited) | 0 | $ | 0 | 9,375,000 | $ | 937 | $ | 0 | $ | (22,581,306 | ) | $ | (22,580,369 | ) | ||||||||||||||
Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
Class A | Class B | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares (1) | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
Balance - September 1, 2020 (inception) | 0 | $ | 0 | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
Issuance of Class B ordinary shares to Sponsor | — | — | 10,062,500 | 1,006 | 23,994 | — | 25,000 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (11,885 | ) | (11,885 | ) | |||||||||||||||||||
�� | ||||||||||||||||||||||||||||
Balance - September 30, 2020 (unaudited) | 0 | $ | 0 | 10,062,500 | $ | 1,006 | $ | 23,994 | $ | (11,885 | ) | $ | 13,115 | |||||||||||||||
(1) | As of September 30, 2020 and December 31, 2020, included up to 1,312,500 Class B ordinary shares subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters. On January 12, 2021, the underwriters partially exercised the over-allotment option; thus, 687,500 shares were forfeited. |
For the Three Months Ended | ||||
March 31, 2021 | ||||
Cash Flows from Operating Activities: | ||||
Net loss | $ | (328,945 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Change in fair value of warrant liabilities | (547,917 | ) | ||
Offering costs associated with issuance of warrants | 425,516 | |||
Net gain from investments held in Trust Account | (4,727 | ) | ||
Change in operating assets: | ||||
Prepaid expenses | (791,845 | ) | ||
Accounts payable | 70,006 | |||
Accounts payable - related party | 26,452 | |||
Accrued expenses | 14,500 | |||
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Net cash used in operating activities | (1,136,960 | ) | ||
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Cash Flows from Investing Activities: | ||||
Cash deposited in Trust Account | (375,000,000 | ) | ||
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Net cash used in investing activities | (375,000,000 | ) | ||
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Cash Flows from Financing Activities: | ||||
Proceeds from note payable to related party | 6,604 | |||
Repayment of note payable to related party | (168,731 | ) | ||
Proceeds received from initial public offering, gross | 375,000,000 | |||
Proceeds received from private placement | 10,000,000 | |||
Offering costs paid | (7,977,302 | ) | ||
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Net cash provided by financing activities | 376,860,571 | |||
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Net change in cash | 723,611 | |||
Cash - beginning of the period | — | |||
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Cash - end of the period | $ | 723,611 | ||
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Supplemental disclosure of noncash activities: | ||||
Offering costs included in accrued expenses | $ | 85,000 | ||
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Deferred underwriting commissions | $ | 13,125,000 | ||
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Forfeiture of Class B ordinary shares | $ | 69 | ||
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Initial value of Class A ordinary shares subject to possible redemption | $ | 346,074,800 | ||
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Change in value of Class A ordinary shares subject to possible redemption | $ | 109,940 | ||
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For the Period from | ||||||||
For the Nine Months Ended | September 1, 2020 (Inception) | |||||||
September 30, 2021 | through September 30, 2020 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | 905,940 | $ | (11,885 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Change in fair value of warrant liabilities | (2,312,500 | ) | — | |||||
Offering costs associated with issuance of warrants | 425,516 | — | ||||||
Net gain from investments held in Trust Account | (23,633 | ) | — | |||||
Change in operating assets: | ||||||||
Prepaid expenses | (549,833 | ) | (13,115 | ) | ||||
Accounts payable | 74,716 | — | ||||||
Accounts payable - related party | 23,345 | — | ||||||
Accrued expenses | 43,500 | — | ||||||
Net cash used in operating activities | (1,412,949 | ) | (25,000 | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Cash deposited in Trust Account | (375,000,000 | ) | — | |||||
Net cash used in investing activities | (375,000,000 | ) | — | |||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from note payable to related party | 6,604 | — | ||||||
Repayment of note payable to related party | (168,731 | ) | — | |||||
Proceeds received from initial public offering, gross | 375,000,000 | — | ||||||
Proceeds received from private placement | 10,000,000 | — | ||||||
Offering costs paid | (7,977,302 | ) | 25,000 | |||||
Net cash provided by financing activities | 376,860,571 | 25,000 | ||||||
Net change in cash | 447,622 | — | ||||||
Cash - beginning of the period | 0 | — | ||||||
Cash - end of the period | $ | 447,622 | $ | — | ||||
Supplemental disclosure of noncash activities: | ||||||||
Offering costs included in accrued expenses | $ | 85,000 | $ | 175,000 | ||||
Offering costs included in accounts payable | $ | — | $ | 8,000 | ||||
Offering costs included in note payable | $ | — | $ | 23,690 | ||||
Deferred underwriting commissions | $ | 13,125,000 | $ | — | ||||
Forfeiture of Class B ordinary shares | $ | 69 | $ | — | ||||
$788,000.
