Item 1. Financial Statements.
SCION TECH GROWTH I
CONDENSED BALANCE SHEETS
| |
June 30, 2022 | | |
December 31, 2021 | |
| |
(Unaudited) | | |
(Audited) | |
Assets | |
| | |
| |
Current assets | |
| | |
| |
Cash | |
$ | 34,275 | | |
$ | 283,409 | |
Prepaid assets | |
| 266,938 | | |
| 461,986 | |
Total current assets | |
| 301,213 | | |
| 745,395 | |
| |
| | | |
| | |
Marketable Securities held in Trust Account | |
| 576,177,109 | | |
| 575,190,452 | |
Total Assets | |
$ | 576,478,322 | | |
$ | 575,935,847 | |
| |
| | | |
| | |
Liabilities and Shareholders’ Deficit | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accrued offering costs and expenses | |
$ | 275,194 | | |
$ | 228,314 | |
Due to related party | |
| 185,161 | | |
| 125,161 | |
Total current liabilities | |
| 460,355 | | |
| 353,475 | |
Non-current Liabilities | |
| | | |
| | |
Warrant liability | |
| 4,702,500 | | |
| 20,795,500 | |
Deferred underwriting discount | |
| 20,125,000 | | |
| 20,125,000 | |
Total liabilities | |
| 25,287,855 | | |
| 41,273,975 | |
| |
| | | |
| | |
Commitments (Note 7) | |
| | | |
| | |
Class A ordinary shares subject to possible redemption, 57,500,000 shares at redemption value as of June 30, 2022 and December 31, 2021 | |
| 576,177,109 | | |
| 575,190,452 | |
| |
| | | |
| | |
Shareholders’ 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; none issued and outstanding (excluding 57,500,000 shares subject to possible redemption) as of June 30, 2022 and December 31, 2021 | |
| — | | |
| — | |
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 14,375,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021 | |
| 1,438 | | |
| 1,438 | |
Additional paid-in capital | |
| — | | |
| — | |
Accumulated deficit | |
| (24,988,080 | ) | |
| (40,530,018 | ) |
Total shareholders’ deficit | |
| (24,986,642 | ) | |
| (40,528,580 | ) |
Total Liabilities and Shareholders’ Deficit | |
$ | 576,478,322 | | |
$ | 575,935,847 | |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
SCION TECH GROWTH I
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
| |
Three Months Ended
June 30, | | |
Six Months Ended
June 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
Formation and operating costs | |
$ | 241,943 | | |
$ | 262,023 | | |
$ | 551,069 | | |
$ | 428,896 | |
Loss from operations | |
| (241,943 | ) | |
| (262,023 | ) | |
| (551,069 | ) | |
| (428,896 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income (expense): | |
| | | |
| | | |
| | | |
| | |
Bank interest income | |
| 2 | | |
| 10 | | |
| 7 | | |
| 30 | |
Change in fair value of warrants | |
| 4,702,500 | | |
| (4,528,333 | ) | |
| 16,093,000 | | |
| (6,113,333 | ) |
Trust interest income | |
| 938,533 | | |
| 29,975 | | |
| 986,657 | | |
| 109,863 | |
Total other income (expense), net | |
| 5,641,035 | | |
| (4,498,348 | ) | |
| 17,079,664 | | |
| (6,003,440 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net income (loss) | |
$ | 5,399,092 | | |
$ | (4,760,371 | ) | |
$ | 16,528,595 | | |
$ | (6,432,336 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding of Class A ordinary shares | |
| 57,500,000 | | |
| 57,500,000 | | |
| 57,500,000 | | |
| 57,500,000 | |
Basic and diluted net income (loss) per share, Class A ordinary share | |
$ | 0.08 | | |
$ | (0.07 | ) | |
$ | 0.23 | | |
$ | (0.09 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding of Class B ordinary shares | |
| 14,375,000 | | |
| 14,375,000 | | |
| 14,375,000 | | |
| 14,375,000 | |
Basic and diluted net income (loss) per share, Class B ordinary share | |
$ | 0.08 | | |
$ | (0.07 | ) | |
$ | 0.23 | | |
$ | (0.09 | ) |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
SCION TECH GROWTH I
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN
SHAREHOLDERS’ DEFICIT
THREE AND SIX MONTHS ENDED JUNE 30, 2022
| |
Class A Ordinary Shares | | |
Class B Ordinary Shares | | |
Additional Paid-in | | |
Accumulated | | |
Total
Shareholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance as of January 1, 2022 | |
| — | | |
$ | — | | |
| 14,375,000 | | |
$ | 1,438 | | |
$ | — | | |
$ | (40,530,018 | ) | |
$ | (40,528,580 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 11,129,503 | | |
| 11,129,503 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Remeasurement in Class A ordinary shares subject to possible redemption | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (48,124 | ) | |
| (48,124 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of March 31, 2022 | |
| — | | |
$ | — | | |
| 14,375,000 | | |
$ | 1,438 | | |
$ | — | | |
$ | (29,448,639 | ) | |
$ | (29,447,201 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 5,399,092 | | |
| 5,399,092 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Remeasurement in Class A ordinary shares subject to possible redemption | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (938,533 | ) | |
| (938,533 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of June 30, 2022 | |
| — | | |
$ | — | | |
| 14,375,000 | | |
$ | 1,438 | | |
$ | — | | |
$ | (24,988,080 | ) | |
$ | (24,986,642 | ) |
THREE AND SIX MONTHS ENDED JUNE 30, 2021
| |
Class A Ordinary Shares | | |
Class B Ordinary Shares | | |
Additional Paid-in | | |
Accumulated | | |
Total
Shareholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance as of January 1, 2021 | |
| — | | |
$ | — | | |
| 14,375,000 | | |
$ | 1,438 | | |
$ | — | | |
$ | (49,186,779 | ) | |
$ | (49,185,341 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,671,965 | ) | |
| (1,671,965 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Remeasurement in Class A ordinary shares subject to possible redemption | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (79,888 | ) | |
| (79,888 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of March 31, 2021 | |
| — | | |
$ | — | | |
| 14,375,000 | | |
$ | 1,438 | | |
$ | — | | |
$ | (50,938,632 | ) | |
$ | (50,937,194 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (4,760,371 | ) | |
| (4,760,371 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Remeasurement in Class A ordinary shares subject to possible redemption | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (29,975 | ) | |
| (29,975 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of June 30, 2021 | |
| — | | |
$ | — | | |
| 14,375,000 | | |
$ | 1,438 | | |
$ | — | | |
$ | (55,728,978 | ) | |
$ | (55,727,540 | ) |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
SCION TECH GROWTH I
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| |
For the six months ended June 30, | |
| |
2022 | | |
2021 | |
Cash flows from Operating Activities: | |
| | |
| |
Net income (loss) | |
$ | 16,528,595 | | |
$ | (6,432,336 | ) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |
| | | |
| | |
Interest earned on Marketable Securities held in Trust Account | |
| (986,657 | ) | |
| (109,863 | ) |
Change in fair value of warrant liabilities | |
| (16,093,000 | ) | |
| 6,113,333 | |
Changes in current assets and current liabilities: | |
| | | |
| | |
Prepaid assets | |
| 195,048 | | |
| 196,048 | |
Due to related party | |
| 60,000 | | |
| 60,000 | |
Accrued offering costs and expenses | |
| 46,880 | | |
| (881,953 | ) |
Net cash used in operating activities | |
| (249,134 | ) | |
| (1,054,771 | ) |
| |
| | | |
| | |
Net change in cash | |
| (249,134 | ) | |
| (1,054,771 | ) |
Cash, beginning of the period | |
| 283,409 | | |
| 1,425,919 | |
Cash, end of the period | |
$ | 34,275 | | |
$ | 371,148 | |
| |
| | | |
| | |
Supplemental disclosure of noncash investing and financing activities: | |
| | | |
| | |
Remeasurement in value of ordinary share subject to possible redemption | |
$ | 986,657 | | |
$ | 109,863 | |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
SCION TECH GROWTH I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 — Organization and Business
Operations
Organization and General
ScION Tech Growth I (the “Company”)
was incorporated as a Cayman Islands exempted company on October 7, 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
(the “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”). The Company’s efforts to identify a prospective target business will not be limited to a particular industry or geographic
location.
