The accompanying notes are an integral part of
the unaudited condensed financial statements.
See accompanying notes to unaudited condensed financial
statements.
See accompanying notes to unaudited condensed financial
statements.
See accompanying notes to unaudited condensed financial
statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 — Organization and Business Operations
Organization and General
New Vista Acquisition Corp
(the “Company”) was incorporated as a Cayman Islands exempted company on December 21, 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 has not yet selected any specific Business Combination target.
The Company’s sponsor
is New Vista Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”).
As of September 30, 2022,
the Company had not commenced any operations. All activity for the period from December 21, 2020 (inception) through September 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 marketable securities from the proceeds derived from the IPO and will recognize changes in the fair value of warrant liability
as other income (expense).
Initial Public Offering
The registration statement
for the Company’s IPO was declared effective on February 16, 2021 (the “Effective Date”). On February 19, 2021, the
Company consummated the IPO of 27,600,000 units, including the issuance of 3,600,000 units as a result of the underwriters’
full exercise of their 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 $276,000,000, which is discussed in Note
3. Each Unit consisted of one Public Share and one-third of one redeemable warrant (the “Public Warrants”). Each whole
Public Warrant entitles the holder to purchase one Public Share for $11.50 per share, subject to adjustment (see Note 3).
Simultaneously with the closing
of the IPO, the Company consummated a private placement (the “Private Placement”) of 5,680,000 warrants (the “Private
Placement Warrants,” and together with the Public Warrants, the “Warrants”) at a price of $1.50 per Private Placement
Warrant to the Sponsor, generating gross proceeds of $8,520,000, which is discussed in Note 4.
Transaction costs amounted
to $15,699,812, consisting of $5,520,000 of underwriting discount, $9,660,000 of deferred underwriting discount, and $519,812 of
other offering costs.
Trust Account
Following the closing of
the IPO on February 19, 2021, $276,000,000 ($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 (the “Trust Account”), which is invested only in U.S.
government treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting
certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”). 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
(1) the completion of an initial Business Combination; (2) the redemption of any Public Shares properly submitted in connection with a
shareholder vote to amend 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 does not complete the initial Business Combination within 24 months from the closing
of the IPO (the “Combination Period”) or (B) with respect to any other provision relating to shareholders’ rights or
pre-initial Business Combination activity; and (3) the redemption of the Company’s Public Shares if the Company has not completed
an initial Business Combination within the Combination Period, subject to applicable law.
Initial Business Combination
The Company must complete
its initial Business Combination with one or more operating businesses or assets 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) 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 issued and 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. There is no
assurance that the Company will be able to complete a Business Combination successfully by February 19, 2023.
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 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 Business Combination
or conduct a tender offer will be made by the Company, solely in its discretion. The public shareholders will be entitled to redeem their
shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account calculated as of
two business days prior to the consummation of the initial Business Combination, including interest, divided by the number of then issued
and outstanding Public Shares, subject to the limitations. The amount in the Trust Account is initially anticipated to be $10.00 per
Public Share.
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) are classified
as liability instruments and are 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) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’
equity. The Company’s ordinary shares subject to possible redemption, which feature certain redemption rights considered to be outside
of the Company’s control and subject to the occurrence of uncertain future events, are presented at redemption value as temporary
equity, outside of the shareholders’ equity section of the Company’s balance sheet. The Company’s amended and restated
memorandum and articles of association provide that in no event will the Company redeem its Public Shares in an amount that would cause
its net tangible assets to be less than $5,000,001 upon consummation of the initial Business Combination and after payment of the
deferred underwriting commissions. In such case, the Company will proceed with a Business Combination if the Company has net tangible
assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a
majority of then issued and outstanding shares voted are voted in favor of the Business Combination.
The Company has 24 months
from the closing of the IPO to complete the initial Business Combination. However, 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 (less up to $100,000 of interest to pay
dissolution expenses), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish
public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), and (iii)
as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and board of directors,
liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands law, to provide for claims of creditors
and to comply with the requirements of any other applicable law.