2020.
As
not reasonably expected to require the use of current assets or require the creation of current liabilities.
current assets or require the creation of current liabilities.
months
The Company’s unaudited condensed statement of operations includes As a presentation of income (loss)result, diluted net loss per ordinary shares subject to redemption in a manner similar toshare is the two-class method of income (loss)same as basic net loss per share. Net income per ordinary share basicfor the three and diluted fornine months ended September 30, 2021. Accretion associated with the redeemable Class A ordinary shares is calculated by dividingexcluded from earnings per share as the investment income earned onredemption value approximates fair value.
For the Three Months Ended September 30, 2021 | For the Nine Months Ended September 30, 2021 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income - basic | $ | 3,986,577 | $ | 996,644 | $ | 719,116 | $ | 186,824 | ||||||||
Allocation of net income - diluted | $ | 3,986,577 | $ | 996,644 | $ | 718,717 | $ | 187,223 | ||||||||
Denominator: | ||||||||||||||||
Weighted average ordinary shares outstanding, basic | 37,500,000 | 9,375,000 | 35,989,011 | 9,349,817 | ||||||||||||
Weighted average ordinary shares outstanding, diluted | 37,500,000 | 9,375,000 | 35,989,011 | 9,375,000 | ||||||||||||
Basic net income per ordinary share | $ | 0.11 | $ | 0.11 | $ | 0.02 | $ | 0.02 | ||||||||
Diluted net income per ordinary share | $ | 0.11 | $ | 0.11 | $ | 0.02 | $ | 0.02 | ||||||||
Pronouncements
Recent Issued Accounting Standards
$
Subsequent to the repayment, the facility was no longer available to the Company.
sheet.
-Warrants
Gross proceeds received from Initial Public Offering | $ | 375,000,000 | ||
Less: | ||||
Fair value of Public Warrants at issuance | (7,312,500 | ) | ||
Offering costs allocated to Class A ordinary shares | (20,898,264 | ) | ||
Plus: | ||||
Accretion on Class A ordinary shares to redemption value | 28,210,764 | |||
Class A ordinary shares subject to possible redemption | $ | 375,000,000 | ||
(see Note 8).
Fair Value Measured as of March 31, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Investments held in Trust Account - U.S. Treasury Securities | $ | 375,004,727 | $ | — | $ | — | $ | 375,004,727 | ||||||||
Liabilities: | ||||||||||||||||
Warrant liabilities - public warrants | 7,031,250 | — | 7,031,250 | |||||||||||||
Warrant liabilities - private warrants | — | — | 5,000,000 | 5,000,000 | ||||||||||||
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Fair Value Measured as of September 30, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Investments held in Trust Account - U.S. Treasury Securities | $ | 375,023,633 | $ | — | $ | — | $ | 375,023,633 | ||||||||
Liabilities: | ||||||||||||||||
Warrant liabilities - public warrants | $ | 6,000,000 | $ | — | $ | — | $ | 6,000,000 | ||||||||
Warrant liabilities - private warrants | $ | — | $ | — | $ | 4,266,667 | $ | 4,266,667 |
The Company utilizes a binomial Monte-Carlo simulation to estimatetraded in March 2021.
Warrant liabilities at January 1, 2021 | $ | — | ||
Issuance of Public and Private Warrants | 12,579,167 | |||
Public Warrants transfer to Level 1 | (7,312,500 | ) | ||
Change in fair value of warrant liabilibites | (266,667 | ) | ||
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Warrant liabilities at March 31, 2021 | $ | 5,000,000 | ||
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Warrant liabilities at January 1, 2021 | $ | 0 | ||
Issuance of Public and Private Warrants | 12,579,167 | |||
Public Warrants transferred to Level 1 | (7,312,500 | ) | ||
Change in fair value of warrant liabilities | (266,667 | ) | ||
Warrant liabilities at March 31, 2021 | 5,000,000 | |||
Change in fair value of warrant liabilities | 1,466,667 | |||
Warrant liabilities at June 30, 2021 | 6,466,667 | |||
Change in fair value of warrant liabilities | (2,200,000 | ) | ||
Warrant liabilities at September 30, 2021 | $ | 4,266,667 | ||
Any changes in these assumptions can change the valuation significantly.