The Company has selected December 31 as its fiscal
year end.
As of June 30, 2022, the Company had not yet commenced
any operations. All activity for the period from October 7, 2020 (inception) through June 30, 2022 relates to the Company’s formation
and the initial public offering (“IPO”) described below, and since the closing of the IPO, the search for a prospective initial
Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination,
at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds
derived from the IPO and will recognize changes in the fair value of warrant liability as other income (expense).
The Company’s sponsor is ScION 1 Sponsor LLC, a Delaware limited
liability company (the “Sponsor”).
Financing
The registration statement for the Company’s
IPO was declared effective on December 16, 2020 (the “Effective Date”). On December 21, 2020, the Company consummated the
IPO of 57,500,000 units, including the issuance of 7,500,000 units as a result of the underwriters’ full exercise
of the over-allotment option (the “Units” and, with respect to the ordinary shares included in the Units being offered, the
“Public Shares”), at $10.00 per Unit, generating gross proceeds of $575,000,000, which is discussed in Note 3.
Simultaneously with the closing of the IPO, the
Company consummated the sale of 9,000,000 warrants (the “Private Placement Warrants”) at a price of $1.50 per
Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $13,500,000, which is discussed in Note 4.
Offering costs amounted to $32,212,884 consisting
of $11,500,000 of underwriting discount, $20,125,000 of deferred underwriting discount, and $587,884 of other offering costs.
Trust Account
Following the closing of the IPO on December 21,
2020, $575,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement Warrants
was placed in a Trust Account, which can only be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16)
of the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Except with respect to
interest earned on the funds held in the Trust Account that may be released to the Company to pay its taxes, and, if any, the proceeds
from the IPO and the sale of the Private Placement Warrants will not be released from the Trust Account until the earliest of (i) the
completion of the Business Combination, (ii) the redemption of the Company’s Public Shares if the Company is unable to complete
the initial Business Combination within 24 months from December 21, 2020 (the “Combination Period”), the closing of the IPO,
subject to applicable law, or (iii) the redemption of the Company’s Public Shares properly submitted in connection with a shareholder
vote to amend the Company’s amended and restated memorandum and articles of association, to (A) modify the substance or timing of
the Company’s obligation to allow redemption in connection with its initial Business Combination or to redeem 100% of the Public
Shares if the Company has not consummated an initial Business Combination within the Combination Period, or (B) with respect to any other
material provisions relating to shareholders’ rights or pre-initial Business Combination activity.
Initial Business Combination
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the IPO 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 must complete one or more initial
Business Combinations having an aggregate fair market value of at least 80% of the value of the assets held in the Trust Account (excluding
the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account) at the time of the agreement to enter
into 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 1940, as amended (the “Investment
Company Act”). There is no assurance that the Company will be able to complete a Business Combination successfully.
The Company will provide its public shareholders
with the opportunity to redeem all or a portion of their Public Shares upon the completion of the initial Business Combination either
(i) in connection with a general meeting called to approve the initial Business Combination or (ii) without a shareholder vote by means
of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed initial Business Combination or
conduct a tender offer will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem their shares
for a pro rata portion of the amount then on deposit in the Trust Account (initially $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 taxes).
The ordinary shares subject to redemption will
be recorded at a redemption value and classified as temporary equity upon the completion of the IPO, 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 and, if the Company seeks shareholder approval,
a majority of the issued and outstanding shares voted are voted in favor of the Business Combination.
If the Company seeks shareholder approval of a
Business Combination and the Company does not conduct redemptions in connection with the Business Combination pursuant to the tender offer
rules, the Company’s amended and restated memorandum and articles of association provide that a public shareholder, together with
any affiliate of such shareholder or any other person with whom such shareholder is acting in concert as a “group” (as defined
under Section 13 of the Securities Exchange Act of 1934, as amended (the “ Securities Exchange Act”)), will be restricted
from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in the IPO without the Company’s
prior consent, which the Company refers to as the “Excess Shares.” However, the Company would not restrict their shareholders’
ability to vote all of their shares (including Excess Shares) for or against the Business Combination.
If the Company is unable to complete the initial
Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii)
as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust
Account (less tax payable and up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding Public
Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive
further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the Company’s remaining shareholders and the Company’s board of directors, liquidate and dissolve,
subject in the case of clauses (ii) and (iii) to the Company’s obligations under Cayman Islands law to provide for claims of creditors
and in all cases subject to the other requirements of applicable law.
The Sponsor, officers and directors have agreed
to (i) waive their redemption rights with respect to their founder shares and Public Shares in connection with the completion of the initial
Business Combination, (ii) waive their redemption rights with respect to their founder shares and Public Shares in connection with a shareholder
vote to approve an amendment to the Company’s amended and restated memorandum and articles of association, (iii) waive their rights
to liquidating distributions from the Trust Account with respect to their founder shares if the Company fails to complete the initial
Business Combination within the Combination Period, and (iv) vote any founder shares held by them and any Public Shares purchased during
or after the IPO (including in open market and privately-negotiated transactions) in favor of the initial Business Combination.
The Sponsor has agreed that it will be liable
to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective
target business with which the Company has entered into a written letter of intent, confidentiality or 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 IPO
against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). However,
the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether
the Sponsor has sufficient funds to satisfy its indemnity obligations and the Company believes that the Sponsor’s only assets are
securities of the Company. Therefore, the Company cannot assure that the Sponsor would be able to satisfy those obligations. None of the
Company’s officers or directors will indemnify the Company for claims by third parties including, without limitation, claims by
vendors and prospective target businesses.
Liquidity, Capital Resources and Going Concern Consideration
As of June 30, 2022, the Company had cash outside
the Trust Account of $34,275 available for working capital needs. All remaining cash held in the Trust Account are generally unavailable
for the Company’s use, prior to an initial Business Combination, and is restricted for use either in a Business Combination or to
redeem ordinary shares. As of June 30, 2022, no amounts were withdrawn from the Trust Account.