The initial shareholders,
directors and officers have entered into a letter agreement with the Company, pursuant to which they have agreed to waive: (1) their redemption
rights with respect to any founder shares (as described in Note 5) and Public Shares held by them, as applicable, in connection with the
completion of the initial Business Combination; (2) their redemption rights with respect to any founder shares and Public Shares held
by them in connection with a shareholder vote to amend the 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 our Public Shares if the Company does not complete the initial Business Combination within the Combination Period or (B) with
respect to any other provision relating to shareholders’ rights or pre-initial business combination activity; and (3) their rights
to liquidating distributions from the Trust Account with respect to any founder shares they hold if the Company fails to complete the
initial Business Combination within the Combination Period (although they will be entitled to liquidating distributions from the Trust
Account with respect to any Public Shares they hold if the Company fails to complete the initial Business Combination within the Combination
Period). If the Company submits the initial Business Combination to the public shareholders for a vote, the initial shareholders,
directors and officers have agreed to vote any founder shares and Public Shares held by them 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 (other than the Company’s independent registered
public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company
has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.00 per Public Share
or (2) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions
in the value of the trust assets, except as to any claims by a third party who executed a waiver of any and all rights to seek access
to the Trust Account and except as to any claims under the indemnity of the underwriters of the IPO against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, (the “Securities Act”). Moreover, in the event that an executed
waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such
third-party claims. The Company has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations
and believe that the Sponsor’s only assets are securities of the Company and, therefore, the Sponsor may not be able to satisfy
those obligations.
Effective April 12, 2021,
the holders of Units may elect to separately trade the Class A ordinary shares and warrants included in the Units. The Units not separated
continue to trade on the NASDAQ Capital Market under the symbol “NVSAU.” The separated Class A ordinary shares and Warrants
trade on the NASDAQ Capital Market under the symbols “NVSA” and “NVSAW,” respectively.
Going Concern Consideration
As of September 30, 2022,
the Company had approximately $0.3 million in its operating bank account and negative working capital of approximately $2.2 million.
Prior to the completion of
the IPO, the Company’s liquidity needs had been satisfied through a capital contribution from the Sponsor of $25,000, to cover certain
offering costs in return for the founder shares (see Note 5), and the loan under an unsecured promissory note from the Sponsor of $77,012 (see
Note 5). The loan under the promissory note from the Sponsor was paid in full on February 22, 2021. Subsequent to the consummation of
the IPO and Private Placement, the Company’s liquidity needs have been satisfied through the proceeds from the consummation of the
Private Placement not held in the Trust Account.
The Company will be using
these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing
due diligence on prospective target businesses, paying for travel and consultant expenditures, selecting the target business to merge
with or acquire, and structuring, negotiating and consummating the Business Combination.
The Company has incurred
and expects to continue to incur significant costs in pursuit of its acquisition plans. The Company will need to raise additional capital
through loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties. The Company’s officers,
directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they
deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able
to obtain additional financing. These conditions raise substantial doubt about the Company’s ability to continue as a going concern
for a period of time within one year after the date that the financial statements are issued. If the estimate of the costs of identifying
a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary
to do so, the Company may have insufficient funds available to operate its business prior to its Business Combination. Moreover, the Company
may need to obtain additional financing or draw on the Working Capital Loans (as defined below) either to complete a Business Combination
or because it becomes obligated to redeem a significant number of the Public Shares upon consummation of our Business Combination, in
which case the Company may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance
with applicable securities laws, the Company would only complete such financing simultaneously with the completion of our Business Combination.
If the Company is unable
to complete the Business Combination because it does not have sufficient funds available or not enough time as it has less than one year
to complete the Business Combination, the Company will be forced to cease operations and liquidate the Trust Account. In addition, following
the Business Combination, if cash on hand is insufficient, the Company may need to obtain additional financing in order to meet its obligations.
No adjustments have been made to the carrying amounts of assets or liabilities should the Company be unable to continue as a going concern.
The Company is actively pursuing a target business and anticipates announcing a Business Combination before the mandatory liquidation
date of February 19, 2023. It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business
Combination is not consummated by this date and an extension of the period of time the Company has to complete a Business Combination
has not been approved by the Company’s shareholders, there will be a mandatory liquidation and subsequent dissolution of the Company.
Management has determined that mandatory liquidation, should a Business Combination not occur, and an extension not approved by the shareholders
of the Company, and potential subsequent dissolution and the liquidity issue raise substantial doubt about the Company’s ability
to continue as a going concern for one year from the date these financial statements are issued.
Risks and Uncertainties
The negative impact on the
global economy, capital markets or other geopolitical conditions resulting from the Russian invasion of Ukraine and subsequent sanctions,
could adversely affect the Company’s search for a Business Combination and any target business with which we may ultimately consummate
a Business Combination. 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 the pandemic could have a negative effect on the Company’s financial
position, results of 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 these uncertainties.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited
condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of
America (“US GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10
of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance
with US GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly,
they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations,
or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting
of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows
for the periods presented.
The accompanying unaudited
condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, as filed with the SEC
on March 31, 2022. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results
to be expected for the period ending December 31, 2022 or for any future interim periods.
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 of 1934, as amended (the “Exchange Act”) are required to comply
with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition
period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable.
