NOBLE ROCK ACQUISITION
CORPORATION
CONDENSED BALANCE
SHEETS
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
Assets
|
|
(unaudited)
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
1,489,423
|
|
|
$
|
-
|
|
Prepaid expenses
|
|
|
587,619
|
|
|
|
6,759
|
|
Total current assets
|
|
|
2,077,042
|
|
|
|
6,759
|
|
Deferred offering costs
|
|
|
-
|
|
|
|
423,000
|
|
Investments held in Trust Account
|
|
|
241,509,027
|
|
|
|
-
|
|
Total Assets
|
|
$
|
243,586,069
|
|
|
$
|
429,759
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
52,889
|
|
|
$
|
15,000
|
|
Accrued expenses
|
|
|
152,000
|
|
|
|
262,300
|
|
Note payable - related party
|
|
|
-
|
|
|
|
45,000
|
|
Total current liabilities
|
|
|
204,889
|
|
|
|
322,300
|
|
Deferred legal fees
|
|
|
320,000
|
|
|
|
113,000
|
|
Deferred underwriting commissions
|
|
|
9,056,250
|
|
|
|
-
|
|
Derivative warrant liabilities
|
|
|
15,348,250
|
|
|
|
-
|
|
Total liabilities
|
|
|
24,929,389
|
|
|
|
435,300
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary shares, $0.0001 par value; 21,365,667 shares subject to possible redemption at $10.00 per share
|
|
|
213,656,670
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity
|
|
|
|
|
|
|
|
|
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; 2,784,333 shares issued and outstanding (excluding 21,365,667 shares subject to possible redemption)
|
|
|
278
|
|
|
|
-
|
|
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 6,037,500 shares issued and outstanding
|
|
|
604
|
|
|
|
604
|
|
Additional paid-in capital
|
|
|
2,829,950
|
|
|
|
24,396
|
|
Retained Earnings (Accumulated Deficit)
|
|
|
2,169,178
|
|
|
|
(30,541
|
)
|
Total Shareholders’ Equity
|
|
|
5,000,010
|
|
|
|
(5,541
|
)
|
Total Liabilities and Shareholders’ Equity
|
|
$
|
243,586,069
|
|
|
$
|
429,759
|
|
The accompanying notes
are an integral part of these unaudited condensed financial statements.
NOBLE ROCK ACQUISITION
CORPORATION
UNAUDITED CONDENSED
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS
ENDED MARCH 31, 2021
General and administrative expenses
|
|
$
|
212,125
|
|
Loss from operations
|
|
|
(212,125
|
)
|
Other income (expenses)
|
|
|
|
|
Change in fair value of derivative warrant liabilities
|
|
|
3,172,140
|
|
Financing costs - derivative warrant liabilities
|
|
|
(769,323
|
)
|
Income from investments held in Trust Account
|
|
|
9,027
|
|
Net income
|
|
$
|
2,199,719
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A ordinary shares subject to possible redemption, basic and diluted
|
|
|
21,071,303
|
|
Basic and diluted net loss per share, Class A ordinary shares subject to possible redemption
|
|
$
|
0.00
|
|
Weighted average shares outstanding of non-redeemable ordinary shares, basic and diluted
|
|
|
7,655,634
|
|
Basic and diluted net loss per share, non-redeemable ordinary shares
|
|
$
|
0.29
|
|
The accompanying notes
are an integral part of these unaudited condensed financial statements.
NOBLE ROCK ACQUISITION
CORPORATION
CONDENSED STATEMENT
OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE THREE MONTHS
ENDED MARCH 31, 2021
|
|
Ordinary Shares
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Shareholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance - December 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
6,037,500
|
|
|
$
|
604
|
|
|
$
|
24,396
|
|
|
$
|
(30,541
|
)
|
|
$
|
(5,541
|
)
|
Sale of units in initial public offering, less fair value of public warrants
|
|
|
24,150,000
|
|
|
|
2,415
|
|
|
|
-
|
|
|
|
-
|
|
|
|
229,722,045
|
|
|
|
-
|
|
|
|
229,724,460
|
|
Offering costs, net of reimbursement from underwriters
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,347,104
|
)
|
|
|
-
|
|
|
|
(13,347,104
|
)
|
Excess of cash received over fair value of private placement warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85,146
|
|
|
|
-
|
|
|
|
85,146
|
|
Shares subject to possible redemption
|
|
|
(21,365,667
|
)
|
|
|
(2,137
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(213,654,533
|
)
|
|
|
-
|
|
|
|
(213,656,670
|
)
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,199,719
|
|
|
|
2,199,719
|
|
Balance - March 31, 2021 (unaudited)
|
|
|
2,784,333
|
|
|
$
|
278
|
|
|
|
6,037,500
|
|
|
$
|
604
|
|
|
$
|
2,829,950
|
|
|
$
|
2,169,178
|
|
|
$
|
5,000,010
|
|
The accompanying notes
are an integral part of these unaudited condensed financial statements.
