NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
1 - Organization and Business Operations
Organization
and General
African
Gold Acquisition Corporation (the “Company”) is a blank check company incorporated on November 17, 2020 as a Cayman Islands
exempted company. The Company was incorporated for the purpose of effecting a merger or mergers, asset acquisition, share purchase, reorganization
or other similar business combination with one or more businesses (the “Business Combination”). The Company has not selected
any specific Business Combination target and the Company has not, nor has anyone on its behalf, engaged in any substantive discussions,
directly or indirectly, with any Business Combination target with respect to the Business Combination.
The
Company’s sponsor is African Gold Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”).
As
of March 31, 2022, the Company had not commenced any operations. All activity for the period from November 17, 2020 (inception) through
March 31, 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 liabilities as other income (expense).
Financing
The
registration statement for the Company’s IPO was declared effective on February 25, 2021 (the “Effective Date”). On
March 2, 2021, the Company consummated the IPO of 36,000,000 units (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 $360,000,000,
which is discussed in Note 3.
Simultaneously
with the closing of the IPO, the Company consummated the sale of 10,300,000 warrants (the “Private Placement Warrants”) at
a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $10,300,000, which
is discussed in Note 4.
Transaction
costs amounted to $20,466,592 consisting of $7,200,000 of underwriting discount, $12,600,000 of deferred underwriting discount, and $666,592
of other offering costs.
The
Company granted the underwriters in the IPO a 45-day option to purchase up to 5,400,000 additional Units to cover over-allotments, if
any. On March 16, 2021, the underwriters exercised the over-allotment option in full to purchase 5,400,000 Units (the “Over-allotment
Units”), generating an aggregate of gross proceeds of $54,000,000, and incurred $1,080,000 in cash underwriting fees and $1,890,000
in deferred underwriting fees.
Trust
Account
Following
the closing of the IPO on March 2, 2021 and the underwriters’ full exercise of over-allotment option on March 16, 2021, $414,000,000
($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO and over-allotment and the sale of the Private Placement
Warrants was placed in a Trust Account, which can be 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. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay taxes,
if any, the funds held in the Trust Account 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 its 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 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 of 1940, as amended (the “Investment Company Act”). There is no assurance that the Company
will be able to complete a Business Combination successfully.
A
Class A ordinary share subject to possible 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 upon such consummation of a Business Combination 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 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
100% of the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided
by the number of the then issued and outstanding Public Shares, which redemption will completely extinguish public shareholders’
rights as shareholders (including the right to receive further liquidation distributions, if any), 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 each case to the Company’s obligations under Cayman Islands law to provide for
claims of creditors and the requirements of other applicable law.
The
Sponsor, officers and directors have agreed to waive: (i) their redemption rights with respect to any founder shares and Public Shares
held by them, as applicable in connection with the completion of the initial Business Combination, (ii) their redemption rights with
respect to any founder shares and Public Shares held by them in connection with a shareholder vote to amend the Company’s amended
and restated memorandum and articles of association, (iii) 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 or during
any extended time that the Company has to consummate a Business Combination beyond 24 months as a result of a shareholder vote to amend
the Company’s amended and restated memorandum and articles of association (an “Extension Period”), and (iv) 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 auditors) 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 (i) $10.00 per Public Share
or (ii) 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, in each case net of the interest which may be withdrawn to pay taxes, 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 Company’s
indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. 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. The Company has not
asked the Sponsor to reserve for such obligations.
Going
Concern and Liquidity
As
of March 31, 2022, the Company had approximately $0.4 million in its operating bank account, and working capital of approximately $0.7
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, for the founder shares (see Note 5), and the loan under an unsecured promissory note from
the Sponsor of $178,488 (see Note 5). The Company fully paid the note to the Sponsor on March 8, 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.
In
addition, in order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate
of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital
Loans (see Note 5). To date, there were no amounts outstanding under any Working Capital Loans.
In
connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board
(“FASB”)’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s
Ability to Continue as a Going Concern,” management determined that the liquidity condition and date for mandatory liquidation
and dissolution raise substantial doubt about the Company’s ability to continue as a going concern through March 2, 2023, the scheduled
liquidation date of the Company if it does not complete a Business Combination prior to such date. 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 - 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 months ended March 31, 2022 is 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 Securities and Exchange Commission (“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 of 1933, as amended, (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 Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of
such extended transition period which means that when a standard is issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which
is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of the unaudited condensed 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 March 31, 2022 and December 31, 2021.