March 31, 2021 | January 12, 2021 | |||||||
Exercise price | $ | 11.50 | $ | 11.50 | ||||
Stock Price | $ | 9.72 | $ | 9.80 | ||||
Term (in years) | 5.76 | 5.97 | ||||||
Volatility | 13.50 | % | 14.20 | % | ||||
Risk-free interest rate | 1.10 | % | 0.66 | % | ||||
Dividend yield | — | — |
Note 10 — Revision to Prior Period Financial Statements
During the course of preparing the quarterly report on Form 10-Q for the three-month period ended March 31, 2021, the Company identified a misapplication of accounting guidance related to the Company’s warrants in the Company’s previously issued audited balance sheet dated January 12, 2021, filed on Form 8-K on January 19, 2021 (the “Post-IPO Balance Sheet”).
On April 12, 2021, the staff of the Securities and Exchange Commission (the “SEC Staff”) issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Staff Statement”). In the SEC Staff Statement, the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheets as opposed to equity. Since their issuance on January 12, 2021, the Company’s warrants have been accounted for as equity within the Company’s previously reported balance sheet. After discussion and evaluation, including with the Company’s independent registered public accounting firm and the Company’s audit committee, management concluded that the warrants should be presented as liabilities with subsequent fair value remeasurement.
The warrants were reflected as a component of equity in the Post-IPO Balance Sheet as opposed to liabilities on the balance sheets, based on the Company’s application of FASB ASC Topic 815-40,Derivatives and Hedging, Contracts in Entity’s Own Equity (“ASC 815-40). The views expressed in the SEC Staff Statement were not consistent with the Company’s historical interpretation of the specific provisions within its warrant agreement and the Company’s application of ASC 815-40 to the warrant agreement. The Company reassessed its accounting for Warrants issued on January 12, 2021, in light of the SEC Staff’s published views. Based on this reassessment, management determined that the warrants should be classified as liabilities measured at fair value upon issuance, with subsequent changes in fair value reported in the Company Statement of Operations each reporting period.
The Company concluded that the misstatement was not material to the Post-IPO Balance Sheet and the misstatement had no material impact to any prior interim period. The effect of the revisions to the Post-IPO Balance Sheet is as follows:
As of January 12, 2021 | ||||||||||||
As Previously | Restatement | |||||||||||
Reported | Adjustment | As Restated | ||||||||||
Balance Sheet | ||||||||||||
Total assets | $ | 377,545,296 | $ | — | $ | 377,545,296 | ||||||
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Liabilities and shareholders’ equity | ||||||||||||
Total current liabilities | $ | 766,319 | $ | — | $ | 766,319 | ||||||
Deferred underwriting commissions | 13,125,000 | — | 13,125,000 | |||||||||
Warrant liabilities | — | 12,579,167 | 12,579,167 | |||||||||
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Total liabilities | 13,891,319 | 12,579,167 | 26,470,486 | |||||||||
Class A ordinary shares, $0.001 par value; shares subject to possible redemption | 358,653,970 | (12,579,170 | ) | 346,074,800 | ||||||||
Shareholders’ equity | ||||||||||||
Preference shares - $0.0001 par value | — | — | — | |||||||||
Class A ordinary shares - $0.001 par value | 164 | 126 | 290 | |||||||||
Class B ordinary shares - $0.001 par value | 1,006 | — | 1,006 | |||||||||
Additional paid-in-capital | 5,046,081 | 425,393 | 5,471,474 | |||||||||
Accumulated deficit | (47,244 | ) | (425,516 | ) | (472,760 | ) | ||||||
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Total shareholders’ equity | 5,000,007 | 3 | 5,000,010 | |||||||||
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Total liabilities and shareholders’ equity | $ | 377,545,296 | $ | — | $ | 377,545,296 | ||||||
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September 30, 2021 | January 12, 2021 | |||||||
Exercise price | $ | 11.50 | $ | 11.50 | ||||
Stock Price | $ | 9.74 | $ | 9.80 | ||||
Term (in years) | 5.50 | 5.97 | ||||||
Volatility | 11.50 | % | 14.20 | % | ||||
Risk-free interest rate | 1.06 | % | 0.66 | % | ||||
Dividend yield | 0 | 0 |
Management has
$788,000.
sheet.