Through June 30, 2022, the Company’s liquidity
needs were satisfied through a capital contribution from the Sponsor of $25,000, to cover certain offering costs, for the founder shares
(see Note 5), the loan under an unsecured promissory note from the Sponsor of $222,583 (see Note 5), and the net proceeds from the consummation
of the Private Placement not held in the Trust Account. The promissory note from the Sponsor was paid in full on December 22, 2020, and
the unsecured promissory note is no longer available to the Company. As of June 30, 2022 and December 31, 2021 no amounts were outstanding
under the unsecured promissory note.
Until consummation of its Business Combination,
the Company will be using the funds not held in the Trust Account, and any additional Working Capital Loans (as defined in Note 5) from
the initial stockholders, the Company’s officers and directors, or their respective affiliates (which is described in Note 5), for
identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling
to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements
of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business
Combination.
If the Company is unable to raise additional capital,
it may be required to take additional measures to conserve liquidity, which could include, but not necessarily limited to, curtailing
operations, suspending the pursuit of potential transaction and reducing overhead expenses. The Company cannot provide any assurance that
new financing will be available to it on commercially acceptable terms, if at all.
If the Company’s cash outside the Trust
Account is less than the costs of undertaking in-depth due diligence and negotiating a Business Combination the Company may have insufficient
funds available to operate its business prior to the Business Combination. Moreover, the Company will need to raise additional capital
through loans from its Sponsor, officers, directors, or third parties. None of the Sponsor, officers or directors are under any obligation
to advance funds to, or to invest in, the Company. If the Company is unable to raise additional capital, it may be required to take additional
measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit
of its business plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to
it on commercially acceptable terms, if at all.
Additionally, the Company is now less than 12
months from its mandatory liquidation date of December 21, 2022. In connection with the Company’s assessment of going concern considerations
in accordance with ASC Topic 205-40 Presentation of Financial Statements – Going Concern, this condition and the Company’s
liquidity condition raises substantial doubt about the Company’s ability to continue as a going concern until the earlier of the
consummation of the Business Combination or the date the Company is required to liquidate, December 21, 2022.
These financial statements do not include any
adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the
Company be unable to continue as a going concern.
Note 2 — Summary of Significant Accounting
Policies
Basis of Presentation
The accompanying unaudited condensed financial
statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information
and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which
include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating
results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected through December
31, 2022.
The accompanying unaudited condensed financial
statements should be read in conjunction with the audited financial statements and notes thereto included in the Form 10-K filed by the
Company with the SEC on April 15, 2022.
Emerging Growth Company Status
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and
proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Securities Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides
that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth
companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which
means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as
an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This
may make comparison of the Company’s unaudited condensed financial statements with another public company which is neither an emerging
growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because
of the potential differences in accounting standards used.
Use of Estimates
The preparation of unaudited condensed financial
statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the
reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Making estimates requires management to exercise
significant judgement. It is at least reasonably possible that the estimate of the effect of a condition, situation, or set of circumstances
that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near
term due to one or more future confirming events. One of the more significant accounting estimates included in these statements is the
determination of the fair value of the Public Warrant (as defined in Note 3), Private Placement Warrant, and Forward Purchase Warrant
liabilities. Such estimates may be subject to change as more current information becomes available and accordingly the actual results
could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of June 30, 2022 and December 31, 2021.
Cash and Securities Held in Trust Account
Securities held in Trust Account are invested
in a mutual fund invested in U.S. Treasury Securities. The Company’s securities held in the Trust Account are classified as trading
securities. Trading securities are presented on the condensed balance sheets at fair value at the end of each reporting period. Gains
and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on Securities
held in Trust Account in the accompanying condensed statements of operations. The estimated fair values of securities held in Trust Account
are determined using available market information.
Warrant Liabilities
The Company evaluated the warrants (which are
discussed in Note 2, Note 3 and Note 7) in accordance with ASC 815-40 and concluded that a provision in its warrant agreement related
to certain tender or exchange offers precludes the warrants from being accounted for as components of equity. As the warrants meet the
definition of a derivative as contemplated in ASC 815-40, the warrants are recorded as derivative liabilities on the condensed balance
sheet and measured at fair value at inception (the date of the IPO) and at each reporting date in accordance with FASB ASC Topic 820,
“Fair Value Measurement”, with changes in fair value recognized in the Company’s statement of operations. The measurement
of the Public Warrants after the detachment of the Public Warrants from the Units is classified as Level 1 due to the use of an observable
market quote in an active market. The subsequent measurements of the Private Placement Warrants and the Forward Purchase Warrants after
the detachment of the Public Warrants from the Units are classified as Level 2 due to the use of an observable market quote for a similar
asset in an active market. The fair value was initially estimated using a Monte Carlo Simulation approach (see Note 6)
Offering Costs Associated with the IPO
The Company complies with the requirements of
the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - “Expenses of Offering”. Offering costs
consist principally of professional and registration fees incurred through the balance sheet date that are related to the IPO. Offering
costs are allocated to the separable financial instruments issued in the IPO based on a relative fair value basis compared to total proceeds
received. Offering costs associated with warrant liabilities were expensed, and offering costs associated with the Class A ordinary share
are charged to the shareholders’ equity. As such, in 2020 the Company recorded $31,396,824 of offering costs as a reduction of equity
in connection with the sale of the Class A ordinary shares. The Company immediately expensed $816,060 of offering costs in connection
with the Public Warrants that were classified as liabilities.
Ordinary Shares Subject to Possible Redemption
The Company accounts for its ordinary shares subject
to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) is classified as a liability instrument and is
measured at fair value. Conditionally redeemable ordinary shares (including 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) is classified as temporary equity. At all other times, ordinary shares is classified as shareholders’ equity. The Company’s
ordinary shares feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence
of uncertain future events. Accordingly, ordinary shares subject to possible redemption were presented at redemption value as temporary
equity, outside of the shareholders’ deficit section of the Company’s condensed balance sheets.
Income Taxes
The Company accounts for income taxes under ASC
740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected
impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit
to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when
it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty
in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process
for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits
to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides
guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
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 June 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result
in significant payments, accruals or material deviation from its position.
The Company is a Cayman Islands exempted company
and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States.
Net Income (Loss) Per Ordinary Share
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income (loss) per share is computed by dividing net income (loss)
by the weighted average number of ordinary shares outstanding during the period.
The Company has two classes of shares, which are
referred to as Class A ordinary shares and Class B ordinary shares. Earnings and losses are shared pro rata between the two classes of
shares. The Company has not considered the effect of the warrants sold in the IPO and Private Placement in the calculation of diluted
net loss per ordinary share, since the exercise of the warrants is contingent upon the occurrence of future events. On June 30, 2022 and
2021, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary
shares and then share in the earnings of the Company. As a result, diluted net income per ordinary share is the same as basic net income
per ordinary share for the period presented.