NOBLE ROCK ACQUISITION
CORPORATION
UNAUDITED CONDENSED
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS
ENDED MARCH 31, 2021
Cash Flows from Operating Activities:
|
|
|
|
Net income
|
|
$
|
2,199,719
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
Income from investments held in Trust Account
|
|
|
(9,027
|
)
|
Change in fair value of derivative warrant liabilities
|
|
|
(3,172,140
|
)
|
Financing costs - derivative warrant liabilities
|
|
|
769,323
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
Prepaid expenses
|
|
|
(580,860
|
)
|
Accounts payable
|
|
|
37,889
|
|
Accrued expenses
|
|
|
44,700
|
|
Net cash used in operating activities
|
|
|
(710,396
|
)
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
Cash deposited in Trust Account
|
|
|
(241,500,000
|
)
|
Net cash used in investing activities
|
|
|
(241,500,000
|
)
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
Proceeds from note payable related party
|
|
|
150,000
|
|
Repayment of note payable to related party
|
|
|
(195,000
|
)
|
Proceeds received from initial public offering, gross
|
|
|
241,500,000
|
|
Proceeds received from private placement
|
|
|
6,830,000
|
|
Reimbursement from underwriter
|
|
|
603,750
|
|
Offering costs paid
|
|
|
(5,188,931
|
)
|
Net cash provided by financing activities
|
|
|
243,699,819
|
|
|
|
|
|
|
Net increase in cash
|
|
|
1,489,423
|
|
|
|
|
|
|
Cash - beginning of the period
|
|
|
-
|
|
Cash - end of the period
|
|
$
|
1,489,423
|
|
|
|
|
|
|
Supplemental disclosure of noncash investing and financing activities:
|
|
|
|
|
Offering costs included in accrued expenses
|
|
$
|
95,000
|
|
Offering costs included in deferred legal fees
|
|
$
|
320,000
|
|
Reversal of accrued offering costs
|
|
$
|
(250,000
|
)
|
Deferred underwriting commissions
|
|
$
|
9,056,250
|
|
Initial value of Class A ordinary shares subject to possible redemption
|
|
$
|
210,659,510
|
|
Change in value of Class A ordinary shares subject to possible redemption
|
|
$
|
2,997,160
|
|
The accompanying notes
are an integral part of these unaudited condensed financial statements.
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
Noble Rock Acquisition Corporation (the “Company”)
is a blank check company incorporated as a Cayman Islands exempted company on November 4, 2020. The Company was incorporated for
the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination
with one or more businesses that the Company has not yet identified (“Business Combination”). The Company is not limited
to a particular industry or sector for purposes of consummating a Business Combination. The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, the Company is subject to all of the risks associated with
early stage and emerging growth companies.
As of March 31, 2021, the Company had not yet
commenced operations. All activity for the period from January 1, 2021 through March 31, 2021 relates to the Company’s formation
and the initial public offering (the “Initial Public Offering”), which is described below. The Company will not generate
any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating
income in the form of interest income on investments held in trust from the proceeds of its Initial Public Offering
The Company’s sponsor is Noble Rock Sponsor
LLC, a Cayman Island limited liability company (the “Sponsor”). The registration statement for the Company’s Initial
Public Offering was declared effective on February 1, 2021. On February 4, 2021, the Company consummated its Initial Public Offering
of 24,150,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the
“Public Shares”), which includes 3,150,000 additional Units to cover over-allotments (the “Over-Allotment Units”),
at $10.00 per Unit, generating gross proceeds of $241.5 million, and incurring offering costs of approximately $14.4 million. Of these
offering costs, approximately $9.1 million and approximately $320,000 was for deferred underwriting commissions and deferred legal fees,
respectively (Note 6).
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the private placement (“Private Placement”) of 4,553,334 warrants (each, a “Private
Placement Warrant” and collectively, the “Private Placement Warrants”), at a price of $1.50 per Private Placement Warrant
with the Sponsor, generating gross proceeds of approximately $6.8 million (Note 4).
Upon the closing of the Initial Public Offering
and the Private Placement, $241.5 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the
proceeds of the Private Placement were placed in a trust account (“Trust Account”) with Continental Stock Transfer &
Trust Company acting as trustee and invested in United States “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act of 1940, as amended, or the Investment Company Act, which invest only in direct U.S. government treasury
obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the
distribution of the Trust Account as described below.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of its Initial Public Offering and the sale of Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The Company’s
initial Business Combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of
the net assets held in the Trust Account (as defined below) (net of amounts disbursed to management for working capital purposes,
if permitted, and excluding the amount of any deferred underwriting fees and taxes payable on the income earned on the Trust Account) at
the time the Company signs a definitive agreement in connection with the initial Business Combination. However, the Company will only
complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities
of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act.
The Company will provide its holders of the Public
Shares (the “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, solely in its discretion. The Public Shareholders will be entitled to redeem their Public Shares
for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per share, plus any pro rata interest
earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The per-share amount
to be distributed to Public Shareholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions
the Company will pay to the underwriters (as discussed in Note 6). These Public Shares will be recorded at a redemption value and
classified as temporary equity upon the completion of the Initial Public Offering, in accordance with Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business
Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and a majority
of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and the Company does
not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to the amended and restated memorandum
and articles of association which will be adopted by the Company upon the consummation of the Initial Public Offering (the “Amended
and Restated Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities
and Exchange Commission (the “SEC”), and file tender offer documents with the SEC prior to completing a Business Combination.
If, however, a shareholder approval of the transactions is required by law, or the Company decides to obtain shareholder approval for
business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules
and not pursuant to the tender offer rules. Additionally, each Public Shareholder may elect to redeem their Public Shares irrespective
of whether they vote for or against the proposed transaction. If the Company seeks shareholder approval in connection with a Business
Combination, the holders of the Founder Shares prior to this Initial Public Offering (the “Initial Shareholders”) agreed
to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering
in favor of a Business Combination. In addition, the Initial Shareholders agreed to waive their redemption rights with respect to their
Founder Shares and Public Shares in connection with the completion of a Business Combination. In addition, the Company agreed not to
enter into a definitive agreement regarding an initial Business Combination without the prior consent of the Sponsor.