The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it
has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised
standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements
with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the
extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of these
financial statements in conformity with 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 balance sheet. Actual results could differ
from those estimates.
Cash and Cash Equivalents
The Company considers all
short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have
any cash equivalents as of September 30, 2022 and December 31, 2021.
Marketable Securities held in Trust Account
Investments held in the Trust
Account consist of U.S. Money market and U.S. Treasury securities. The Company classifies its U.S. Treasury securities as held-to-maturity
in accordance with ASC 320 “Investments - Debt and Equity Securities.” Held-to-maturity securities are those securities which
the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost and
adjusted for the amortization or accretion of premiums or discounts.
A decline in the market value
of held-to-maturity securities below cost that is deemed to be other than temporary, results in an impairment that reduces the carrying
costs to such securities’ fair value. The impairment is charged to earnings and a new cost basis for the security is established.
To determine whether an impairment is other than temporary, the Company considers whether it has the ability and intent to hold the investment
until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to
the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and the duration of the impairment,
changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area
or industry the investee operates in.
Premiums and discounts are
amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective-interest method.
Such amortization and accretion are included in the “Trust interest income” line item in the statements of operations. Trust
interest income is recognized when earned.
Fair Value Measurements
Fair value is defined as
the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants
at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)
and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1,
defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level 2,
defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, such as quoted prices
for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3,
defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the
inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair
value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the
fair value measurement.
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 balance sheet. The fair values of cash and cash equivalents, prepaid expenses, and
accounts payable and accrued expenses are estimated to approximate the carrying values as of September 30, 2022 due to the short maturities
of such instruments.
The Company’s warrant
liability is based on prices from observable markets. See Note 6 for additional information on assets and liabilities measured at fair
value.
Concentration of Credit Risk
Financial instruments that
potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times,
may exceed the Federal Depository Insurance Coverage of $250,000. At September 30, 2022 and December 31, 2021, the Company has not experienced
losses on this account and management believes the Company is not exposed to significant risks on such account.
Ordinary Shares Subject to Possible Redemption
The Company accounts for
its ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480. Ordinary shares subject to mandatory
redemption (if any) are classified as liability instruments and are 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) are classified as temporary equity. At all other times, ordinary shares
are classified as shareholders’ equity. The Company’s ordinary shares feature certain redemption rights that are considered
to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, ordinary shares subject
to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the
Company’s balance sheet.
The Company recognizes changes
in redemption value immediately as they occur and adjusts the carrying value of redeemable Class A ordinary shares to equal the redemption
value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable Class A ordinary shares are affected
by charges against additional paid-in capital and accumulated deficit.
Net Income Per Ordinary Share
Net income per ordinary share
is computed by dividing net income by the weighted average number of ordinary shares outstanding with income allocated pro-rata between
the classes. The calculation of diluted income per ordinary share excludes the effect of the warrants issued in connection with the Class
A ordinary shares since the warrant shares current market value is below exercise price and would be antidilutive. Remeasurement associated
with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value. As a
result, diluted income per ordinary share is the same as basic income per ordinary share.
For the three months ended September 30, 2022 | |
Class A | | |
Class B | |
Allocation of net income including ordinary shares subject to possible redemption | |
$ | 970,820 | | |
$ | 242,705 | |
| |
| | | |
| | |
Weighted average ordinary shares outstanding | |
| 27,600,000 | | |
| 6,900,000 | |
Basic and diluted net income per share | |
$ | 0.04 | | |
$ | 0.04 | |
For the nine months ended September 30, 2022 | |
Class A | | |
Class B | |
Allocation of net income including ordinary shares subject to possible redemption | |
$ | 7,758,438 | | |
$ | 1,939,610 | |
| |
| | | |
| | |
Weighted average ordinary shares outstanding | |
| 27,600,000 | | |
| 6,900,000 | |
Basic and diluted net income per share | |
$ | 0.28 | | |
$ | 0.28 | |
For the three months ended September 30, 2021 | |
Class A | | |
Class B | |
Allocation of net income including ordinary shares subject to possible redemption | |
$ | 2,820,524 | | |
$ | 705,131 | |
| |
| | | |
| | |
Weighted average ordinary shares outstanding | |
| 27,600,000 | | |
| 6,900,000 | |
Basic and diluted net income per share | |
$ | 0.10 | | |
$ | 0.10 | |
For the nine months ended September 30, 2021 | | Class A | | | Class B | |
Allocation of net income including ordinary shares subject to possible redemption | | $ | 4,118,679 | | | $ | 1,230,424 | |
| | | | | | | | |
Weighted average ordinary shares outstanding | | | 22,545,055 | | | | 6,735,165 | |
Basic and diluted net income per share | | $ | 0.18 | | | $ | 0.18 | |
Offering Costs associated with the Initial
Public Offering
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. Accordingly, as of February 19, 2021, offering costs of $15,699,812 (consisting of $5,520,000 of underwriting commissions,
$9,660,000 of deferred underwriters’ commission, and $519,812 other cash offering costs) have been incurred. Offering
costs were 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 liability were expensed, and offering costs associated with the Class A ordinary shares
were charged to temporary equity. Accordingly, $683,306 of offering costs associated with warrant liability were expensed in the
statements of operations upon the completion of the IPO.
