References to the "Company," "us," "our" or "we" refer toCarney Technology Acquisition Corp. II . The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and related notes included herein. In this Amendment No. 2, we are restating (i) the Post IPO Balance Sheet, as previously revised in the First Amended Filing, and (ii) the unaudited financial statements as of and for the year endedDecember 31, 2020 as previously revised
in the First Amended Filing. We have re-evaluated our application of ASC 480-10-S99-3A
to our accounting and classification of the Public Shares, issued as part of the units sold in the initial public offering onDecember 14, 2020 . Historically, a portion of the Public Shares was classified as permanent equity to maintain stockholders' equity greater than$5 million on the basis that we will not redeem our Public Shares in an amount that would cause our net tangible assets to be less than$5,000,001 , as described in the Charter. Pursuant to such re-evaluation, our management has determined that the Public Shares include certain provisions that require classification of all of the Public Shares as temporary equity regardless of the net tangible assets redemption limitation contained in the Charter. In addition, in connection with the change in presentation for the Public Shares, management determined it should restate earnings per share calculation to allocate income and losses shared pro rata between the two classes of common stock. This presentation contemplates an initial business combination as the most likely outcome, in which case, both classes of common stock share pro rata in the income and losses of our Company. OnJanuary 4, 2022 , the Audit Committee concluded, after discussion with the Company's management and consultation with Withum, that our previously issued (i) the Post IPO Balance sheet, as previously revised in the First Amended Filing, (ii) audited financial statements for the fiscal year endedDecember 31, 2020 as previously restated in the First Amended Filing, (iii) unaudited financial statements included in our Quarterly Report on Form 10-Q for the quarterly period endedMarch 31, 2021 , filed with theSEC onJuly 9, 2021 and (iv) unaudited financial statements included in our Quarterly Report on Form 10-Q for the quarterly period endedJune 30, 2021 , filed with theSEC onAugust 11, 2021 , should be restated to report all Public Shares as temporary equity and the Company revised method for its calculation for earnings per share and should no longer be relied upon. The restatement does not have an impact on our cash position. Our management has concluded that in light of the classification error described above, a material weakness exists in our internal control over financial reporting and that our disclosure controls and procedures were not effective as ofDecember 31, 2020 . In connection with the restatement, our management reassessed the effectiveness of our disclosure controls and procedures for the periods affected by the restatement. As a result of that reassessment, we determined that our disclosure controls and procedures for such periods were not effective with respect to our internal controls around the proper accounting and classification of complex financial instruments. For more information, see Item 9A included in this Amendment No. 2. The restatement is more fully described in Note 2 of the notes to the financial statements included herein. Overview We are a blank check company formed under the laws of theState of Delaware onAugust 31, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using cash from the proceeds of the Initial Public Offering and the sale of the Placement Units, our capital stock, debt or a combination of cash, stock and debt. We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful. Results of Operations We have neither engaged in any operations (other than searching for a Business Combination after our Initial Public Offering) nor generated any revenues to date. Our only activities fromAugust 31, 2020 (inception) throughDecember 31, 2020 were organizational activities, those necessary to prepare for the Initial Public Offering, described below. We do not expect to generate any operating revenues until after the completion of our Business Combination, at the earliest. We expect to generate non-operating income in the form of interest income on marketable securities held after the Initial Public Offering. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. For the period fromAugust 31, 2020 (inception) throughDecember 31, 2020 , we had a net loss of$845,189 , which consists of operating costs of$133,396 and transaction costs allocable to warrants of$993,257 offset by a change in the fair value of warrant liabilities of$274,333 and interest income on investments and marketable securities held in the Trust Account of$7,131 . 19 -------------------------------------------------------------------------------- Table of Contents Liquidity and Capital Resources OnDecember 14, 2020 , we consummated the Initial Public Offering of 40,250,000 Units, which included the full exercise by the underwriters of their over-allotment option in the amount of 5,250,000 Units, at a price of$10.00 per Unit, generating gross proceeds of$402,500,000 . Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 900,000 Placement Units at a price of$10.00 per Placement Unit in a private placement to our Sponsor, generating gross proceeds of$9,000,000 . Following the Initial Public Offering, the full exercise of the over-allotment option, and the sale of the Placement Units, a total of$402,500,000 was placed in the Trust Account. We incurred$22,583,792 in transaction costs, including$7,000,000 of underwriting fees,$15,137,500 of deferred underwriting fees and$446,292 of other offering costs. For the period fromAugust 31, 2020 (inception) throughDecember 31, 2020 , cash used in operating activities was$743,500 . Net loss of$845,189 was affected by a change in the fair value of warrant liabilities of$274,333 , transaction costs allocable to warrants of$993,257 , interest earned on investments and marketable securities held in the Trust Account of$7,131 and changes in operating assets and liabilities, which used$610,104 of cash from operating activities. As ofDecember 31, 2020 , we had cash, investments and marketable securities held in the Trust Account of$402,507,131 . We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account to complete our Business Combination. We may withdraw interest to pay taxes. During the period endedDecember 31, 2020 , we did not withdraw any interest income from the Trust Account To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies. As ofDecember 31, 2020 , we had$835,208 of cash held outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination. In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. Up to$1,500,000 of such loans may be convertible into units, at a price of$10.00 per unit, at the option of the lender. The units would be identical to the Placement Units. We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our 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, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination. If we are unable to complete our Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as ofDecember 31, 2020 . Contractual Obligations We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay affiliate of the Sponsor a monthly fee of$15,000 for office space, utilities and secretarial and administrative support services. We began incurring these fees onDecember 9, 2020 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and/or our liquidation. 20 -------------------------------------------------------------------------------- Table of Contents The underwriters are entitled to a deferred fee of (i)$0.35 per Unit of the gross proceeds of the initial 35,000,000 Units sold in the Initial Public Offering, or$12,250,000 , and (ii)$0.55 per Unit of the gross proceeds from the Units sold pursuant to the over-allotment option, or$2,887,500 . The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event we complete a Business Combination, subject to the terms of the underwriting agreement. Critical Accounting Policies The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted inthe United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies. Warrant Liability We account for the warrants issued in connection with our Initial Public Offering in accordance with the guidance contained in ASC 815-40 under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. The fair value of the warrants was estimated using a Monte Carlo simulation approach. Class A Common Stock Subject to Possible Redemption We account for our Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity." Shares of Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders' equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders' equity section of our balance sheet. Effective with the closing of our initial public offering, the Company recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit. Net Income (Loss) per Common Share We comply with accounting and disclosure requirements ofFinancial Accounting Standards Board ("FASB") ASC Topic 260, "Earnings Per Share." We have two classes of shares, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per share of common stock is calculated by dividing the net income (loss) by the weighted average number of common stock outstanding for the respective period. We did not consider the effect of the warrants issued in connection with the initial public offering and the private placement in the calculation of diluted income (loss) per common stock because their exercise is contingent upon future events. As a result, diluted net income (loss) per common stock is the same as basic net income (loss) per common stock. Accretion associated with the redeemable Class A common stock is excluded from income (loss) per common stock as the redemption value approximates fair value. Recent Accounting Standards Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
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