The table below presents a reconciliation of the
numerator and denominator used to compute basic and diluted net loss per share for each class of ordinary shares:
| |
Three Months Ended June 30, | | |
Six Months Ended June 30, | |
| |
2022 | | |
2021 | | |
2022 | | |
2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | | |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income (loss) per share | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Allocation of net income (loss) | |
$ | 4,319,274 | | |
$ | 1,079,818 | | |
$ | (3,808,297 | ) | |
| (952,074 | ) | |
$ | 13,222,876 | | |
$ | 3,305,719 | | |
$ | (5,145,869 | ) | |
$ | (1,286,467 | ) |
Denominator: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Weighted-average shares outstanding | |
| 57,500,000 | | |
| 14,375,000 | | |
| 57,500,000 | | |
| 14,375,000 | | |
| 57,500,000 | | |
| 14,375,000 | | |
| 57,500,000 | | |
| 14,375,000 | |
Basic and diluted net income (loss) per share | |
$ | 0.08 | | |
$ | 0.08 | | |
$ | (0.07 | ) | |
$ | (0.07 | ) | |
$ | 0.23 | | |
$ | 0.23 | | |
$ | (0.09 | ) | |
$ | (0.09 | ) |
Fair Value Measurements
FASB ASC Topic 820 “Fair Value Measurements
and Disclosures” (“ASC 820”) defines fair value, the methods used to measure fair value and the expanded disclosures
about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with
the market approach, income approach and cost approach shall be used to measure fair value. ASC 820 establishes a fair value hierarchy
for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined
as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based
on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the
inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the
circumstances.
The fair value hierarchy is categorized into three
levels based on the inputs as follows:
Level 1 — Valuations based on
unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments
and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an
active market, valuation of these securities does not entail a significant degree of judgment.
Level 2 — Valuations based on
(i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical
or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from
or corroborated by market through correlation or other means.
Level 3 — Valuations based on
inputs that are unobservable and significant to the overall fair value measurement.
The fair value of the Company’s certain
assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates
the carrying amounts represented in the condensed balance sheets. The fair values of cash and cash equivalents, prepaid assets, accounts
payable and accrued expenses, due to related parties are estimated to approximate the carrying values as of June 30, 2022 and December
31, 2021 due to the short maturities of such instruments.
Derivative Financial Instruments
The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic
815, “Derivatives and Hedging”. Derivative instruments are recorded at fair value on the grant date and re-valued at each
reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified
on the condensed balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument
could be required within 12 months of the balance sheet date. The Company has determined the warrants are a derivative instrument.
FASB ASC 470-20, “Debt with Conversion and
Other Options” addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The
Company applies this guidance to allocate the IPO proceeds from the Units between Class A ordinary shares and warrants, using the residual
method by allocating the IPO proceeds first to fair value of the warrants and then the Class A ordinary shares.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 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 scope exception, and it simplifies the diluted earnings per share
calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim
periods within those fiscal years with early adoption permitted. The Company is currently assessing the impact, if any, that ASU 2020-06 would
have on its financial position, results of operations or cash flows.
Management does not believe that any other recently
issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed
financial statements.
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 of $250,000. At June 30, 2022 and December 31, 2021, the Company has not experienced losses on these accounts.
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic on the Company’s financial statements and has concluded that while it is reasonably possible that it could
have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific
impact is not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Note 3 — IPO
Pursuant to the IPO, the Company sold 57,500,000 Units,
including 7,500,000 Units as a result of the underwriters’ full exercise of the over-allotment option, at a price of $10.00 per
Unit. Each Unit consists of one Class A ordinary share and one-third of one redeemable warrant. Each whole warrant entitles the holder
to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment. The warrants will become exercisable
on the later of 30 days after the completion of the initial Business Combination or 12 months from the closing of the IPO and will expire
five years after the completion of the initial Business Combination or earlier upon redemption or liquidation.
Warrants
Each whole warrant entitles the holder to purchase
one Class A ordinary share at a price of $11.50 per share, subject to adjustment as discussed herein. In addition, if (x) the
Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing
of the initial Business Combination (excluding any issuance of forward purchase warrants) at an issue price or effective issue price of
less than $9.20 per Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the Company’s
board of directors and in the case of any such issuance to the Company’s initial shareholders or their affiliate, without taking
into account any founder shares held by the Company’s initial shareholders or such affiliates, as applicable, prior to such issuance
(the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity
proceeds (including from such issuances, the IPO and the sale of the forward purchase units), 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 the Company’s 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, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher
of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger prices described below under “Redemption
of warrants when the price per Class A ordinary share equals or exceeds $18.00” and “Redemption of warrants when the price
per Class A ordinary share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of
the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described adjacent to the caption “Redemption
of warrants when the price per Class A ordinary share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal
to the higher of the Market Value and the Newly Issued Price.
The warrants will become exercisable on the later
of 12 months from the closing of the IPO or 30 days after the completion of its initial Business Combination and will expire five years
after the completion of the Company’s initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption
or liquidation.
The Company will not be obligated to deliver any
Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration
statement under the Securities Act with respect to Class A ordinary shares underlying the warrants is then effective and a prospectus
relating thereto is current. No warrant will be exercisable, and the Company will not be obligated to issue a Class A ordinary share upon
exercise of a warrant unless the Class A ordinary share issuable upon such warrant exercise has been registered, qualified or deemed to
be exempt under the securities laws of the state of residence of the registered holder of the warrants. In no event will the Company be
required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser
of a unit containing such warrant will have paid the full purchase price for the unit solely for the Class A ordinary share underlying
such unit.
Redemption of Warrants When the Price per Class
A Ordinary Share Equals or Exceeds $18.00
Once the warrants become exercisable, the Company
may redeem the outstanding warrants:
| ● | in
whole and not in part; |
| ● | at
a price of $0.01 per warrant; upon a minimum of 30 days’ prior written notice of redemption (the “30-day redemption
period”); and |
| ● | if,
and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share, subject to adjustment, for any
20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant
holders. |
Redemption of Warrants When the Price per Class
A Ordinary Share Equals or Exceeds $10.00
Once the warrants become exercisable, the Company
may redeem the outstanding warrants:
| ● | in
whole and not in part; |
| ● | at
a price of $0.10 per warrant; upon a minimum of 30 days’ prior written notice of redemption; provided that
holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares, based on the
redemption date and the “fair market value” (as defined below) of Class A ordinary shares except as otherwise described
below; and |
| ● | if,
and only if, the closing price of Class A ordinary shares equals or exceeds $10.00 per share, subject to adjustment, for any 20 trading
days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders;
and |
| ● | if
the closing price of the Class A ordinary shares for any 20 trading days within a 30-trading day period ending on the third trading
day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $18.00 per share, subject
to adjustment, the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding warrants
sold as part of the Units in our IPO (whether they are were purchased in our IPO or thereafter in the open market) (the “Public
Warrants”), as described above. |
In addition, if a registration statement covering
the Class A ordinary shares issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after
the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement
and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless
basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if 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 best efforts to register or qualify the shares under applicable blue sky laws to the extent
an exemption is not available. In such event, each holder would pay the exercise price by surrendering each such warrant for that number
of shares of the Company’s Class A ordinary shares equal to the lesser of (A) the quotient obtained by dividing (x) the product
of the number of Class A ordinary shares underlying the warrants, multiplied the excess of the “fair market value” over the
exercise price of the warrants by (y) the fair market value and (B) 0.361. The “fair market value” shall mean the average
reported closing price of the Class A ordinary shares for the 10 trading days ending on the third trading day prior to the date on which
the notice of warrant exercise is sent to the warrant agent.