Notwithstanding the foregoing, 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% or more of the Class A ordinary shares sold in the Initial Public Offering, without the
prior consent of the Company.
The Company’s Sponsor, executive officers
and directors agreed not to propose an amendment to the Company’s Amended and Restated Memorandum and Articles of Association that
would affect the substance or timing of the Company’s obligation to provide for the redemption of its Public Shares in connection
with a Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the
Company provides the Public Shareholders with the opportunity to redeem their Class A ordinary shares in conjunction with any such
amendment.
If the Company is unable to complete a Business
Combination within 24 months from the closing of the Initial Public Offering, or February 4, 2023, (the “Combination Period”),
the Company will (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but
not more than 10 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 (less up to $100,000 of interest to pay dissolution expenses and which
interest shall be net of taxes payable), divided by the number of then issued and outstanding Public Shares, which redemption will completely
extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any);
and (3) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and
the 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.
In connection with the redemption of 100% of
the Company’s outstanding Public Shares for a portion of the funds held in the Trust Account, each holder will receive a full pro
rata portion of the amount then in the Trust Account, plus any pro rata interest earned on the funds held in the Trust Account and not
previously released to the Company to pay the Company’s taxes payable (less up to $100,000 of interest to pay dissolution expenses).
The Initial Shareholders agreed to waive their
liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination
Period. However, if the Initial Shareholders should acquire Public Shares in or after the Initial Public Offering, they will be entitled
to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination
within the Combination Period. The underwriters 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 in the Combination Period and, in
such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the
Company’s Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining
available for distribution (including Trust Account assets) will be only $10.00 per share initially held in the Trust Account. In order
to protect the amounts held in the Trust Account, the Sponsor agreed that it will be liable to the Company if and to the extent any claims
by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered
into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds
in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in
the trust account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value
of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target
business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable)
nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain
liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). 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 endeavoring to have vendors, service providers (except 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.
Liquidity and capital
resources
As of March 31, 2021,
the Company had approximately $1.5 million in its operating bank account and working capital of approximately $1.9 million.
The Company’s
liquidity needs to date have been satisfied through a payment of $25,000 from the Sponsor to cover for certain expenses in exchange for
the issuance of the Founder Shares (as defined in Note 5), the loan of $195,000 from the Sponsor pursuant to the Note (as defined in
Note 5), and the proceeds from the consummation of the Private Placement not held in the Trust Account. The Company repaid the Note in
full on February 5, 2021. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor
or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company
Working Capital Loans (as defined in Note 5). As of March 31, 2021, there were no amounts outstanding under any Working Capital Loan.
Based on the foregoing,
management believes that the Company will have sufficient working capital and borrowing capacity from the Sponsor or an affiliate of
the Sponsor, or certain of the Company’s officers and directors to meet its needs through the earlier of the consummation of a
Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts
payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target
businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and
consummating the Business Combination.
Risks and Uncertainties
Management continues to evaluate the impact
of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that 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 unaudited condensed financial statements. The unaudited condensed financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2. BASIS OF PRESENTATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited
condensed financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles
(“GAAP”) for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation
have been included. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2021 or any future period.
The accompanying unaudited condensed
financial statements should be read in conjunction with the audited financial statements in the Annual Form 10-K and notes thereto
included in the Form 8-K and the final prospectus filed by the Company with the SEC on February 10, 2021 and February 3, 2021,
respectively.
In April 2021, the Company
identified an error in its accounting treatment for both its public and private warrants (the “Warrants”) as presented in
its audited balance sheet as of February 4, 2021 included in its Current Report on Form 8-K. On April 12, 2021, the Acting Director of
the Division of Corporate Finance and Acting Chief Accountant of the Securities and Exchange Commission together issued a statement regarding
the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement
on Accounting and Reporting Considerations for Warrants Issued by Special Purposes Acquisition Companies” (the “SEC Staff Statement”).
As a result of the statements, the Company’s management reevaluated the accounting treatment of the Warrants and were reflected as a
component of equity as opposed to liabilities on the balance sheet. Pursuant to Accounting Standards Codification (“ASC”)
250, Accounting Changes and Error Corrections issued by the Financial Accounting Standards Board (“FASB”) and Staff Accounting
Bulletin 99, “Materiality”) (“SAB 99”) issued by the SEC, the Company determined the impact of the error was
immaterial. The impact of the error correction is reflected in the unaudited condensed financial statements contained herein which resulted
in a $18.5 million increase to the derivative warrant liabilities line item and offsetting decrease to the Class A ordinary shares subject
to possible redemption mezzanine equity line item recorded as part of the activity in the period from November 4, 2020 (inception) through
March 31, 2021 as reported herein. There would have been no change to total shareholders’ equity as reported.
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
auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, 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 an emerging growth 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 an 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 unaudited condensed financial statements with another public company that is neither an emerging growth company
nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
Use of estimates
The preparation of unaudited
condensed financial statements in conformity with 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 unaudited
condensed financial statements and the reported amounts of revenues and 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 unaudited condensed 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
significantly from those estimates.
Cash and cash equivalents
The company considers
all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. As of March 31, 2021
and December 31, 2020, the Company had no cash equivalents held outside the Trust Account.
Investments held
in Trust Account
The Company’s
portfolio of investments held in trust is comprised solely of U.S. government securities, within the meaning set forth in Section 2(a)(16)
of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government
securities, or a combination thereof. The Company’s investments held in the Trust Account are classified as trading securities.