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 balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument
could be required within 12 months of the balance sheet date. The Company has determined both the public and private placement Warrants
are derivative instruments and has classified them as liabilities.
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 IPO proceeds from the Units between Class A ordinary shares and Warrants, using
the residual method by allocating IPO proceeds first to fair value of the Warrants and then the Class A ordinary shares.
Share-Based Compensation
Share-based compensation
cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the vesting period
of the award, which is also the requisite service period, based upon the corresponding vesting method and probability of vesting. The
Company recognizes the effect of pre-vesting forfeitures as they occur. The Company’s share-based compensation charges relate to
awards of profits interests of the Company’s Sponsor.
Income Taxes
The Company accounts for
income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets
and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and
for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation
allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the
accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold
and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.
ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and
transition. Based on the Company’s evaluation, there are no significant uncertain tax positions requiring recognition in the Company’s
financial statements. Since the Company was incorporated on December 21, 2020, the 2020 and 2021 tax periods will be subject to examination.
The Company recognizes accrued
interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts
accrued for interest and penalties as of September 30, 2022. The Company is currently not aware of any issues under review that could
result in significant payments, accruals or material deviation from its position.
The Company is considered
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.
Recent Accounting Pronouncements
In August 2020, the Financial
Accounting Standards Board issued Accounting Standards Update (“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) (“ASU 2020-06”)
to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial
conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining
to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible
debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings
per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective
for the Company on January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning
on January 1, 2021. The Company is 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 recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s
financial statements.
Note 3 — Initial Public Offering
Pursuant to the IPO, the
Company sold 27,600,000 Units, including 3,600,000 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.
Following the closing of
the IPO on February 19, 2021, $276,000,000 ($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 is invested only in U.S. government treasury bills with a
maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7
under the Investment Company Act.
All of the 27,600,000 Class
A ordinary shares sold as part of the Units in the IPO contain a redemption feature which allows for the redemption of such Public Shares
in connection with the Company’s liquidation, if there is a shareholder vote or tender offer in connection with the Business Combination
and in connection with certain amendments to the Company’s amended and restated memorandum and articles of association. In accordance
with SEC staff guidance on redeemable equity instruments, which have been codified in ASC 480-10-S99, redemption provisions not solely
within the control of the Company require ordinary share subject to redemption to be classified outside of permanent equity. Given that
the Class A ordinary shares were issued with other freestanding instruments (i.e., public warrants), the initial carrying value of the
Class A ordinary shares classified as temporary equity are the allocated proceeds based on the guidance in ASC 470-20.
The Class A ordinary shares
are subject to SEC staff guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99. If it is probable that
the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period
from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest
redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount
of the instrument to equal the redemption value at the end of each reporting period. 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. Immediately upon the closing of the IPO, the Company recognized the accretion from initial book value to redemption
amount value. The change in the carrying value of redeemable Class A ordinary shares resulted in charges against additional paid-in capital
and accumulated deficit.
As of September 30, 2022,
the Class A ordinary shares reflected on the balance sheet are reconciled in the following table:
Gross proceeds from public issuance | |
$ | 276,000,000 | |
Less: | |
| | |
Proceeds allocated to public warrants | |
| (12,066,203 | ) |
Class A ordinary shares issuance costs | |
| (15,016,506 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 27,082,709 | |
Redeemable Class A ordinary shares - December 31, 2021 and March 31, 2022 | |
$ | 276,000,000 | |
Plus: | |
| | |
Remeasurement of carrying value to redemption value | |
| 195,759 | |
Redeemable Class A ordinary shares – June 30, 2022 | |
$ | 276,195,759 | |
Plus: | |
| | |
Remeasurement of carrying value to redemption value | |
| 1,254,702 | |
Redeemable Class A ordinary shares – September 30, 2022 | |
$ | 277,450,461 | |
Public 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 ordinary shares or equity-linked securities for capital raising purposes in connection with the closing
of the initial Business Combination at an issue price or effective issue price of less than $9.20 per ordinary share (with such issue
price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the Sponsor
or its affiliates, without taking into account any founder shares held by the Sponsor or such affiliates, as applicable, prior to such
issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of
the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the completion
of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Class A ordinary shares
during the 20 trading day period starting on the trading day prior to the day on which the Company consummates the initial Business Combination
(such price, the “Market Value”) is below $9.20 per share, the exercise price of the Warrants will be adjusted (to the
nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $10.00 per share redemption
trigger price described below under “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, and the $18.00 per
share redemption trigger price 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.