Note 4 — Private Placement
Simultaneously with the closing of the IPO, the
Sponsor purchased an aggregate of 9,000,000 Private Placement Warrants at a price of $1.50 per Private Placement Warrant,
for an aggregate purchase price of $13,500,000, in a private placement. The proceeds from the Private Placement Warrants were added to
the proceeds from the IPO held in the Trust Account.
The Private Placement warrants are identical to
the warrants sold in the IPO, except that the Private Placement Warrants, so long as they are held by the Sponsor or its permitted transferees,
(i) will not be redeemable by the Company, (ii) may not (including the Class A ordinary shares issuable upon exercise of these warrants),
subject to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of the Company’s
initial Business Combination, (iii) may be exercised by the holders on a cashless basis and (iv) will be entitled to certain registration
rights.
The Private Placement Warrants will be non-redeemable
and exercisable on a cashless basis so long as they are held by the Sponsor. If the Private Placement Warrants are held by holders other
than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by the
holders on the same basis as the warrants included in the Units being sold in the IPO.
The Sponsor has agreed to (i) waive its redemption
rights with respect to its founder shares and Public Shares in connection with the completion of the initial Business Combination, (ii)
waive its redemption rights with respect to its founder shares and Public Shares in connection with a shareholder vote to approve an amendment
to the Company’s amended and restated memorandum and articles of association (A) to modify the substance or timing of the Company’s
obligation to allow redemption in connection with the initial Business Combination or to redeem 100% of the Company’s Public
Shares if the Company has not consummated its initial Business Combination within the Combination Period or (B) with respect to any other
material provisions relating to shareholders’ rights or pre-initial Business Combination activity, (iii) waive its rights to liquidating
distributions from the Trust Account with respect to its founder shares if the Company fails to complete its initial Business Combination
within the Combination Period, and (iv) vote any founder shares held by the Sponsor and any Public Shares purchased during or after the
IPO (including in open market and privately-negotiated transactions) in favor of the initial Business Combination.
Note 5 — Related Party Transactions
Founder Shares
On October 7, 2020, the Sponsor paid $25,000,
or approximately $0.002 per share, to cover certain offering costs in consideration for 14,375,000 Class B ordinary shares,
par value $0.0001 (the founder Shares). Up to 1,875,000 founder shares are subject to forfeiture by the Sponsor depending
on the extent to which the underwriters’ over-allotment option is exercised. In connection with the underwriters’ full exercise
of their over-allotment option on December 21, 2020, the 1,875,000 shares were no longer subject to forfeiture.
The initial shareholders have agreed not to transfer,
assign or sell any of their founder shares and any Class A ordinary shares issuable upon conversion thereof until the earlier to occur
of: (i) one year after the completion of the initial Business Combination, or (ii) the date on which the Company completes a liquidation,
merger, share exchange or other similar transaction after the initial Business Combination that results in all of the Company’s
shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property; except to certain permitted
transferees and under certain circumstances (the “lock-up”). Notwithstanding the foregoing, if (1) 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 or (2) if the Company consummates a transaction after the initial Business Combination which results in the Company’s
shareholders having the right to exchange their shares for cash, securities or other property, the founder shares will be released from
the lock-up.
Promissory Note — Related Party
On October 9, 2020, the Sponsor agreed to loan
the Company up to $300,000 to be used for a portion of the expenses of the IPO. These loans are non-interest bearing, unsecured and
are due at the earlier of December 31, 2021 or the closing of the IPO. The loan will be repaid upon the closing of the IPO out of the
$1,000,000 of offering proceeds that has been allocated to the payment of offering expenses. As of December 21, 2020, the Company
had borrowed $222,583 under the promissory note. The promissory note from the Sponsor was paid in full on December 22, 2020, and
the unsecured promissory note is no longer available to the Company. As of June 30, 2022 and December 31, 2021 no amounts were outstanding
under the unsecured promissory note.
Due to Related Parties
The balance of $185,161 and $125,161, respectively,
represents the amount accrued for the administrative support services provided by Sponsor as of June 30, 2022 and December 31, 2021.
Related Party Loans
In order to finance transaction costs in connection
with an intended 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, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes
the initial Business Combination, the Company would repay the Working Capital Loans. In the event that the initial Business Combination
does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans
but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of such Working Capital
Loans may be convertible into warrants at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical
to the Private Placement Warrants. As of June 30, 2022 and December 31, 2021, the Company had no borrowings under the Working Capital
Loans.
Administrative Service Fee
Commencing on the Effective Date of the registration
statement, the Company has agreed to pay the Sponsor $10,000 per month for office space, utilities, secretarial and administrative
support services provided to members of the Company’s management team. Upon completion of the initial Business Combination or the
Company’s liquidation, the Company will cease paying these monthly fees. During the three and six months ended June 30, 2022, the
Company incurred $30,000 and $60,000 of administrative services under this arrangement, of which such amounts are recorded as accrued
expenses in the condensed balance sheets. During the three and six months ended June 30, 2021, the Company incurred $30,000 and $60,000
of administrative services under this arrangement, of which such amounts are recorded as accrued expenses in the condensed balance sheets.
Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees.
Forward Purchase Agreement
On December 16, 2020, the Company entered into
a forward purchase agreement pursuant to which an affiliate of the Sponsor committed that it will purchase from the Company 10,000,000
forward purchase units, or at its option up to an aggregate maximum of 30,000,000 forward purchase units, each consisting of one Class
A ordinary share, or a forward purchase share, and one-third of one warrant (the “Forward Purchase Warrants”) to purchase
one Class A ordinary share, or a Forward Purchase Warrant, for $10.00 per unit, or an aggregate amount of $100,000,000, or at the purchaser’s
option up to an aggregate amount of $300,000,000, in a private placement that will close concurrently with the closing of the Company’s
initial Business Combination. The proceeds from the sale of these forward purchase units, together with the amounts available to the Company
from the Trust Account (after giving effect to any redemptions of Public Shares) and any other equity or debt financing obtained by the
Company in connection with the Business Combination, will be used to satisfy the cash requirements of the Business Combination, including
funding the purchase price and paying expenses and retaining specified amounts to be used by the post-Business Combination company for
working capital or other purposes. The forward purchase shares will be identical to the Class A ordinary shares included in the Units
being sold in the IPO, except that they will be subject to transfer restrictions and registration rights. The Forward Purchase Warrants
will have the same terms as the Private Placement Warrants so long as they are held by the purchaser or its permitted assignees and transferees.