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 these investments are included in interest income held in Trust Account in the accompanying statement of
operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
Concentration of
credit risk
Financial instruments
that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at
times, may exceed the Federal Depository Insurance Coverage limit of $250,000. At March 31, 2021, the Company has not experienced losses
on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial
Instruments
Fair value is defined
as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market
participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring
fair value.
The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
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Level 1, defined as observable inputs
such as quoted prices for identical instruments in active markets;
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●
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Level 2, defined as inputs other than
quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in
active markets or quoted prices for identical or similar instruments in markets that are not active; and
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●
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Level 3,
defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
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In some circumstances,
the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances,
the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant
to the fair value measurement.
As of March 31, 2021
and December 31, 2020, the carrying values of accounts payable, and accrued expenses approximate their fair values
due to the short-term nature of the instruments.
Derivative warrant liabilities
The Company does not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives,
pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded
as liabilities or as equity, is re-assessed at the end of each reporting period.
The 8,050,000 warrants issued in connection with
the Initial Public Offering (the “Public Warrants”) and the 4,553,334 Private Placement Warrants are recognized as derivative
liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and
adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date
until exercised, and any change in fair value is recognized in the Company’s statement of operations. The fair value of the Public
Warrants issued in connection with the Public Offering been measured at fair value using a Monte
Carlo simulation model. The fair value of the Private Placement Warrants have been measured at fair value using a Black Scholes model. (See Notes 4, 7 and 9).
Offering costs associated
with the Initial Public Offering
Offering costs consisted
of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the
Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based
on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed
as incurred, presented as non-operating expenses in the statement of operations. Offering costs associated with the Class A ordinary
shares were charged to shareholders’ equity upon the completion of the Initial Public Offering on February 4, 2021.
Class A ordinary
shares subject to possible redemption
The Company accounts
for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments
and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature
redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not
solely within the Company’s control) are classified as temporary equity. At all other times, Class A ordinary shares are classified
as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered
to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at March 31, 2021,
21,365,667 Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’
equity section of the Company’s unaudited condensed balance sheets.
Income taxes
ASC Topic 740 prescribes a recognition threshold
and a measurement attribute for the unaudited condensed financial statements recognition and measurement of tax positions taken or expected
to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon
examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s only major
tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There
were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 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.
There is currently no taxation imposed on income
by the Government of the Cayman Islands. In accordance with Cayman federal income tax regulations, income taxes are not levied on the
Company. Consequently, income taxes are not reflected in the Company’s unaudited condensed financial statements. The Company’s
management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Net Income per ordinary share
Net income per
ordinary share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the period.
The Company’s
unaudited condensed statement of operations includes a presentation of net income per ordinary share for ordinary shares subject
to possible redemption in a manner similar to the two-class method of loss per share. Net income per ordinary share, basic and
diluted, for Class A ordinary shares subject to possible redemption is calculated by dividing the proportionate share of income or loss
on investments held by the Trust Account, net of applicable franchise and income taxes, by the weighted average number of ordinary shares
subject to possible redemption outstanding for the period.
Net income per
share, basic and diluted, for non-redeemable ordinary share is calculated by dividing the net income, adjusted for income or loss on
investments attributable to ordinary shares subject to possible redemption, by the weighted average number of non-redeemable
ordinary shares outstanding for the period.
Non-redeemable ordinary
shares include founder shares and non-redeemable shares of Class A ordinary shares as these shares do not have any redemption features.
Non-redeemable ordinary shares participate in the income or loss on investments based on non-redeemable shares’ proportionate interest.
The following table
reflects the calculation of basic and diluted net income (loss) per ordinary share:
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|
FOR THE
THREE
MONTHS
ENDED
MARCH 31,
2021
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|
Class A Ordinary shares subject to possible redemption
|
|
|
|
Numerator: Earnings allocable to ordinary shares subject to possible redemption
|
|
|
|
Income from investments held in Trust Account
|
|
$
|
9,027
|
|
Less: Company’s portion available to be withdrawn to pay taxes
|
|
|
-
|
|
Net income attributable
|
|
$
|
9,027
|
|
Denominator: Weighted average Class A ordinary shares subject to possible redemption
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
|
21,071,303
|
|
Basic and diluted net income per share
|
|
$
|
0.00
|
|
|
|
|
|
|
Non-Redeemable Ordinary shares
|
|
|
|
|
Numerator: Net income minus Net Earnings
|
|
|
|
|
Net income
|
|
$
|
2,199,719
|
|
Less: Net income allocable to Class A Ordinary shares subject to possible redemption
|
|
|
(9,027
|
)
|
Non-redeemable net income
|
|
$
|
2,190,692
|
|
Denominator: weighted average Non-redeemable ordinary share
|
|
|
|
|
Basic and diluted weighted average shares outstanding, Non-redeemable ordinary share
|
|
|
7,655,634
|
|
Basic and diluted net income per share, Non-redeemable ordinary share
|
|
$
|
0.29
|
|
Recent accounting pronouncements
In August 2020, the
FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
(“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required
under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the
derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU
2020-06 on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash
flows.
The Company’s
management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have
a material effect on the accompanying financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
On February 4, 2021, the Company consummated
its Initial Public Offering of 24,150,000 Units, which includes 3,150,000 Over-Allotment Units, at $10.00 per Unit, generating gross
proceeds of $241.5 million, and incurring offering costs of approximately $14.4 million. Of these offering costs, approximately $9.1
million and approximately $320,000 was for deferred underwriting commissions and deferred legal fees, respectively.
