The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this report.
Special Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this section
and elsewhere in this Form 10-Q regarding the Company's financial position,
business strategy and the plans and objectives of management for future
operations, are forward-looking statements. When used in this Form 10-Q, words
such as "anticipate," "believe," "estimate," "expect," "intend" and similar
expressions, as they relate to us or the Company's management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of management, as well as assumptions made by, and information currently
available to, the Company's management. Actual results could differ materially
from those contemplated by the forward-looking statements as a result of certain
factors detailed in our filings with the
Overview
We are a blank check company incorporated on
The issuance of additional shares in a business combination:
? may significantly dilute the equity interest of investors in this offering,
which dilution would increase if the anti-dilution provisions in the Class B
ordinary shares resulted in the issuance of Class A ordinary shares on a
greater than one-to-one basis upon conversion of the Class B ordinary shares;
? may subordinate the rights of holders of Class A ordinary shares if preference
shares are issued with rights senior to those afforded our Class A ordinary
shares;
? could cause a change in control if a substantial number of our Class A ordinary
shares are issued, which may affect, among other things, our ability to use our
net operating loss carry forwards, if any, and could result in the resignation
or removal of our present officers and directors;
? may have the effect of delaying or preventing a change of control of us by
diluting the share ownership or voting rights of a person seeking to obtain
control of us;
? may adversely affect prevailing market prices for our units, Class A ordinary
shares and/or warrants; and may not result in adjustment to the exercise price
of our warrants.
Similarly, if we issue debt or otherwise incur significant debt, it could result in:
? default and foreclosure on our assets if our operating revenues after an
initial business combination are insufficient to repay our debt obligations;
? acceleration of our obligations to repay the indebtedness even if we make all
principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
? our immediate payment of all principal and accrued interest, if any, if the
debt is payable on demand;
? our inability to obtain necessary additional financing if the debt contains
covenants restricting our ability to obtain such financing while the debt is
outstanding;
? our inability to pay dividends on our Class A ordinary shares;
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? using a substantial portion of our cash flow to pay principal and interest on
our debt, which will reduce the funds available for dividends on our Class A
ordinary shares if declared, expenses, capital expenditures, acquisitions and
other general corporate purposes;
? limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation;
and limitations on our ability to borrow additional amounts for expenses,
capital expenditures, acquisitions, debt service requirements, execution of our
strategy and other purposes and other disadvantages compared to our competitors
who have less debt.
As indicated in the accompanying financial statements, as of
Recent Developments - COVID-19
In
Results of Operations
For the period from
Our normal operating costs since
As we identify Initial Business Combination candidates, our costs are expected to increase significantly in connection with investigating potential Initial Business Combination candidates, as well as additional professional, due diligence and consulting fees and travel costs that will be required and professional and other costs associated with negotiating and executing a definitive agreement and related agreements and related required public reporting and governance matters.
Income taxes were
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See below regarding other income and expense items associated with the warrant liability.
The Public Offering and the Private Placement closed on
As discussed further in Note 5 to the condensed financial statements, the Company accounts for its outstanding public and private placement warrants as derivative liabilities in the unaudited condensed financial statements. As a result, the Company is required to measure the fair value of the public and private placement warrants at the end of each reporting period and recognize changes in the fair value from the prior period in the Company's operating results for each current period.
The Company's prior accounting for the warrants as components of equity instead
of as derivative liabilities at
Liquidity and Capital Resources
On
The net proceeds from the Public Offering and Private Placement was
approximately
Until the consummation of the Public Offering, the Company's only sources of
liquidity were an initial purchase of shares of our Class B ordinary share for
The Company believes, but cannot provide any assurance, that the approximately
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We expect our principal liquidity requirements during this period to include
approximately
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a "no-shop" provision (a provision designed to keep target businesses from "shopping" around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a "no-shop" provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
Moreover, we may need to obtain additional financing to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held in our trust account, or because we become obligated to redeem a significant number of our public shares upon completion of the business combination, in which case we may issue additional securities or incur debt in connection with such business combination. If we have not consummated our initial business combination within the required time period because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account.
The Company has until
In the event of such liquidation, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the price per unit in the Public Offering.
Off-balance sheet financing arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any agreements for non-financial assets.