The 9,200,000 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 has agreed that
as soon as practicable, but in no event later than 20 business days after the closing of the initial Business Combination, the Company
will use commercially reasonable efforts to file with the SEC a registration statement covering the issuance, under the Securities Act,
of the Class A ordinary shares issuable upon exercise of the Warrants, and the Company will use commercially reasonable efforts to cause
the same to become effective within 60 business days after the closing of the initial Business Combination and to maintain the effectiveness
of such registration statement, and a current prospectus relating thereto, until the expiration of the Warrants in accordance with the
provisions of the Warrant Agreement. Notwithstanding the above, if the Class A ordinary shares are, at the time of any exercise of a Warrant,
not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1)
of the Securities Act, the Company may, at the Company’s 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,
the Company will not be required to file or maintain in effect a registration statement, but will use commercially reasonable 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 the Warrants for that number of 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 by the excess of the
“fair market value” (defined below) less the exercise price of the Warrants by (y) the fair market value and (B) 0.361. The
“fair market value” as used in the preceding sentence shall mean the volume weighted average price of the Class A ordinary
shares for the 10 trading days immediately following the date on which the notice of exercise is received by the warrant agent.
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 (except as described herein with respect to the Private Placement Warrants):
| ● | in
whole and not in part; |
| ● | at
a price of $0.01 per Warrant; |
| ● | upon
not less than 30 days’ prior written notice of redemption to each Warrant holder; and |
| ● | if,
and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share for any 20 trading days within any 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. |
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
$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” of Class A ordinary shares; |
| ● | if,
and only if, the closing price of the Class A ordinary shares equals or exceeds $10.00 per Public Share on the trading day prior to the
date on which 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 any 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, then
the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants,
as described above. |
Note 4 — Private Placement Warrants
Simultaneously with the closing
of the IPO, the Sponsor purchased an aggregate of 5,680,000 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant, for an aggregate purchase price of $8,520,000, 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 excess amount of the purchase price over the fair value of the
Private Placement Warrants of $7,488,033 was charged to the shareholders’ equity, and thus $1,031,967 was recorded into
additional paid-in capital.
The Private Placement Warrants
(including the Class A ordinary shares issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable
or salable until 30 days after the completion of the initial Business Combination and they will not be redeemable by the Company (except
as described above in Note 3, “Redemption of Warrants when the price per Class A ordinary share equals or exceeds $10.00”)
so long as they are held by the Sponsor or its permitted transferees. The Sponsor, or its permitted transferees, have the option to exercise
the Private Placement Warrants on a cashless basis and have certain registration rights. Otherwise, the Private Placement Warrants have
terms and provisions that are identical to those of the Public Warrants. 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 in all redemption scenarios
and exercisable by the holders on the same basis as the Public Warrants. If the Company does not complete the initial Business Combination
within the Combination Period, the proceeds of the sale of the Private Placement Warrants held in the Trust Account will be used to fund
the redemption of the Public Shares, and the Private Placement Warrants will expire worthless.
Note 5 — Related Party Transactions
Founder Shares
In December 2020, the Sponsor
paid $25,000, or approximately $0.004 per share, to cover certain offering costs in consideration for 5,750,000 Class B
ordinary shares, par value $0.0001. Up to 750,000 founder shares were subject to forfeiture by the Sponsor depending on the
extent to which the underwriters’ over-allotment option was exercised. On February 16, 2021, the Company effected a 1:1.2 stock
split of the Class B ordinary shares, resulting an aggregate of 6,900,000 founder shares outstanding. Up to 900,000 founder
shares were subject to forfeiture by the Sponsor depending on the extent to which the underwriters’ over-allotment option was exercised.
In connection with the underwriters’ full exercise of their over-allotment option on February 19, 2021, the 900,000 shares
were no longer subject to forfeiture.