Each Unit consists of one Class A ordinary
share and one-third of one redeemable warrant. Each whole Public Warrant will entitle the holder to purchase one Class A ordinary
share at an exercise price of $11.50 per share, subject to adjustment (see Note 7).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the Private Placement of 4,553,334 Private Placement Warrants, at a price of $1.50 per Private
Placement Warrant with the Sponsor, generating gross proceeds of approximately $6.8 million. On February 4, 2021, the day of issuance, the fair value of the Private Placement warrants was approximately $6.7 million compared to
the gross proceeds received of approximately $6.8 million, therefore, an excess of approximately $85,000 cash was received over the fair
value of the Private Placement warrants. The excess in cash received over the fair value of the Private Placement warrants is recorded
as additional paid in capital on the unaudited condensed statement of changes in shareholders' equity.
Each whole Private Placement Warrant is exercisable
for one whole share of Class A ordinary shares at a price of $11.50 per share. A portion of the proceeds from the sale of the Private
Placement Warrants to the Sponsor was added to the 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 Private Placement Warrants will expire worthless. The Private
Placement Warrants will be non-redeemable for cash and exercisable on a cashless basis so long as they are held by the Sponsor or
its permitted transferees.
The Sponsor and the Company’s officers
and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days
after the completion of the initial Business Combination.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On November 11,
2020, the initial shareholders paid an aggregate of $25,000 for certain expenses on behalf of the Company in exchange for issuance
of 5,750,000 Class B ordinary shares (the “Founder Shares”). On February 1, 2021, the Company declared a stock
dividend with respect to the Class B ordinary shares such that 0.05 Class B ordinary shares were issued for every one share of Class
B ordinary shares, resulting in an aggregate of 6,037,500 Class B ordinary shares outstanding. The initial shareholders agreed to forfeit
up to an aggregate of 787,500 Founder Shares, on a pro rata basis, to the extent that the option to purchase additional units was not
exercised in full by the underwriters, so that the Founder Shares would represent 20% of the Company’s issued and outstanding shares
after the Initial Public Offering. On February 4, 2021, the underwriter fully exercised its over-allotment option; thus, these 787,500
Founder Shares were no longer subject to forfeiture.
The Initial Shareholders agreed not to transfer,
assign or sell any of their Founder Shares until the earlier to occur of (A) one year after the completion of the initial Business
Combination or (ii) the date following the completion of the initial Business Combination on which the Company completes a liquidation,
merger, share exchange or other similar transaction that results in all of the shareholders having the right to exchange their ordinary
shares for cash, securities or other property. Notwithstanding the foregoing, if the closing price of Class A ordinary shares equals
or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like)
for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination,
the Founder Shares will be released from the lockup.
Related Party Loans
On November 11,
2020, the Sponsor agreed to loan the Company up to $300,000 to be used for the payment of costs related to the Initial Public
Offering pursuant to a promissory note (the “Note”). The Note was non-interest bearing, unsecured and due upon the closing
of the Initial Public Offering. As of February 4, 2021, the Company borrowed a total of $195,000 under the Note. The Company repaid the
Note in full on February 5, 2021.
In addition, in order to finance transaction
costs in connection with a Business Combination, the Sponsor, members of the Company’s founding team or any of their affiliates
may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes
a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company.
Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination
does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation
of a Business Combination, without interest, or, at the lenders’ discretion, up to $1.5 million of such Working Capital Loans
may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical
to the Private Placement Warrants. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined
and no written agreements exist with respect to such loans. As of March 31, 2021, the Company had no borrowings under the Working Capital
Loans.
Administrative Agreement
Commencing on the date that the Company’s
securities were first listed on Nasdaq through the earlier of consummation of the initial Business Combination and the liquidation, the
Company agreed to pay the Sponsor a total of $30,000 per month for office space, administrative, financial and support services.
In addition, the Sponsor, directors and officers,
or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities
on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations.
The Company’s audit committee will review on a quarterly basis all payments that were made by us to the Sponsor, directors, officers
or the Company’s or any of their affiliates.
NOTE 6. COMMITMENTS & CONTINGENCIES
Registration and Shareholder Rights
The holders of the Founder Shares, Private Placement
Warrants, and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon
the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of
the Founder Shares) were entitled to registration rights pursuant to a registration and shareholder rights agreement signed upon the
effective date of the Initial Public Offering. The holders of these securities were entitled to make up to three demands, excluding short
form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. The Company will
bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day option
from the date of this prospectus to purchase up to 3,150,000 additional Units at the Initial Public Offering price less the underwriting
discounts and commissions. On February 4, 2021, the underwriter fully exercised its over-allotment option.
The underwriters were entitled to an underwriting
discount of $0.20 per unit, or approximately $4.8 million in the aggregate, paid upon the closing of the Initial Public Offering.
In addition, $0.375 per unit, or approximately $9.1 million in the aggregate will be payable to the underwriters for deferred underwriting
commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event
that the Company completes a Business Combination, subject to the terms of the underwriting agreement. In addition, the underwriters
paid to the Company in an amount equal to 0.25% of the offering gross proceeds, or $603,750 in the aggregate to reimburse certain expenses
in connection with the Initial Public Offering.
Deferred Legal Fees
The Company engaged a legal counsel firm for
legal advisory services, and the legal counsel agreed to defer their fees in excess of $250,000 (“Deferred Legal Fees”).
The deferred fee will become payable in the event that the Company completes a Business Combination. As of March 31, 2021, the Company
recorded deferred legal fees of approximately $320,000 in connection with such services on the accompanying balance sheet.