Marketable
Securities Held in Trust Account
The
Company’s portfolio of investments held in the Trust Account is comprised of U.S. government securities, within the meaning set
forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, investments in money market funds that
invest in U.S. government securities, cash, or a combination thereof. The Company’s marketable securities held in the Trust Account
are classified as trading securities. Trading securities are presented on the balance sheets at fair value at the end of each reporting
period. Gains and losses resulting from the change in fair value of these securities is included in interest income in the accompanying
statements of operations. The estimated fair values of marketable securities held in the Trust Account are determined using available
market information. As of March 31, 2022 and December 31, 2021, the assets held in the Trust Account were invested in money market funds.
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 sheets. The fair values of cash and
cash equivalents, prepaid expenses, accounts payable and accrued expenses, due to related parties are estimated to approximate the carrying
values as of March 31, 2022 and December 31, 2021 due to the short term maturities of such instruments.
The
fair value of Private Placement Warrants is based on a valuation model utilizing management judgment and pricing inputs from observable
and unobservable markets with less volume and transaction frequency than active markets. Significant deviations from these estimates
and inputs could result in a material change in fair value. The fair value of the Private Placement Warrants is classified as level 3.
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 March 31, 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.
Class
A 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 “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 are classified as shareholders’ deficit. 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 is presented at redemption value as
temporary equity, outside of the shareholders’ deficit section of the Company’s balance sheets.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of Class A ordinary shares to
equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of Class A ordinary shares
are affected by charges against additional paid in capital and accumulated deficit.
Net
Income 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. The 42,430,000 potential ordinary shares for outstanding warrants to purchase
the Company’s shares were excluded from diluted earnings per share for the three months ended March 31, 2022 and 2021 because the
warrants are contingently exercisable, and the contingencies have not yet been met. As a result, diluted net income per ordinary share
is the same as basic net income per ordinary share for the periods presented. The table below presents a reconciliation of the numerator
and denominator used to compute basic and diluted net income per share for each class of ordinary shares:
| |
For the Three Months Ended March 31, 2022 | | |
For the Three Months Ended March 31, 2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income per share: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income | |
$ | 9,846,055 | | |
$ | 2,461,514 | | |
$ | 5,763,292 | | |
$ | 4,253,309 | |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Weighted-average shares outstanding | |
| 41,400,000 | | |
| 10,350,000 | | |
| 12,500,000 | | |
| 9,225,000 | |
Basic and diluted net income per share | |
$ | 0.24 | | |
$ | 0.24 | | |
$ | 0.46 | | |
$ | 0.46 | |
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.
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 is expensed, and offering costs associated with the Class
A ordinary share are charged to the temporary equity.
Warrant
Liabilities
The
Company evaluated the Public Warrants and Private Placement Warrants (collectively, “Warrants”, which are discussed in Note
3, Note 4, and Note 6) in accordance with ASC 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, the Warrants are
recorded as derivative liabilities on the balance sheets and measured at fair value at inception (on the date of the IPO) and at each
reporting date in accordance with ASC 820, “Fair Value Measurement”, with changes in fair value recognized in the statements
of operations in the periods of change. Derivative warrant liabilities are classified as non-current liabilities as their liquidation
is not reasonably expected to require the use of current assets or require the creation of current liabilities.
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 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.
Income
Taxes
The
Company accrued 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 unaudited condensed financial statements 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 unaudited condensed 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 March 31, 2022 and December 31, 2021. The Company is currently not
aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The
Company is considered an exempted Cayman Islands company and is presently not subject to income taxes or income tax filing requirements
in the Cayman Islands or the United States.
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could
have a negative effect on the Company’s financial position, results of its operations, cash flows and/or search for a target company,
the specific impact is not readily determinable as of the date of the unaudited condensed financial statements. The unaudited condensed
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Recent
Accounting Pronouncements
Management
does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on the Company’s unaudited condensed financial statements.
Note
3 - Initial Public Offering
Pursuant
to the IPO, the Company sold 36,000,000 Units at a price of $10.00 per Unit. Each Unit consists of one Class A ordinary share and three-quarters
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.
On
March 16, 2021, the underwriters exercised the over-allotment option in full to purchase 5,400,000 Units.