The initial shareholders,
directors and officers have entered into a letter agreement with the Company, pursuant to which they have agreed to waive: (1) their redemption
rights with respect to any founder shares (as described in Note 5) and Public Shares held by them, as applicable, in connection with the
completion of the initial Business Combination; (2) their redemption rights with respect to any founder shares and Public Shares held
by them in connection with a shareholder vote to amend the 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 does not complete the initial Business Combination within the Combination Period or
(B) with respect to any other provision relating to shareholders’ rights or pre-initial Business Combination activity; and (3) their
rights to liquidating distributions from the Trust Account with respect to any founder shares they hold if the Company fails to complete
the initial Business Combination within the Combination Period (although they will be entitled to liquidating distributions from the Trust
Account with respect to any Public Shares they hold if the Company fails to complete the initial Business Combination within the Combination
Period). If the Company submits the initial Business Combination to the public shareholders for a vote, the initial shareholders, directors
and officers have agreed to vote any founder shares and Public Shares held by them in favor of the initial Business Combination.
With certain limited exceptions,
the founder shares will not be transferable, assignable or salable by the initial shareholders until the earlier of: (1) one year after
the completion of the initial Business Combination; and (2) subsequent to the initial Business Combination (x) if the last reported sale
price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights
issuances, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least
150 days after the initial Business Combination or (y) the date on which the Company completes a liquidation, merger, share exchange,
reorganization or other similar transaction that results in all of the public shareholders having the right to exchange their ordinary
shares for cash, securities or other property.
Related Party Loans
In addition, 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 September 30, 2022 and December 31, 2021, the
Company had no borrowings under the Working Capital Loans.
Administrative Service Fee
Commencing on the date the
securities of the Company were first listed on The Nasdaq Stock Market LLC, the Company paid the Sponsor $10,000 per month for office
space, utilities, administrative and support services. Upon completion of the initial Business Combination or the Company’s liquidation,
the Company will cease paying these monthly fees. During the three and nine months ended September 30, 2022, the Company recorded and
paid $30,000 and $90,000 of administrative service fees, respectively. During the three and nine months ended September 30, 2021, the
Company recorded and paid $30,000 and $80,000 of administrative service fees, respectively.
Due to Related Party
The unpaid reimbursable travel
expenses incurred in 2021 of $5,204 were paid on March 2, 2022.
Note 6 — Recurring Fair Value Measurements
Marketable Securities Held in Trust Account
As of September 30, 2022,
investment in the Company’s Trust Account consisted of $3,992 in U.S. Money Market and $277,446,469 in U.S. Treasury Securities.
The Company classifies its U.S. Treasury Securities as held-to-maturity in accordance with ASC 320 “Investments — Debt and
Equity Securities.” Held-to-maturity treasury securities are recorded at amortized cost and adjusted for the amortization or accretion
of premiums or discounts. The Company considers all investments with original maturities of more than three months but less than one year
to be short-term investments. The carrying value approximates the fair value due to its short-term maturity. The carrying value, excluding
gross unrealized holding loss and fair value of held to maturity securities on September 30, 2022 are as follows:
| |
Carrying Value/Amortized Cost | | |
Gross Unrealized Gains | | |
Gross Unrealized Losses | | |
Fair Value as of September 30, 2022 | |
U.S. Money Market | |
$ | 3,992 | | |
$ | — | | |
$ | — | | |
$ | 3,992 | |
U.S. Treasury Securities | |
| 277,446,469 | | |
| 160,229 | | |
| — | | |
| 277,606,698 | |
| |
$ | 277,450,461 | | |
$ | — | | |
$ | — | | |
$ | 277,610,690 | |
Warrant Liability
At September 30, 2022, the
Company’s warrant liability was valued at $1,135,344. 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 balance sheet 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.
Initial Measurement – Public Warrants
The estimated fair value
of the Public Warrants on February 19, 2021 was determined using Level 3 inputs. Inherent in a Monte-Carlo simulation model are assumptions
related to expected share-price volatility (pre-merger and post-merger), expected term, dividend yield and risk-free interest
rate. The Company estimated the volatility of its ordinary shares based on management’s understanding of the volatility associated
with instruments of other similar entities. The risk-free interest rate is based on the U.S. Treasury Constant Maturity similar to the
expected remaining life of the warrants. The expected life of the warrants is simulated based on management assumptions regarding the
timing and likelihood of completing a business combination. The dividend rate is based on the historical rate, which the Company anticipates
to remain at zero. The assumptions used in calculating the estimated fair values represent the Company’s best estimate. However,
inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially different.
Subsequent Measurement — Public
Warrants
The fair value of the Public
Warrants on September 30, 2022 was classified as Level 1 due to the use of an observable market quote in an active market. Effective April
12, 2021, the Public Warrants began trading separately. As of September 30, 2022, the aggregate value of Public Warrants was $701,960.