NOTE 7. DERIVATIVE WARRANT LIABILITIES
As of March 31, 2021, the Company had 8,050,000
Public Warrants and 4,553,334 Private Warrants outstanding.
Public Warrants may only be exercised for a whole
number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade.
The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months
from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement
under the Securities Act covering Class A ordinary shares issuable upon exercise of the warrants and a current prospectus relating
to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws
of the state of residence of the holder (or holders are permitted to exercise their warrants on a cashless basis under
certain circumstances as a result of (i) the Company’s failure to have an effective registration statement by the 60th business
day after the closing of the initial Business Combination or (ii) a notice of redemption described under “Redemption of warrants
when the price per share of Class A ordinary shares equals or exceeds $10.00”). The Company agreed that as soon as practicable,
but in no event later than 15 business days after the closing of its initial Business Combination, the Company will use its commercially
reasonable efforts to file with the SEC and have an effective registration statement covering Class A ordinary shares issuable upon
exercise of the warrants and will use its commercially reasonable efforts to cause the same to become effective within 60 business days
after the closing of the Company’s initial Business Combination and to maintain a current prospectus relating to those Class A
ordinary shares until the warrants expire or are redeemed. If the shares issuable upon exercise of the warrants are not registered under
the Securities Act in accordance with the above requirements, the Company will be required to permit holders to exercise their warrants
on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to
issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or
qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding
the above, if the Company’s 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 its 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 elects, it will not be required to file
or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its commercially reasonable
efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
The warrants have an exercise price of $11.50
per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption
or liquidation. In addition, if (x) the Company issues additional 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
share (with such issue price or effective issue price to be determined in good faith by the board of directors, and in the case of any
such issuance to the initial shareholders or their affiliates, without taking into account any Founder Shares held by them 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 consummation
of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of Class A ordinary
shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business
Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of each warrant will be adjusted
(to the nearest cent) such that the effective exercise price per full share will be equal to 115% of the higher of (i) the Market
Value and (ii) the Newly Issued Price, and the $18.00 per-share redemption trigger price described under “Redemption
of warrants when the price per share of Class A ordinary shares equals or exceeds $18.00” and “Redemption of warrants
for Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00” will be adjusted (to the nearest
cent) to be equal to 180% of the higher of (i) the Market Value and (ii) the Newly Issued Price, and the $10.00 per-share redemption
trigger price described under “Redemption of warrants when the price per share of Class A ordinary shares equals or exceeds
$10.00” will be adjusted (to the nearest cent) to be equal to the higher of (i) the Market Value and (ii) the Newly Issued
Price.
The Private Placement Warrants are identical
to the Public Warrants, except that, so long as they are held by the Sponsor or its permitted transferees, (i) they will not be
redeemable by the Company, (ii) they (including 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, (iii) they may be exercised by the holders on a cashless basis and (iv) are subject to registration
rights.
Redemption of warrants when the price per
share of Class A ordinary shares equals or exceeds $18.00: Once the warrants become exercisable, the Company may redeem the
outstanding warrants (except as described herein with respect to the Private Placement Warrants):
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in whole and not in part;
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●
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at a price of $0.01 per warrant;
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●
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upon a minimum of 30 days’ prior written notice of
redemption; and
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●
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if, and only if, the last reported sale price of the Class A
ordinary shares equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which
the Company sends the notice of redemption to the warrant holders.
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The Company will not redeem the warrants
as described above unless an effective registration statement under the Securities Act covering Class A ordinary shares issuable
upon exercise of the warrants is effective and a current prospectus relating to those Class A ordinary shares is available throughout
the 30-day redemption period. Any such exercise would not be on a cashless basis and would require the exercising warrant holder
to pay the exercise price for each warrant being exercised.
Redemption of warrants when the price per
share of Class A ordinary shares equals or exceeds $10.00: Once the warrants become exercisable, the Company may redeem
the outstanding warrants:
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in whole and not in part;
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●
|
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 Class A ordinary shares determined by reference to an agreed table based on the redemption date and the fair
market value of the Class A ordinary shares;
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●
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if, and only if, the last reported sale price of Class A
ordinary shares equals or exceeds $10.00 per share on the trading day prior to the date on which the Company sends the notice of redemption
to the warrant holders; and
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|
●
|
if the Reference Value is less than $18.00 per share (as adjusted),
the Private Placement Warrants must also concurrently be called for redemption on the same terms as the outstanding Public Warrants,
as described above.
|
The fair market value of Class A ordinary
shares mentioned above shall mean the volume-weighted average price of Class A ordinary shares for the 10 trading days immediately
following the date on which the notice of redemption is sent to the holders of warrants. In no event will the warrants be exercisable
in connection with this redemption feature for more than 0.361 shares of Class A ordinary shares per warrant (subject
to adjustment).
In no event will the Company be required to net
cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates
the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will
they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly,
the warrants may expire worthless.
NOTE 8. SHAREHOLDERS’ EQUITY
Preference Shares —
The Company is authorized to issue 5,000,000 preference shares with a par value of $0.0001 per share. As of March 31, 2021 and December
31, 2020, 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. Holders of the Company’s
Class A ordinary shares are entitled to one vote for each share. As of March 31, 2021, there were 2,784,333 Class A ordinary
shares issued or outstanding, excluding 21,365,667 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. On November 11,
2020, the Company issued 5,750,000 Class B ordinary shares to the Initial Shareholders. On February 1, 2021, the Company
declared a stock dividend with respect to the Class B ordinary shares such that 0.05 Class B ordinary shares were issued for every one
share of Class B ordinary shares, resulting in an aggregate of 6,037,500 Class B ordinary shares outstanding. All shares and associated
amounts have been retroactively restated to reflect the stock dividend (see Note 8). Of the 6,037,500 Class B ordinary shares outstanding,
up to 787,500 Class B ordinary shares were subject to forfeiture to the Company by the Initial Shareholders for no consideration
to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the Initial Shareholders
will collectively own 20% of the Company’s issued and outstanding ordinary shares after the Initial Public Offering.