Following
the closing of the IPO on March 2, 2021 and the underwriters’ full exercise of over-allotment option on March 16, 2021, $414,000,000
($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO and over-allotment and the sale of the Private Placement
Warrants was placed in a Trust Account, which can be 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 41,400,000 Class A ordinary shares sold as part of the Units in the IPO, including Units sold upon the exercise of over-allotment
by the underwriters, 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 articles of association. In accordance with SEC and its staff’s guidance on redeemable equity
instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require ordinary
shares subject to redemption to be classified outside of permanent equity.
The
Class A ordinary shares are subject to SEC and its staff’s 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. Immediately upon the closing of the IPO, the Company recognized
the remeasurement from initial book value to redemption amount value. The change in the carrying value of redeemable ordinary shares
resulted in charges against additional paid-in capital and accumulated deficit.
At
March 31, 2022 and December 31, 2021, Class A ordinary shares subject to possible redemption reflected on the balance sheets are reconciled
in the following table:
Gross proceeds from IPO | |
$ | 414,400,000 | |
Less: | |
| | |
Proceeds allocated to Public Warrants | |
| (23,417,755 | ) |
Class A ordinary shares issuance costs | |
| (22,110,910 | ) |
Plus: | |
| | |
Remeasurement of carrying value to redemption
value | |
| 45,528,665 | |
Class A ordinary shares subject
to possible redemption | |
$ | 414,000,000 | |
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. 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 may, in its sole discretion, lower the exercise
price at any time prior to the expiration date of the warrants for a period of not less than twenty (20) business days, provided, that
the Company provides at least twenty (20) days prior written notice of such reduction to registered holders of the warrants and, provided
further that any such reduction shall be identical among all of the warrants.
The
Company is not registering the Class A ordinary shares issuable upon exercise of the warrants at this time. However, the Company has
agreed that as soon as practicable, but in no event later than 15 business days, after the closing of its initial Business Combination,
it will use its 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 its 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 Company’s Class A ordinary shares are, at the time
of any exercise of a warrant, not listed on a national securities exchange such that they satisfy the definition of a “covered
security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of public warrants who
exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the
event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but will use its
commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
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 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.
The “fair market value” shall mean the volume weighted average price of the Class A ordinary shares for the 10 trading days
ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent.
Redemption
of Warrants
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 last reported sale 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 equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and the like). |
The
Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the issuance
of the Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those Class
A ordinary shares is available throughout the 30-day redemption period. If and when the warrants become redeemable by the Company, the
Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable
state securities laws.
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 Company’s board of directors and in the case
of any such issuance to the Company’s Sponsors or its affiliate, without taking into account any founder shares held by the Company’s
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 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, 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 price described above will be adjusted (to the nearest
cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
Note
4 - Private Placement
Simultaneously
with the closing of the IPO, the Sponsor purchased an aggregate of 10,300,000 Private Placement Warrants at a price of $1.00 per Private
Placement Warrant, for an aggregate purchase price of $10,300,000, in a private placement. The proceeds from the Private Placement Warrants
were added to the proceeds from the IPO held in the Trust Account.
On
March 16, 2021, simultaneously with the closing of the underwriters’ full exercise of the over-allotment option, the Company completed
the private sale of an aggregate of 1,080,000 Private Placement Warrants to the Sponsor, at a purchase price of $1.00 per Private Placement
Warrant, generating gross proceeds of $1,080,000.
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 (including the ordinary shares issuable upon exercise of these warrants) entitled to certain registration
rights.
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.
Note
5 - Related Party Transactions
Founder
Shares
On
November 17, 2020, the Company issued to the Sponsor 8,625,000 Class B ordinary shares, par value $0.0001 (the “Founder Shares”),
for $25,000, or approximately $0.003 per share. Up to 1,125,000 Founder Shares are subject to forfeiture by the Sponsor depending on
the extent to which the underwriters’ over-allotment option is exercised. In February 2021, the Company effected a stock dividend
of 0.2 shares for each founder share outstanding, resulting in an aggregate of 10,350,000 Founder Shares outstanding and held by the
Sponsor (up to 1,350,000 of which are subject to forfeiture by our Sponsor if the underwriters’ over-allotment option is not exercised
in full). On March 16, 2021, the underwriter exercised its over-allotment option in full, hence, the 1,350,000 Founder Shares are no
longer subject to forfeiture since then.
The
initial shareholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (i) one year
after the completion of the initial Business Combination and (ii) 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, consolidations, 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,
amalgamation, share exchange, reorganization or other similar transaction that results in all of its public shareholders having the right
to exchange their ordinary shares for cash, securities or other property. Any permitted transferees would be subject to the same restrictions
and other agreements of the initial shareholders with respect to any Founder Shares.