Initial Measurement – Private Placement
Warrants
The estimated fair value
of the Private Placement Warrants on February 19, 2021 was determined using Level 3 inputs. Inherent in a Monte-Carlo simulation
model are assumptions related to expected share-price volatility (pre-merger and post-merger), expected term, dividend yield
and risk-free interest rate. The Company estimates the volatility of its ordinary shares based on management’s understanding of
the volatility associated with instruments of other similar entities. The risk-free interest rate is based on the U.S. Treasury Constant
Maturity similar to the expected remaining life of the warrants. The expected life of the warrants is simulated based on management assumptions
regarding the timing and likelihood of completing a business combination. The dividend rate is based on the historical rate, which the
Company anticipates to remain at zero. The assumptions used in calculating the estimated fair values represent the Company’s best
estimate. However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially
different.
Subsequent Measurement — Private
Placement Warrants
Due to certain “make
whole” provisions in the warrant agreement, the Company also used the quoted market price of the Public Warrants as the fair value
of the Private Placement Warrants as of September 30, 2022 and reclassified the Private Placement Warrants from Level 3 to Level 2, due
to the use of the quoted price of a similar liability. As of September 30, 2022, the aggregate value of Private Placement Warrants was
$433,384.
The following table sets
forth a summary of the changes in the Level 3 fair value of warrants for the three and nine months ended September 30, 2022:
| |
Warrant Liability | |
Fair value as of December 31, 2021 | |
$ | 4,304,340 | |
Unrealized gain on change in fair value of warrants | |
| (2,082,384 | ) |
Fair value of Private Placement Warrants as of March 31, 2022 | |
| 2,221,956 | |
Unrealized gain on change in fair value of warrants | |
| (1,578,110 | ) |
Fair value of Private Placement Warrants as of June 30, 2022 | |
$ | 643,846 | |
Unrealized gain on change in fair value of warrants | |
| (210,462 | ) |
Transfer of Private Placement Warrants to Level 2 | |
| (433,384 | ) |
Fair value of Private Placement Warrants as of September 30, 2022 | |
$ | — | |
Recurring Fair Value Measurements
The following table presents
information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of September 30,
2022 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
| |
September 30, | | |
Quoted Prices In Active Markets | | |
Significant Other Observable Inputs | | |
Significant Other Unobservable Inputs | |
| |
2022 | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
Assets: | |
| | |
| | |
| | |
| |
U.S. Money Market held in Trust Account | |
$ | 3,992 | | |
$ | 3,992 | | |
$ | — | | |
$ | — | |
U.S. Treasury Securities held in Trust Account | |
| 277,606,698 | | |
| 277,606,698 | | |
| — | | |
| — | |
| |
$ | 277,610,690 | | |
$ | 277,610,690 | | |
$ | — | | |
$ | — | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Public Warrants | |
$ | 701,960 | | |
$ | 701,960 | | |
$ | — | | |
$ | — | |
Private Warrants | |
| 433,384 | | |
| — | | |
| 433,384 | | |
| — | |
Warrant Liability | |
$ | 1,135,344 | | |
$ | 701,960 | | |
$ | 433,384 | | |
$ | — | |
Note 7 — Commitments and Contingencies
Registration Rights
The holders of the founder
shares, Private Placement Warrants and any warrants that may be issued on conversion of Working Capital Loans (and any Class A ordinary
shares issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and
upon conversion of the founder shares) will be entitled to registration rights pursuant to a registration rights agreement signed on February
16, 2021, requiring the Company to register such securities for resale (in the case of the founder shares, only after conversion to the
Class A ordinary shares). The holders of these securities will be entitled to make up to three demands, excluding short form registration
demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights
with respect to registration statements filed subsequent to the completion of the initial Business Combination and rights to require the
Company to register for resale such securities pursuant to Rule 415 under the Securities Act.
Underwriting Agreement
The Company granted the underwriters
a 45-day option from February 16, 2021 to purchase up to an additional 3,600,000 units to cover over-allotments. On February
19, 2021, the underwriters fully exercised the over-allotment option.
On February 19, 2021, the
Company paid a fixed underwriting discount of $5,520,000. 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 $9,660,000, upon the completion of the Company’s initial
Business Combination.
Deferred Legal Fees
The Company engaged a legal
counsel firm for legal advisory services, and the legal counsel agreed to defer a portion of their fees. The deferred fees will become
payable in the event that the Company completes a Business Combination. As of September 30, 2022, the Company has deferred legal fees
of approximately $2.48 million in connection with such services on the accompanying balance sheet.