Note 6 — Recurring Fair Value Measurements
Cash and Securities Held in Trust Account
At June 30, 2022 and December 31, 2021, investment in the Company’s
Trust Account was $576,177,109 and $575,190,452, respectively, in a mutual fund invested
in U.S. Treasury Securities. The Company’s securities held in the Trust Account are classified as trading securities. Trading
securities are presented on the condensed balance sheets at fair value at the end of each reporting period. Gains and losses resulting
from the change in fair value of investments held in Trust Account are included in interest earned on Securities held in Trust Account
in the accompanying statements of operations.
Recurring Fair Value Measurements
The following tables present information about
the Company’s assets and liabilities that were measured at fair value on a recurring basis as of June 30, 2022 and December 31,
2021 and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
| |
June 30, | | |
Quoted Prices In Active Markets | | |
Significant Other Observable Inputs | | |
Significant Other Unobservable Inputs | |
| |
2022 | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
Assets: | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| |
Marketable Securities held in Trust Account | |
| 576,177,109 | | |
| 576,177,109 | | |
| - | | |
| - | |
| |
$ | 576,177,109 | | |
$ | 576,177,109 | | |
$ | - | | |
$ | - | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Private Placement Warrants | |
$ | 1,215,000 | | |
$ | - | | |
$ | 1,215,000 | | |
$ | - | |
Public Warrants | |
| 2,587,500 | | |
| 2,587,500 | | |
| - | | |
| - | |
Forward Purchase Warrants | |
| 900,000 | | |
| - | | |
| 900,000 | | |
| - | |
Warrant Liability | |
$ | 4,702,500 | | |
$ | 2,587,500 | | |
$ | 2,115,000 | | |
$ | - | |
| |
December 31, | | |
Quoted Prices In Active Markets | | |
Significant Other Observable Inputs | | |
Significant Other Unobservable Inputs | |
| |
2021 | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
Assets: | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| |
Marketable Securities held in Trust Account | |
| 575,190,452 | | |
| 575,190,452 | | |
| - | | |
| - | |
| |
$ | 575,190,452 | | |
$ | 575,190,452 | | |
$ | - | | |
$ | - | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Private Placement Warrants | |
$ | 5,373,000 | | |
$ | - | | |
$ | 5,373,000 | | |
$ | - | |
Public Warrants | |
| 11,442,500 | | |
| 11,442,500 | | |
| - | | |
| - | |
Forward Purchase Warrants | |
| 3,980,000 | | |
| - | | |
| 3,980,000 | | |
| - | |
Warrant Liability | |
$ | 20,795,500 | | |
$ | 11,442,500 | | |
$ | 9,353,000 | | |
$ | - | |
Warrants
The warrants are accounted for as liabilities
in accordance with ASC 815-40 and are presented within warrant liabilities on the condensed balance sheets which includes the Forward
Purchase Warrants. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value
presented within change in fair value of warrant liabilities in the Company’s statements of operations.
The mid-point of the Forward Purchase Agreement
($200 million) has been used as an estimate for the purpose of deriving the associated Forward Purchase Warrant liability; this estimate
is reassessed at each reporting period.
Warrant Liability
At June 30, 2022 and December 31, 2021, the Company’s
warrants liability was valued at $4,702,500 and $20,795,500, respectively. Under the guidance in ASC 815-40 the warrants do not meet the
criteria for equity treatment. As such, the warrants must be recorded on the condensed balance sheets at fair value. This valuation is
subject to re-measurement at each balance sheet date. With each re-measurement, the warrant valuation will be adjusted to fair value,
with the change in fair value recognized in the Company’s statements of operations.
Measurement
The Company established the initial fair value
for the Warrants on December 16, 2020, the date of the Company’s IPO, using a Monte Carlo simulation model for the Public warrants,
and the Black-Sholes Model for Private Placement Warrants and Forward Purchase Warrants based on their relative fair values at the initial
measurement date. The Private Placement Warrants and Forward Purchase Warrants were classified as Level 3 at the initial measurement date
due to the use of unobservable inputs. As of September 30, 2021, the Company changed the classification of the Private Warrants and Forward
Purchase Warrants from Level 3 to Level 2 investments. The change in the classification of the Private Placement Warrants and Forward
Purchase Warrants was due to the use of an observable quoted price in active markets for Public Warrants. They are now Level 2.
Subsequent Measurement
As of June 30, 2022, the Public warrants were
measured at the observable quoted price in active markets, and the Private Placement Warrants and Forward Purchase Warrants were measured
at the observable quoted price in active markets for Public warrants.
The change in the fair value of the derivative
warrant liabilities measured utilizing Level 1, Level 2, and Level 3 inputs for the year ended December 31, 2021 is summarized as follows:
Derivative warrant liabilities at January 1, 2021 - Level 3 | |
$ | 30,461,667 | |
Transfer of Public Warrants to - Level 1 (February 5, 2021) | |
| (16,675,000 | ) |
Transfer of Private Placement Warrants and Forward Purchase Warrants to Level 2 (September 30, 2021) | |
| (13,786,667 | ) |
Derivative warrant liabilities at December 31, 2021 - Level 3 | |
$ | - | |
There were no transfers to/from Levels 1, 2, and
3 in the period ended June 30, 2022.
Note 7 — Commitments
Registration Rights
The holders of (i) the founder shares, (ii) the
Private Placement Warrants, the forward purchase warrants which will be issued in a private placement concurrently with the closing of
the Company’s initial Business Combination and the Class A ordinary shares underlying such Private Placement Warrants and forward
purchase securities and (iii) Private Placement Warrants, Forward Purchase Warrants and warrants that may be issued upon conversion
of Working Capital Loans will have registration rights to require the Company to register a sale of any of its securities held by them
and any other securities of the Company acquired by them prior to the consummation of the initial Business Combination pursuant to a registration
rights agreement signed on December 16, 2020. The holders of these securities will be 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 Company’s completion of its initial Business Combination. The Company
will bear the expenses incurred in connection with the filing of any such registration statements. The registration rights agreement does
not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities.
Underwriting Agreement
The Company granted the underwriters a 45-day
option from December 21, 2020 to purchase up to an additional 7,500,000 Units to cover over-allotments. On December 21, 2020,
the underwriters fully exercised the over-allotment option.
On December 21, 2020, the Company paid a fixed
underwriting discount of $11,500,000. Additionally, the underwriters will be entitled to a deferred underwriting discount of 3.5%
of the gross proceeds of the IPO held in the Trust Account, or $20,125,000, upon the completion of the Company’s initial Business
Combination.
Note 8 — Shareholders’ Deficit
Preference shares—The Company
is authorized to issue 5,000,000 preference shares with a par value of $0.0001 and with such designations, voting and other
rights and preferences as may be determined from time to time by the Company’s board of directors. As of June 30, 2022 and December
31, 2021, there were no preference shares issued or outstanding.