Contractual obligations
At
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In connection with identifying an Initial Business Combination candidate and negotiating an Initial Business Combination, the Company may enter into engagement letters or agreements with various consultants, advisors, professionals and others in connection with an Initial Business Combination. The services under these engagement letters and agreements can be material in amount and in some instances can include contingent or success fees. Contingent or success fees (but not deferred underwriting compensation) would be charged to operations in the quarter that an Initial Business Combination is consummated. In most instances (except with respect to our independent registered public accounting firm), these engagement letters and agreements are expected to specifically provide that such counterparties waive their rights to seek repayment from the funds in the Trust Account.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with GAAP 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. The Company has identified the following as its critical accounting policies:
Emerging Growth Company
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 an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when an accounting 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.
Net Income (Loss) per Share:
Net income (loss) per ordinary share is computed by dividing net income (loss) applicable to ordinary shareholders by the weighted average number of shares of ordinary stock outstanding for the period. The Company has not considered the effect of the warrants sold in the Public Offering and Private Placement to purchase an aggregate of 15,566,667 Class A ordinary shares in the calculation of diluted income (loss) per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted income (loss) per ordinary share is the same as basic loss per ordinary share for the period.
The Company's statements of operations include a presentation of income (loss)
per share for ordinary stock subject to redemption in a manner similar to the
two-class method of income (loss) per share. Net income (loss) per share, basic
and diluted, for shares of Class A ordinary stock is calculated by dividing the
interest income earned on the funds in the Trust Account, net of income tax
expense and franchise tax expense if any, by the weighted average number of
shares of Class A ordinary stock outstanding since their original issuance. Net
income (loss) per ordinary share, basic and diluted, for shares of Class B
ordinary stock is calculated by dividing net income (loss) less income
attributable to Class A ordinary stock, by the weighted average number of shares
of Class B ordinary stock outstanding for the period. Net income (loss)
available to each class of ordinary shareholders is as follows for the three
months ended
Three Months endedMarch 31, 2021
Net income available to Class A ordinary shareholders: Interest income
$ 45,000 Less: Income and franchise taxes -
Net income attributable to Class A ordinary shareholders
$ 4,630,000
Less: amount attributable to Class A ordinary shareholders (45,000 )
Net income attributable to Class B ordinary shareholders
18 Concentration of Credit Risk:
Financial instruments that potentially subject the Company to concentrations of
credit risk consist of cash accounts in a financial institution, which at times,
may exceed the Federal depository insurance coverage of
Financial Instruments:
The fair value of the Company's assets and liabilities, which qualify as financial instruments under Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC 820"), "Fair Value Measurements and Disclosures," approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
Use of Estimates:
The preparation of financial statements in conformity with accounting principles
generally accepted in
Deferred Offering Costs:
The Company complies with the requirements of the FASB ASC 340-10-S99-1 and
Class A ordinary shares Subject to Possible Redemption:
As discussed in Note 3, all of the 30,000,000 Class A ordinary shares sold as
part of a Unit in the Public Offering contain a redemption feature which allows
for the redemption of ordinary shares under the Company's liquidation or tender
offer/stockholder approval provisions. In accordance with FASB ASC 480,
redemption provisions not solely within the control of the Company require the
security to be classified outside of permanent equity. Ordinary liquidation
events, which involve the redemption and liquidation of all of the entity's
equity instruments, are excluded from the provisions of FASB ASC 480. Although
the Company did not specify a maximum redemption threshold, its articles of
association provide that in no event will it redeem its Public Shares in an
amount that would cause its net tangible assets (shareholders' equity) to be
less than
The Company recognizes changes immediately as they occur and adjusts the
carrying value of the securities at the end of each reporting period. Increases
or decreases in the carrying amount of redeemable Class A ordinary shares are
affected by adjustments to additional paid-in capital. Accordingly, at
Income Taxes:
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for
the balance sheet recognition and measurement of tax positions taken or expected
to be taken in a tax return. For those benefits to be recognized, a tax position
must be more-likely-than-not to be sustained upon examination by taxing
authorities. The Company's management determined that the
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The Company is considered an exempted
Warrant Liability
The Company accounts for warrants as either equity-classified or
liability-classified instruments based on an assessment of the warrant's
specific terms and applicable authoritative guidance in
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of
additional paid-in capital at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification, the
warrants are required to be recorded at their initial fair value on the date of
issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the
statements of operations. Costs associated with issuing the warrants accounted
for as liabilities are charged to operations when the warrants are issued. The
valuation as of the initial measurement date was based on application of a
binomial / lattice model that assumes exercise of the Company's redemption
option, including the make whole table. The valuation as of
Recent Accounting Pronouncements:
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company's financial statements.
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