Service Provider Agreements
From time to time, the Company
has entered into and may enter into agreements with various services providers and advisors, to help the Company identify targets, negotiate
terms of potential Business Combinations, consummate a Business Combination and/or provide other services. In connection with these agreements,
the Company will be required to pay such service providers and advisors fees in connection with their services when the closing of a potential
Business Combination is met. If a Business Combination does not occur, the Company anticipates that it will be obligated to pay $145,000
for services that have been provided by September 30, 2022 where payment has been deferred until the completion of the Company’s
initial Business Combination. At September 30, 2022 and December 31, 2021, $145,000 and $120,000 were accrued for these services, respectively.
Note 8 — Shareholders’ Equity and
Redeemable Ordinary Shares
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 September
30, 2022 and December 31, 2021, there were no preference shares issued or outstanding.
Class A Ordinary Shares—
The Company is authorized to issue 500,000,000 Class A ordinary shares with a par value of $0.0001 per share. As of September
30, 2022 and December 31, 2021, there were 27,600,000 shares issued and outstanding and are subject to possible redemption.
The Company classified the Class A ordinary shares subject to redemption as temporary equity as the event of the consummation of the Company’s
initial Business Combination is not solely within the control of the Company.
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. In December 2020, the Sponsor paid $25,000, or approximately $0.004 per
share, to cover certain offering costs in consideration for 5,750,000 Class B ordinary shares, par value $0.0001. Up to 750,000 founder
shares were subject to forfeiture by the Sponsor depending on the extent to which the underwriters’ over-allotment option was exercised.
On February 16, 2021, the Company effected a 1:1.2 stock split of the Class B ordinary shares, resulting an aggregate of 6,900,000 founder
shares outstanding as of February 19, 2021. Up to 900,000 founder shares were subject to forfeiture by the Sponsor depending
on the extent to which the underwriters’ over-allotment option was exercised. In connection with the underwriters’ full exercise
of their over-allotment option on February 19, 2021, the 900,000 shares are no longer subject to forfeiture. At September 30,
2022 and December 31, 2021, there were 6,900,000 Class B ordinary shares issued and outstanding.
Holders of Class A ordinary
shares and holders of Class B ordinary shares will vote together as a single class, with each share entitling the holder to one vote.
The Class B ordinary shares
will automatically convert into Class A ordinary shares at the time of the initial Business Combination, or earlier at the option of the
holder, on a one-for-one basis, subject to adjustment for share sub-divisions, share dividends, rights issuances, reorganizations, recapitalizations
and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares, or equity-linked
securities, are issued or deemed issued in excess of the amounts issued in the IPO and related to the closing of the initial Business
Combination, the ratio at which the Class B ordinary shares will convert into Class A ordinary shares will be adjusted (unless the holders
of a majority of the issued and outstanding Class B ordinary shares agree to waive such anti-dilution adjustment with respect to any such
issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will
equal, in the aggregate, on an as-converted basis, 20% of the sum of all ordinary shares issued and outstanding upon the completion
of the IPO plus all Class A ordinary shares and equity-linked securities issued or deemed issued in connection with the initial Business
Combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination.
The term “equity-linked securities” refers to any debt or equity securities that are convertible, exercisable or exchangeable
for the Class A ordinary shares issued in a financing transaction in connection with the initial Business Combination, including but not
limited to a private placement of equity or debt.
Share-based Compensation—
As of September 30, 2022, the Sponsor had entered into Restricted Profits Interest Award Agreements (the “Awards”) with 37
participants, including some of the Sponsor’s advisors. The Awards are subject to a distribution threshold and vest over equal monthly
installments. The Sponsor granted 451,750 profits interests to these participants that perform services for the benefit of the Company.
Upon a change in control, these units become fully vested. As of September 30, 2022, 408,625 profits interests were outstanding and no
Awards were forfeited during the quarter.
For the 35,500 Awards granted
during the first quarter of 2022, the weighted average fair value per profits interest was estimated to be $3.17 The fair value of share-based
payment awards was estimated using the Black-Scholes option model with a volatility figure derived from the Company’s ordinary shares.
The Company accounts for the expected life of options in accordance with the “simplified” method, which is used for “plain-vanilla”
options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S.
Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options.
In applying the Black-Scholes
option pricing model, the Company used the following assumptions during the nine months ended September 30, 2022:
Risk-free interest rate | |
| 2.43 | % |
Expected term (years) | |
| 0.67 | |
Expected volatility | |
| 9.9 | % |
Expected dividends | |
| 0.00 | |
The share-based compensation
expense related to option grants was $168,801 and $465,886 during the three and nine months ended September 30, 2022, respectively. As
of September 30, 2022, 287,852 profits interests were vested and unrecognized compensation expense related to unvested profits interests
was $336,731, which is expected to be recognized over a weighted average period of approximately 0.5 years.
Note 9 — Subsequent Events
The Company evaluated subsequent
events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. The Company
did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.