Class A Ordinary Shares—The
Company is authorized to issue 500,000,000 Class A ordinary shares with a par value of $0.0001 per share. As of June 30,
2022 and December 31, 2021, there were no Class A ordinary shares issued and outstanding, excluding 57,500,000 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. Holders are entitled
to one vote for each share of Class B ordinary shares. On October 7, 2020, the Sponsor paid $25,000, or approximately $0.002 per
share, to cover certain offering costs in consideration for 14,375,000 Class B ordinary shares, par value $0.0001 (the
founder shares). Up to 1,875,000 founder shares were subject to forfeiture by the Sponsor depending on the extent to which the
underwriters’ over-allotment option is exercised. In connection with the underwriters’ full exercise of their over-allotment
option on December 21, 2020, the 1,875,000 shares were no longer subject to forfeiture. At June 30, 2022 and December 31, 2021,
there were 14,375,000 Class B ordinary shares issued and outstanding.
Holders of the Class A ordinary shares and holders
of the Class B ordinary shares will vote together as a single class, with each share entitling the holder to one vote, on any other matter
submitted to a vote of the Company’s shareholders, including any vote in connection with the Company’s initial Business Combination,
except as required by law; provided that only holders of the Class B ordinary shares have the right to appoint directors in any election
held prior to or in connection with the completion of the initial Business Combination.
The Class B ordinary shares will automatically
convert into Class A ordinary shares concurrently with or immediately following the consummation of the initial Business Combination on
a one-for-one basis, subject to adjustment for share sub-divisions, share capitalizations, 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 connection with the initial Business Combination, the number of Class A ordinary shares issuable upon conversion
of all founder shares will equal, in the aggregate, 20% of the total number of Class A ordinary shares outstanding after such conversion
(after giving effect to any redemptions of Class A ordinary shares by public shareholders), including the total number of Class A ordinary
shares issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued,
by the Company in connection with or in relation to the consummation of the initial Business Combination (including the forward purchase
shares but not the Forward Purchase Warrants), excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible
into Class A ordinary shares issued, or to be issued, to any seller in the initial Business Combination and any Private Placement Warrants
issued to the Sponsor, officers or directors upon conversion of Working Capital Loans; provided that such conversion of founder shares
will never occur on a less than one-for-one basis.
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the condensed financial statements were issued. On July 22nd
the Sponsor agreed to loan the Company $70,000 to meet operating expenses. Besides the aforementioned loan, the Company did not identify any subsequent events that would have required adjustment or disclosure
in the condensed financial statements.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
References to the “Company,” “ScION
Tech Growth I,” “our,” “us” or “we” refer to ScION Tech Growth I. The following discussion and
analysis of the Company’s financial condition and results of operations should be read in conjunction with the 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.
We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking
statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of
activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such
as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,”
“believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors
that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
Overview
We are a blank check company incorporated on October
7, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase,
reorganization or similar Business Combination with one or more businesses. We have not selected any specific Business Combination target
and we have not, nor has anyone on our behalf, engaged in any substantive discussions directly or indirectly, with any Business Combination
target with respect to an initial Business Combination with us. While we may pursue an initial Business Combination target in any industry,
we intend to focus our search on global technology, software and FinTech opportunities businesses. We intend to effectuate our initial
Business Combination using cash from the proceeds of the IPO, the private placement of the Private Placement Warrants, the proceeds of
the sale of our shares in connection with our initial Business Combination (including the sale of the forward purchase units and pursuant
to forward purchase agreements or backstop agreements we may enter into), shares issued to the owners of the target, debt issued to bank
or other lenders or the owners of the target, other securities issuances, or a combination of the foregoing.
The issuance of additional shares in connection
with a Business Combination to the owners of the target or other investors, including the forward purchase warrants:
| ● | may
significantly dilute the equity interest of investors in the IPO, which dilution would increase if the anti-dilution provisions in the
Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion
of the Class B ordinary shares; |
| ● | may
subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded
our Class A ordinary shares; |
| ● | could
cause a change in control if a substantial number of our Class A ordinary shares are issued, which may affect, among other things,
our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers
and directors; |
| ● | may
have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking
to obtain control of us; and |
| ● | may
adversely affect prevailing market prices for our Class A ordinary shares and/or warrants. Similarly, if we issue debt securities
or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in: |
| ● | default
and foreclosure on our assets if our operating revenues after an initial Business Combination are insufficient to repay our debt obligations; |
| ● | acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants
that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| ● | our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; |
| ● | our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing
while the debt security is outstanding; |
| ● | our
inability to pay dividends on our Class A ordinary shares; |
| ● | using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends
on our Class A ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
| ● | limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| ● | increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
and |
| ● | limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of
our strategy and other purposes and other disadvantages compared to our competitors who have less debt. |
We expect to continue to incur significant costs in
the pursuit of our initial Business Combination. We cannot assure you that our plans to complete a Business Combination will be successful.
Results of Operations
Our entire activity since inception up to June
30, 2022 relates to our formation, the IPO, and, since the closing of the IPO, a search for a business combination target. We will not
be generating any operating revenues until the closing and completion of our initial Business Combination, at the earliest.
For the three months ended June 30, 2022, we had
net income of $5,399,092, which consisted of $4,702,500 in unrealized gain on change in fair value of warrants, $938,533 other income
earned from investments held in the Trust Account and $2 from bank interest, offset by $241,943 in general and administrative expenses.
For the six months ended June 30, 2022, we had
net income of $16,528,595, which consisted of $16,093,000 in unrealized gain on change in fair value of warrants, $986,657 other income
earned from investments held in the Trust Account and $7 from bank interest, offset by $551,069 in general and administrative expenses.
For the three months ended June 30, 2021, we had
net loss of $4,760,371, which consisted of $262,023 in general and administrative expenses and $4,528,333 in unrealized loss on change
in fair value of warrants, offset by $29,975 other income earned from investments held in the Trust Account and $10 from bank interest.
For the six months ended June 30, 2021, we had
net loss of $6,432,336, which consisted of $428,896 in general and administrative expenses and $6,113,333 in unrealized loss on change
in fair value of warrants, offset by $109,863 other income earned from investments held in the Trust Account and $30 from bank interest.
Liquidity, Capital Resources, and Going Concern
Consideration
Our liquidity needs have been satisfied prior
to the completion of the IPO through receipt of a $25,000 capital contribution from our Sponsor in exchange for the issuance of the founder
shares to our Sponsor and $300,000 in loans from our Sponsor, amount which has been paid in full on December 22, 2020.
The net proceeds of $575,000,000 from the sale
of the Units in the IPO and the sale of the Private Placement Warrants are held in the Trust Account, which includes the deferred underwriting
commissions of $20,125,000, are held in the Trust Account and are invested or bear interest since December 21, 2020. The proceeds are only
invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain
conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations.
We intend to use substantially all of the funds
held in the Trust Account, including any amounts representing interest earned on the Trust Account (excluding deferred underwriting commissions),
and the proceeds from the sale of the forward purchase securities to complete our initial Business Combination. We may withdraw interest
to pay our taxes, if any. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts
held in the Trust Account. We expect the interest earned on the amount in the Trust Account will be sufficient to pay our income taxes,
if any. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial Business Combination,
the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.
At June 30, 2022, we had cash of $34,275 outside
of the Trust Account and accounts payable and accrued expenses of $275,194. We intend to use the funds held outside the Trust Account
primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from
the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents
and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.