Our unaudited condensed statement of operations includes As a presentation of income (loss)result, diluted net loss per ordinary shares subject to redemption in a manner similar toshare is the two-class method of income (loss)same as basic net loss per share. Net income per ordinary share basicfor the three and diluted fornine months ended September 30, 2021. Accretion associated with the redeemable Class A ordinary shares is calculated by dividingexcluded from earnings per share as the investment income earned on the Trust Account of approximately $5,000 by the weighted average number of Class A ordinary shares outstanding for the three months ended March 31, 2021. Net loss per ordinary share, basic and diluted for Class B ordinary shares is calculated by dividing the net loss of approximately $329,000 for the three months ended March 31, 2021, less income attributable to Class A ordinary shares of approximately $5,000, by the weighted average number of Class B ordinary shares outstanding.
redemption value approximates fair value.
Warrant Liabilities
The determination of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as
Pronouncements
Recent Issued Accounting Standards
We have not engaged in any hedging activities since our inception and we do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.
On April 12, 2021, the staff at the Securities and Exchange Commission (the “SEC staff”) issued a statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) (the “SEC Statement”). In the SEC Statement, the SEC staff noted that certain provisions in the typical SPAC warrant agreement may require that the warrants be classified as a liability measured at fair value, with changes in fair value reported each period in earnings, as compared to the historical treatment of the warrants as equity, which has been the practice of most SPACs, including us. We had previously classified our private placement warrants and public warrants as equity (for a full description of our private placement warrants and public warrants, refer to the registration statement on Form S-1 (File No. 333- 249676), filed in connection with the Company’s initial public offering, declared effective by the SEC on October 26, 2020).After considering the SEC Statement, we concluded that there were misstatements in the January 12, 2021 audited closing balance sheet we filed with the SEC on Form 8-K on January 19, 2021. Based on the guidance in Accounting Standards Codification (“ASC”) 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity”, we concluded that provisions in the warrant agreement preclude 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 should have been recorded as derivative liabilities on the balance sheet and measured at fair value at inception 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. Further, ASC 815 requires that upfront costs and fees related to items for which the fair value option is elected (our warrant liabilities) should have been recognized as expense as incurred.
We have corrected the accounting for the warrants in this Quarterly Report on Form 10-Q. The effect of the restatement on specific line items in our January 12, 2021 audited closing date balance sheet can be found in Note 10 of the Notes to unaudited condensed financial statements.
In connection
officer, to allow timely decisions regarding required disclosure.
Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.
On April 12, 2021, the SEC Staff issued the SEC Statement, wherein the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to being treated as equity. Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement governing our warrants. As a result of the SEC Statement, we reevaluated the accounting treatment of our warrants, and pursuant to the guidance in ASC 815, Derivatives and Hedging, determined the warrants should be classified as derivative liabilities measured at fair value on our balance sheet, with any changes in fair value to be reported each period in earnings on our statement of operations.
As a result of the recurring fair value measurement, our financial statements may fluctuate quarterly, based on factors which are outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants each reporting period and that the amount of such gains or losses could be material.
We have identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As described elsewhere in this Quarterly Report, we identified a material weakness in our internal control over financial reporting related to the accounting for the warrants we issued in connection with our Initial Public Offering and private placement in January 2021. As a result of this material weakness, our management concluded that our disclosure controls and procedures were not effective as of March 31, 2021. This material weakness resulted in a misstatement of our warrant liabilities, additional paid-in capital and accumulated deficit in our previously issued audited balance sheet dated January 12, 2021, filed on a Current Report on Form 8-K on January 19, 2021.
Any failure to maintain effective internal control over financial reporting or disclosure controls and procedures could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our ordinary shares are listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
We may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.
We identified a material weakness in our internal controls over financial reporting. As a result of such material weakness, the change in accounting for our warrants, and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the material weaknesses in our internal control over financial reporting and the preparation of our financial statements. As of the date of this Quarterly Report, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability to complete a business combination.
* | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
Dated: | LEO HOLDINGS CORP. II | |||||
By: | /s/ Lyndon Lea | |||||
Name: | Lyndon Lea | |||||
Title: | President and Chief Executive Officer (Principal Executive |
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