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 shareholders except as required
by law.
The Class B ordinary shares will automatically
convert into Class A ordinary shares at the time of the initial Business Combination, or earlier at the option of the holder, on
a one-for-one basis, subject to adjustment for share sub-divisions, share dividends, rights issuances, reorganizations, recapitalizations
and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares, or equity-linked securities,
are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related to the closing of the initial
Business Combination, the ratio at which the Class B ordinary shares will convert into Class A ordinary shares will be adjusted
(unless the holders of a majority of the issued and outstanding Class B ordinary shares agree to waive such anti-dilution adjustment
with respect to any such issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of
all Class B ordinary shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of all ordinary shares issued
and outstanding upon the completion of the Initial Public Offering plus all Class A ordinary shares and equity-linked securities
issued or deemed issued in connection with the initial Business Combination, excluding any shares or equity-linked securities issued,
or to be issued, to any seller in the initial Business Combination.
NOTE 9. FAIR VALUE MEASUREMENTS
The following tables presents information about
the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2021 by level
within the fair value hierarchy:
|
|
Fair Value Measured as of March 31, 2021
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account
|
|
$
|
241,509,027
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
241,509,027
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative public warrant liabilities
|
|
$
|
9,873,170
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
9,873,170
|
|
Derivative private warrant liabilities
|
|
$
|
0
|
|
|
$
|
-
|
|
|
$
|
5,565,080
|
|
|
$
|
5,565,080
|
|
Total fair value
|
|
$
|
251,292,197
|
|
|
$
|
-
|
|
|
$
|
5,565,080
|
|
|
$
|
256,857,277
|
|
Transfers to/from Levels 1, 2, and 3 are
recognized at the beginning of the reporting period. There were transfers between level 3 and level 1 of public warrants for the
three months ended March 31, 2021.
Level 1 instruments include investments in mutual
funds invested in government securities. The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from
dealers or brokers, and other similar sources to determine the fair value of its investments.
The fair value of the Public Warrants issued
in connection with the Public Offering and Private Placement Warrants have been measured at fair value using a Monte Carlo simulation
model. For the three months ended March 31, 2021, the Company recognized a charge to the statement of operations resulting from an increase
in the fair value of liabilities of $3.2 million presented as change in fair value of derivative warrant liabilities on the accompanying
unaudited condensed statement of operations.
The estimated fair value of the Private Placement
Warrants, and the Public Warrants prior to being separately listed and traded, is determined using Level 3 inputs. Inherent in a Monte
Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield.
The Company estimates the volatility of its ordinary shares based on historical volatility of select peer companies 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 remaining at zero.
The following table provides quantitative information
regarding Level 3 fair value measurements inputs at their measurement dates:
|
|
As of
February 4,
2021
|
|
|
As of
March 31,
2021
|
|
Exercise price
|
|
|
11.50
|
|
|
|
11.50
|
|
Stock Price
|
|
|
9.87
|
|
|
|
9.63
|
|
Option term (in years)
|
|
|
5.00
|
|
|
|
5.00
|
|
Volatility
|
|
|
20
|
%
|
|
|
18
|
%
|
Risk-free interest rate
|
|
|
0.64
|
%
|
|
|
1.14
|
%
|
The change in the fair value of the derivative
warrant liabilities measured utilizing Level 3 inputs for the three months ended March 31, 2021 is summarized as follows:
Derivative warrant liabilities at January 1, 2021
|
|
$
|
-
|
|
Issuance of Public and Private Warrants
|
|
|
18,520,390
|
|
Change in fair value of derivative warrant liabilities
|
|
|
(3,172,140
|
)
|
Derivative warrant liabilities at March 31, 2021
|
|
$
|
15,348,250
|
|
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred
up to the date unaudited condensed financial statements were issued. The Company did not identify
any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,”
“our,” “us” or “we” refer to Noble Rock Acquisition Corp. The following discussion and analysis of
the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial
statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set
forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations
and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions
about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you
can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,”
or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations
and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Form 10-Q. Factors that might cause
or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission
(“SEC”) filings.
Overview
We are a blank check
company incorporated as a Cayman Islands exempted company on November 4, 2020. We were incorporated for the purpose of effecting
a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses
that we have not yet identified (“Business Combination”). Our sponsor is Noble Rock Sponsor LLC, a Cayman Island limited
liability company (the “Sponsor”).
The registration statement for our Initial Public
Offering was declared effective on February 1, 2021. On February 4, 2021, we consummated our Initial Public Offering of 24,150,000 units
(the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”),
which includes 3,150,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating
gross proceeds of $241.5 million, and incurring offering costs of approximately $14.4 million. Of these offering costs, approximately
$9.1 million and approximately $320,000 was for deferred underwriting commissions and deferred legal fees, respectively.
Simultaneously with the closing of the Initial
Public Offering, we consummated the private placement (“Private Placement”) of 4,553,334 warrants (each, a “Private
Placement Warrant” and collectively, the “Private Placement Warrants”), at a price of $1.50 per Private Placement Warrant
with our Sponsor, generating gross proceeds of approximately $6.8 million.
