SAI.TECH GLOBAL CORPORATION References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") that are not historical facts, and involve risks and
uncertainties that could cause actual results to differ materially from those
expected and projected. All statements, other than statements of historical fact
included in this Form 10-Q including, without limitation, statements in this
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding our financial position, business strategy and the plans
and objectives of management for future operations, are forward-looking
statements. Words such as "anticipate," "believe," "continue," "could,"
"estimate," "expect," "intends," "may," "might," "plan," "possible,"
"potential," "predict," "project," "should," "would" and variations thereof and
similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of our final prospectus for its Initial Public Offering filed
with the
Overview
We are a blank check company incorporated in the
On
On
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We presently have no revenue, have had losses since inception from incurring formation costs and have had no operations other than the active solicitation of a target business with which to complete a business combination. We have relied upon the sale of our securities and loans from our Sponsor, officers and directors to fund our operations.
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.
We are currently evaluating the impact of the COVID-19 pandemic on the industry and have concluded that while it is reasonably possible that the virus could have a negative effect on our financial position, results of our operations and/or search for a target company, the specific impact is not readily determinable as of the date of this report. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
On
On
The "Merger Consideration" will be paid by the issuance of our Class A ordinary
shares ("Purchaser Class A Shares") and a new series of our Class B ordinary
shares ("Purchaser Class
In connection with the Merger and the Merger Consideration: (i) SAITECH's
preferred shares will convert into SAITECH's Class A ordinary shares ("SAITECH
Class A Ordinary Shares") immediately prior to the Merger; (ii) Holders of the
issued and outstanding SAITECH Class A Ordinary Shares (including current
holders of SAITECH's prior preferred shares) will receive shares of Purchaser
Class A Shares; and (iii) the current holder of SAITECH's issued and outstanding
Class B ordinary shares will receive Purchaser Class
Holders of Purchaser Class A Shares and Purchaser Class
The new series of Purchaser Class
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The consummation of the Business Combination is subject to customary conditions,
including, among other things, (i) the approval of the Business Combination
Agreement by the shareholders of TradeUP, (ii) TradeUP having an aggregate cash
amount of at least
The parties to the Business Combination Agreement have made customary representations, warranties and covenants in the Business Combination Agreement, including, among others, covenants with respect to the conduct of TradeUP and SAITECH and their subsidiaries prior to the Closing.
The Business Combination Agreement may be terminated by SAITECH or TradeUP under
certain circumstances, including, among others, (i) by mutual written consent of
SAITECH and TradeUP, (ii) by either SAITECH or TradeUP if the Closing has not
occurred on or before
Registration Rights Agreement
At the Closing of the Business Combination, pursuant to the Business Combination Agreement, TradeUP will enter into an Amended and Restated Registration Rights Agreement (the "Registration Rights Agreement") with Sponsor, certain directors of TradeUP, and shareholders of SAITECH containing customary registration rights for the equityholders party to the agreement, including piggyback registration rights and up to two demand registration rights for an underwritten public offering.
Sponsor Support Agreement
In connection with the execution of the Business Combination Agreement, the
Sponsor and certain insiders of TradeUP entered into an Agreement (the "Sponsor
Support Agreement") with TradeUP, pursuant to which the Sponsor and such
insiders agreed to vote all the Founder Shares beneficially owned by them in
favor of the Business Combination and each other proposal related to the
Business Combination included on the agenda for the special meeting of
shareholders relating to the Business Combination, to appear at such meeting or
otherwise cause their shares to be counted as present for purposes of
establishing a quorum at such meeting, to vote against any proposal that would
impede the Business Combination and the other transactions contemplated thereby,
to vote against any change in business, management or board of directors of
TradeUP other than in connection with the Business Combination, not to redeem
any of their shares, and to the waiver of their respective anti-dilution rights
with respect to the issuance of any Purchaser Class A Shares or Purchaser Class
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Sponsor Letter Agreement Amendment
Concurrently with the execution of the Business Combination Agreement, the
Company, the Sponsor and certain insiders of the Company have entered into an
amendment to that certain Letter Agreement, dated as of
Pursuant to Lock-Up Agreements to be executed at the closing of the Merger, the
Sponsor and such insiders would agree to not to, without the prior written
consent of the board of directors of the Company, (i) sell, offer to sell,
contract or agree to sell, assign, lend, offer, encumber, donate, hypothecate,
pledge, grant any option, right or warrant to purchase or otherwise transfer,
dispose of or agree to transfer or dispose of, directly or indirectly, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position, with respect to (A) any Purchaser Class A Shares, (B) any
prior Class B ordinary shares of the Company that are convertible into Purchaser
Class A Shares on the Merger effective date, or (C) any securities convertible
into or exercisable or exchangeable for Purchaser Class A Shares, in each case,
held by it immediately after the Merger effective date (the "Lock-up Shares"),
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of any of the
Lock-up Shares, whether any such transaction is to be settled by delivery of
such securities, in cash or otherwise or (iii) publicly announce any intention
to effect any transaction specified in clause (i) or (ii) (the actions specified
in clauses (i)-(iii), collectively, "Transfer") until (a) for one-half of the
Lock-up Shares, the earlier of (x) the date on which the volume weighted average
trading price of the Purchaser Class A Shares exceeds
New CEO and CFO Employment Agreements
Concurrent with the signing of the Business Combination Agreement, TradeUP
entered into employment agreements with SAITECH's current Chief Executive
Officer (
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Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. All activities from inception through
For the three months ended
For the period from
Liquidity and Capital Resources
Following the closings of the Initial Public Offering on
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, excluding deferred underwriting commissions, to complete our Business Combination. We may withdraw interest from the Trust Account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a 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.