Due
to Related Parties
The
Company promised to pay its Chief Executive Officer $20,000 per month for his services for the period from the Effective Date of the
registration statement to the consummation of the Company’s initial Business Combination.
The
Company also promised to pay its Chief Financial Officer $16,700 per month for the period from October 1, 2020 to the consummation of
the initial Business Combination.
During
the three months ended March 31, 2022, the Company incurred and paid $110,100 of CEO/CFO service fees. During the three months ended
March 31, 2021, the Company incurred $72,243 of CEO/CFO service fees and paid $50,100.
Promissory
Note - Related Party
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 Company borrowed $178,488 under the promissory
notes and was totally repaid upon completion of the IPO out of the $1,000,000 of offering proceeds that has been allocated to the payment
of offering expenses.
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 may repay the Working Capital
Loans out of funds held outside the Trust Account. 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 $1.00 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants. As of
March 31, 2022 and December 31, 2021, the Company had no borrowings under the Working Capital Loans.
Note
6 - 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 March 31, 2022, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such
fair value.
| |
March 31, | | |
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 | |
$ | 414,075,957 | | |
$ | 414,075,957 | | |
$ | — | | |
$ | — | |
| |
$ | 414,075,957 | | |
$ | 414,075,957 | | |
$ | — | | |
$ | — | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Warrant Liability - Public Warrants | |
$ | 6,210,000 | | |
$ | 6,210,000 | | |
$ | — | | |
$ | — | |
Warrant Liability - Private Placement Warrants | |
| 2,369,529 | | |
| — | | |
| — | | |
| 2,369,529 | |
| |
$ | 8,579,529 | | |
$ | 6,210,000 | | |
$ | — | | |
$ | 2,369,529 | |
The following table presents information about
the Company’s assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2021, and indicates
the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
| |
December 31, | | |
Quoted Prices
In Active Markets | | |
Significant Other Observable
Inputs | | |
Significant Other Unobservable
Inputs | |
| |
2021 | | |
(Level
1) | | |
(Level
2) | | |
(Level
3) | |
Assets: | |
| | |
| | |
| | |
| |
U.S. Money Market held in Trust Account | |
$ | 414,036,593 | | |
$ | 414,036,593 | | |
$ | — | | |
$ | — | |
| |
$ | 414,036,593 | | |
$ | 414,036,593 | | |
$ | — | | |
$ | — | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Warrant Liability - Public Warrants | |
$ | 15,270,390 | | |
$ | 15,270,390 | | |
$ | — | | |
$ | — | |
Warrant Liability
- Private Placement Warrants | |
| 5,866,916 | | |
| — | | |
| — | | |
| 5,866,916 | |
| |
$ | 21,137,306 | | |
$ | 15,270,390 | | |
$ | — | | |
$ | 5,866,916 | |
The Company utilized a Monte Carlo simulation model
for the initial valuation of the Public Warrants. The subsequent measurement of the Public Warrants at March 31, 2022 and December 31,
2021 is classified as Level 1 due to the use of an observable market quote in an active market. As of March 31, 2022 and December 31,
2021, the aggregate value of the Public Warrants were $6,210,000 and $15,270,390, respectively.
The estimated fair value of the Private Placement
Warrants on March 31, 2022 and December 31, 2021 is determined using Level 3 inputs. Inherent in a Monte-Carlo simulation model are
assumptions related to expected stock-price volatility (pre-merger and post-merger), expected term, dividend yield and risk-free
interest rate. The Company estimates the volatility of its ordinary share 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.