Upon the closing of the Initial Public Offering
and the Private Placement, $241.5 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the
proceeds of the Private Placement were placed in a trust account (“Trust Account”) with Continental Stock Transfer &
Trust Company acting as trustee and invested in United States “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act of 1940, as amended, or the Investment Company Act, which invest only in direct U.S. government treasury
obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution
of the Trust Account as described below.
If we are unable to complete a Business Combination
within 24 months from the closing of the Initial Public Offering, or February 4, 2023, (the “Combination Period”), we
will (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than
10 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 (less up to $100,000 of interest to pay dissolution expenses and which interest shall
be net of taxes payable), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish
Public Shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any); and (3) as
promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors,
liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements
of other applicable law.
Results of Operations
Our entire activity from January 1, 2021 through
March 31, 2021, was in preparation for our Initial Public Offering, and since our Initial Public Offering, our activity has been limited
to the search for a prospective initial Business Combination. We will not generate any operating revenues until the closing and
completion of our initial Business Combination. We generate non-operating income in the form of investment income from our investments
held in the Trust Account. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence expenses.
For period from January 1, 2021 through March
31, 2021, we had net income of approximately $2.2 million, which consisted of $3.2 million for change in fair value of derivative warrant
liabilities, approximately $9,000 of income from investments held in Trust Account, offset by approximately $769,000 of financing costs
and approximately $212,000 of general and administrative expenses.
Liquidity and Capital Resources
As of March 31, 2021, we had approximately $1.5
million in cash and working capital of approximately $1.9 million.
Our liquidity needs
to date have been satisfied through a payment of $25,000 from our Sponsor to cover for certain expenses in exchange for the issuance
of the Founder Shares, the loan of $195,000 from our Sponsor pursuant to the Note, and the proceeds from the consummation of the Private
Placement not held in the Trust Account. We repaid the Note in full on February 5, 2021. In addition, in order to finance transaction
costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor, or certain of our officers and directors
may, but are not obligated to, provide us Working Capital Loans. As of March 31, 2021, there were no amounts outstanding under any Working
Capital Loan.
Based on the foregoing, management believes that
we will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business
Combination or one year from this filing. Over this time period, we will be using these funds held outside of the Trust Account for paying
existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on
prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring,
negotiating and consummating the Business Combination.
Contractual Obligations
We do not have any long-term
debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
Critical Accounting
Policies
This management’s
discussion and analysis of our financial condition and results of operations is based on our unaudited condensed financial statements,
which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these unaudited
condensed financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses and the disclosure of contingent assets and liabilities in our unaudited condensed financial statements. On an ongoing basis,
we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses. We base
our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Class A Ordinary Shares Subject to
Possible Redemption
We account for our Class A
ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from
Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are
measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption
rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within
our control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’
equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject
to the occurrence of uncertain future events. Accordingly, at March 31, 2021, 21,365,667 Class A ordinary shares subject to possible
redemption are presented as temporary equity, outside of the shareholders’ equity section of our unaudited condensed balance sheets.
Derivative warrant liabilities
We do not use derivative instruments to hedge
exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase
warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC
480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities
or as equity, is re-assessed at the end of each reporting period.
The 8,050,000 issued in connection with the Initial
Public Offering (the “Public Warrants”) and the 4,553,334 Private Placement Warrants are recognized as derivative liabilities
in accordance with ASC 815-40. Accordingly, we recognize the warrant instruments as liabilities at fair value and adjusts the instruments
to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and
any change in fair value is recognized in our statement of operations. The fair value of the Public Warrants issued in connection with
the Public Offering and Private Placement Warrants were initially and subsequently measured at fair value using a Monte Carlo simulation
model.
Offering Costs Associated with the Initial
Public Offering
Offering costs consisted
of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the
Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based
on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed
as incurred, presented as non-operating expenses in the statement of operations. Offering costs associated with the Class A ordinary
shares were charged to shareholders’ equity upon the completion of the Initial Public Offering.
Net Income (Loss) Per Ordinary Share
Our unaudited condensed
statement of operations includes a presentation of net income (loss) per ordinary share for shares subject to possible redemption in
a manner similar to the two-class method of loss per ordinary share. Net income (loss) per ordinary share, basic and diluted, for Class
A ordinary shares subject to possible redemption is calculated by dividing the proportionate share of income or loss on investments held
by the Trust Account, net of applicable franchise and income taxes, by the weighted average number of ordinary shares subject to possible
redemption outstanding since original issuance.
Net income (loss) per
share, basic and diluted, for non-redeemable ordinary share is calculated by dividing the net loss, adjusted for income or loss on investments
attributable to ordinary shares subject to possible redemption, by the weighted average number of non-redeemable ordinary shares outstanding
for the period.
Non-redeemable ordinary
shares include founder shares and non-redeemable Class A ordinary shares as these shares do not have any redemption features. Non-redeemable
ordinary shares participate in the income or loss on marketable securities based on non-redeemable shares’ proportionate interest.
Recent Accounting
Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which
simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes
certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies
the diluted earnings per share calculation in certain areas. We adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did
not impact our financial position, results of operations or cash flows.
We do not believe that
any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on our financial
statements.
Off-Balance Sheet Arrangements
As of March 31, 2021,
we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
The Jumpstart Our Business
Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements
for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply
with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing
to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards
on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the unaudited condensed
financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company
effective dates.
Additionally, we are
in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we
may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over
financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted
by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about
the audit and the unaudited condensed financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation
related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation
to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public
Offering or until we are no longer an “emerging growth company,” whichever is earlier.