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, 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,
lend us funds as may be required. If we complete the initial Business
Combination, it would repay such loaned amounts. In the event that the initial
Business Combination does not close, we may use a portion of the working capital
held outside the Trust Account to repay such loaned amounts but no proceeds from
the Trust Account will be used for such repayment. Up to
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 initial 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 Class A ordinary shares issued in the Initial Public Offering and as a part of the Option Units upon completion of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities that would be considered
off-balance sheet arrangements as of
Contractual Obligations
As of
We are obligated to pay the underwriters a deferred underwriting business
combination marketing fees equal to 3.5% of the gross proceeds of the Initial
Public Offering and the sale of over-allotment Option Units. Upon completion of
the Business Combination,
The holders of the Class B ordinary shares issued to the Sponsor in connection with the organization of our Company (the "Founder shares"), the Private Placement Shares, and any Class A ordinary shares that may be issued upon conversion of working capital loans (and any underlying securities) will be entitled to registration rights pursuant to a registration and shareholder rights agreement entered into in connection with the Initial Public Offering. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent to our completion of our initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
Critical Accounting Policies Basis of Presentation
The accompanying unaudited condensed financial statements are presented in
conformity with accounting principles generally accepted in
Emerging Growth Company Status
We are 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"). As an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, 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 an election to opt out is irrevocable. We have 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, we, 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 our unaudited condensed 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.
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Use of Estimates
The preparation of unaudited condensed financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash
We consider all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. We did not have any cash equivalents.
Investments Held in Trust Account
At
We classify its
Offering Costs
Offering costs consist of underwriting, legal, accounting and other expenses incurred that are directly related to the Initial Public Offering and charged to shareholders' equity upon the completion of the Initial Public Offering.
Warrants
We account 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 ASC 480 "Distinguishing Liabilities from Equity" ("ASC 480") and ASC 815 "Derivatives and Hedging" ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own ordinary shares and whether the warrant holders could potentially require "net cash settlement" in a circumstance outside of our control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
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 equity 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 as liabilities 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.
Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance
with the guidance in ASC Topic 480. Ordinary shares subject to mandatory
redemption are classified as a liability instrument 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
our control) are classified as temporary equity. At all other times, ordinary
shares are classified as shareholders' equity. Our Class A ordinary shares
feature certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly, as of
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Net Income (Loss) Per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC 260, Earnings
Per Share. In order to determine the net income (loss) attributable to both the
redeemable shares and non-redeemable shares, we first considered the
undistributed income (loss) allocable to both the redeemable ordinary shares and
non-redeemable ordinary shares and the undistributed income (loss) is calculated
using the total net loss less any dividends paid. We then allocated the
undistributed income (loss) ratably based on the weighted average number of
shares outstanding between the redeemable and non-redeemable ordinary shares.
Any remeasurement of the accretion to redemption value of the ordinary shares
subject to possible redemption was considered to be dividends paid to the public
shareholders. As of
Concentration of Credit Risk
Financial instruments that potentially subject us to concentration of credit
risk consist of a cash account in a financial institution. We have not
experienced losses on this account and management believes we are not exposed to
significant risks on such account. As of
Fair Value of Financial Instruments
The fair value of our assets and liabilities approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
The fair value of our financial assets and liabilities reflects management's estimate of amounts that we would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, we seek to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
? Level 1 - inputs to the valuation methodology are quoted prices (unadjusted)
for identical assets or liabilities in active markets.
? Level 2 - inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable for
the assets or liability, either directly or indirectly, for substantially the
full term of the financial instruments.
? Level 3 - inputs to the valuation methodology are unobservable and significant
to the fair value. Income Taxes
We account for income taxes under ASC 740 Income Taxes ("ASC 740"). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
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We recognize 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
We have determined that the
We may be subject to potential examination by
There is currently no taxation imposed on income by the Government of the
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
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