The key inputs into the Monte Carlo simulation
model for the initial measurement of the Public Warrants and Private Placement Warrants at March 2, 2021 and the subsequent measurement
of the Private Placement Warrants at March 31, 2022 were as follows:
Input | |
March 2, 2021 (Initial Measurement) | | |
December 31, 2021 | | |
March 31, 2022 | |
Expected term (years) | |
| 5.93 | | |
| 5.56 | | |
| 5.56 | |
Expected volatility | |
| 15.2 | % | |
| 10.7 | % | |
| 3.7 | % |
Risk-free interest rate | |
| 0.90 | % | |
| 1.31 | % | |
| 2.41 | % |
Fair value of the ordinary share price | |
$ | 9.43 | | |
$ | 9.68 | | |
$ | 9.81 | |
The following table sets forth a summary of the
changes in the fair value of the Company’s Level 3 financial instruments for the three months ended March 31, 2022:
| |
Warrant Liability | |
Fair value as of January 1, 2022 | |
$ | 5,866,916 | |
Revaluation of warrant liability included in other income within the statements of operations for the three months ended March 31, 2022 | |
| (3,497,387 | ) |
Fair value as of March 31, 2022 | |
$ | 2,369,529 | |
The following table sets forth a summary of the
changes in the fair value of the Company’s Level 3 financial instruments for the three months ended March 31, 2021:
| |
Warrant Liability | |
Fair value as of January 1, 2021 | |
$ | — | |
Initial fair value of warrant liability upon issuance at IPO | |
| 28,236,354 | |
Initial fair value of warrant liability upon the underwriters’ full exercise of the over-allotment option | |
| 3,880,017 | |
Revaluation of warrant liability included in other income within the statements of operations for the three months ended March 31, 2021 | |
| (11,489,463 | ) |
Fair value as of March 31, 2021 | |
$ | 20,626,908 | |
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 25, 2021 requiring
the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to the Company’s 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 registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect
to registration statements filed subsequent to the completion of the initial Business Combination and rights to require the Company to
register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection
with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day
option from February 25, 2021 to purchase up to an additional 5,400,000 Units to cover over-allotments. On March 16, 2021, the underwriters
purchased an additional 5,400,000 Units to exercise its over-allotment option in full.
The Company paid an aggregate amount of fixed
underwriting discount of $8,280,000, which was calculated as two percent (2%) of the gross proceeds of $414,000,000 of the IPO and the
underwriters’ full exercise of over-allotment option. Additionally, the underwriters will be entitled to a deferred underwriting
discount of 3.5% of the gross proceeds of the IPO and the underwriters’ full exercise of over-allotment option held in the Trust
Account, or $14,490,000, upon the completion of the Company’s initial Business Combination.
The Company has granted B. Riley Securities, Inc.
a right of first refusal to act as sole placement agent in any private placement, backstop or similar financing transactions entered into
or contemplated by the Company within the Combination Period and until the consummation of the initial Business Combination. In the event
that B. Riley Securities, Inc. exercises such right of first refusal, its compensation in connection with any such transaction will be
determined by separate agreement between the Company and B. Riley Securities, Inc. on the basis of compensation customarily paid to placement
agents in similar transactions.
Note 8 - Shareholders’ Deficit
Preference shares - The Company
is authorized to issue 1,000,000 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 March 31, 2022 and December 31, 2021
there were no preference shares issued or outstanding.
Class A Ordinary Shares - The Company
is authorized to issue 300,000,000 Class A ordinary shares with a par value of $0.0001 per share. As of March 31, 2022 and December 31,
2021, there were 41,400,000 shares of Class A ordinary shares issued and outstanding, including 41,400,000 Class A ordinary shares subject
to possible redemption.
Class B Ordinary Shares - The Company
is authorized to issue 30,000,000 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 November 30, 2020, the Company issued to the Sponsor 8,625,000 Class B ordinary shares, par
value $0.0001 (the “Founder Shares”), for $25,000, or approximately $0.003 per share. Up to 1,125,000 Founder Shares are subject
to forfeiture by the Sponsor depending on the extent to which the underwriters’ over-allotment option is exercised. In February
2021, the Company effected a stock dividend of 0.2 shares for each founder share outstanding, resulting in an aggregate of 10,350,000
Founder Shares outstanding and held by the Sponsor (up to 1,350,000 of which are subject to forfeiture by our Sponsor if the underwriters’
over-allotment option is not exercised in full). On March 16, 2021, the underwriter exercised its over-allotment option in full, hence,
the 1,350,000 Founder Shares are no longer subject to forfeiture since then. At March 31, 2022 and December 31, 2021 there were 10,350,000
Class B ordinary shares issued and outstanding.
Class A ordinary shareholders and Class B ordinary
shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders and vote together as
a single class, except as required by law. Unless specified in the Companies Act, the Company’s amended and restated memorandum
and articles of association or applicable stock exchange rules, the affirmative vote of a majority of the Company’s ordinary shares
that are voted is required to approve any such matter voted on by its shareholders.
The Class B ordinary shares will automatically
convert into Class A ordinary shares at the time of the initial Business Combination on a one-for-one basis, subject to adjustment for
share sub-divisions, share dividends, rights issuances, consolidations, 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 Company’s 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.
Note 9 - Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the unaudited condensed financial statements were issued. The Company did
not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.