In order to fund working capital deficiencies
or finance transaction costs in connection with an intended initial Business Combination, our Sponsor or an affiliate of our Sponsor or
certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial Business
Combination, we would repay such loaned amounts. In the event that our initial Business Combination does not close, we may use a portion
of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used
for such repayment. Up to $1,500,000 of such loans may be convertible into Private Placement Warrants of the post business combination
entity at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants.
The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion
of our initial Business Combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor
as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to
funds in our Trust Account.
We expect our primary liquidity requirements during
that period to include approximately $500,000 for legal, accounting, due diligence, travel and other expenses associated with structuring,
negotiating and documenting successful business combinations; $75,000 for legal and accounting fees related to regulatory reporting requirements;
$75,000 for Nasdaq and other regulatory fees; $75,000 for consulting, travel and miscellaneous expenses incurred during the search for
a business combination target; and approximately $35,000 for general working capital that will be used for miscellaneous expenses and
reserves. We are paying our Sponsor $10,000 per month for office space, utilities, secretarial and administrative services provided to
members of our management team.
These amounts are estimates and may differ materially
from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing,
fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision
(a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors
on terms more favorable to such target businesses) with respect to a particular proposed Business Combination, although we do not have
any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business,
the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of
the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result
of our breach or otherwise) could result in us not having sufficient funds to continue searching for, or conducting due diligence with
respect to, prospective target businesses.
Moreover, we may need to obtain additional financing
to complete our initial Business Combination, either because the transaction requires more cash than is available from the proceeds held
in our Trust Account and from the proceeds of the sale of the forward purchase units or because we become obligated to redeem a significant
number of our Public Shares upon completion of the business combination, in which case we may issue additional securities or incur debt
in connection with such business combination. In addition, we intend to target businesses with enterprise values that are greater than
we could acquire with the net proceeds of the IPO and the sale of the Private Placement Warrants, and, as a result, if the cash portion
of the purchase price exceeds the amount available from the Trust Account, net of amounts needed to satisfy any redemptions by public
shareholders, we may be required to seek additional financing to complete such proposed initial Business Combination. We may also obtain
financing prior to the closing of our initial Business Combination to fund our working capital needs and transaction costs in connection
with our search for and completion of our initial Business Combination. There is no limitation on our ability to raise funds through the
issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our initial Business
Combination, including pursuant to forward purchase agreements or backstop agreements we may enter. Subject to compliance with applicable
securities laws, we would only complete such financing simultaneously with the completion of our initial Business Combination. If we are
unable to complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease
operations and liquidate the Trust Account.
In addition, following our initial Business Combination,
if the cash is insufficient, we may need to obtain additional financing in order to meet our obligations. However, the Company is now
less than 12 months from its mandatory liquidation date of December 21, 2022. In connection with the Company’s assessment of going
concern considerations in accordance with ASC Topic 205-40 Presentation of Financial Statements – Going Concern “Disclosures
of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the mandatory liquidation as well as our liquidity
condition raises substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation
of the business combination or the date the Company is required to liquidate, December 21, 2022.
These financial statements do not include any
adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the
Company be unable to continue as a going concern.
Off-Balance Sheet Arrangements
As of June 30, 2022, we did not have any off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Contractual Obligations
We do not have any long-term debt obligations,
capital lease obligations, operating lease obligations, purchase obligations or other long-term liabilities, other than an agreement to
pay the Sponsor a monthly fee of $10,000 for office space, utilities, secretarial support and administrative services. We began incurring
these fees on February 23, 2021 and will continue to incur these fees monthly until the earlier of the completion of an initial Business
Combination and our liquidation.
The underwriters of the IPO are entitled to a
deferred underwriting commission of $0.35 per unit, or $20,125,000 in the aggregate. Subject to the terms of the underwriting agreement,
(i) the deferred underwriting commission was placed in the Trust Account and will be released to the underwriters only upon the completion
of our initial Business Combination and (ii) the deferred underwriting commission will be waived by the underwriters in the event
that we do not complete a business combination.
Critical Accounting Policies and Estimates
The preparation of the unaudited condensed financial
statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the
reported amounts of expenses during the reporting period. Actual results could differ from those estimates. We have identified the following
as our critical accounting policies:
Derivative Financial Instruments
The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with the Financial
Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 815,“Derivatives
and Hedging,” (ASC “815”), “Derivatives and Hedging”. Derivative instruments are recorded at fair value
on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative
assets and liabilities are classified on the condensed balance sheets as current or non-current based on whether or not net-cash settlement
or conversion of the instrument could be required within 12 months of the balance sheet date.
Warrant Liabilities
We account for our Public Warrants, Private Placement
Warrants, and Forward Purchase Warrants (collectively, the “warrants”, which are discussed in Note 3, Note 4 and
Note 8 to the financial statements included elsewhere in this Form 10-K) in accordance with ASC Topic 815-40 “Derivatives and Hedging,
Contracts in Entity’s Own Equity”, and concluded that a provision in the warrant agreement related to certain tender or exchange
offers precludes the warrants from being accounted for as components of equity. As the warrants meet the definition of a derivative as
contemplated in ASC 815-40, the warrants are recorded as derivative liabilities and measured at fair value at inception (on the date of
the IPO) and at each reporting date in accordance with FASB ASC Topic 820, “Fair Value Measurement”, with changes in fair
value recognized in the Company’s statements of operations.
Offering Costs Associated with the IPO
We comply with the requirements of FASB ASC 340-10-S99-1. Offering
costs consisted of legal, accounting, underwriting fees and other costs incurred through the IPO that were directly related to the IPO. Offering
costs are allocated to the separable financial instruments issued in the IPO 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 IPO.
Ordinary Shares Subject to Possible Redemption
Each of the 57,500,000 Units sold in the IPO consists
of one Class A ordinary share and one-third of one redeemable warrant. The Public Shares contain a redemption feature which allows for
the redemption of such Public Shares in connection with the Company’s liquidation, if there is a shareholder vote or tender offer
in connection with the business combination. In accordance with the SEC and its staff’s guidance on redeemable equity instruments,
which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require ordinary shares
subject to redemption to be classified outside of permanent equity. Therefore, all Class A ordinary shares have been classified outside
of permanent equity.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each
reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional
paid in capital and accumulated deficit.
Net Income (Loss) Per Ordinary Share
The Company has two classes of shares, which are
referred to as Class A ordinary shares and Class B ordinary shares. Earnings and losses are shared pro rata between the two classes of
shares. On June 30, 2022 and 2021, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised
or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted net income per ordinary share is
the same as basic net income per ordinary share for the period presented.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 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 scope exception, and it simplifies the diluted earnings per share
calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023 including interim
periods within those fiscal years with early adoption permitted. The Company is currently assessing the impact, if any, that ASU 2020-06 would
have on its financial position, results of operations or cash flows.
Management does not believe that any other recently
issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed financial
statements.
JOBS Act
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, our 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 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 IPO or until we are no longer an
“emerging growth company,” whichever is earlier.