VALOR LATITUDE ACQUISITION CORP. References to "we", "us", "our" or the "Company" are to
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). We have based these forward-looking statements on our current
expectations and projections about future events. These forward-looking
statements are subject to known and unknown risks, uncertainties and assumptions
about us that may cause our actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Factors that might cause or contribute to
such a discrepancy include, but are not limited to, those described in our other
Overview
We were incorporated as a
As indicated in the accompanying unaudited condensed financial statements, as of
On
Simultaneously with the issuance and sale of the Units on
Results of Operations
Our entire activity since inception up to
For the three months ended
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For the six months ended
For the three months ended
For the period from
Liquidity, Capital Resources and Going Concern
On
Our initial shareholders, officers, directors or their affiliates may, but are
not obligated to, loan us funds as may be required ("Working Capital Loans"). If
we complete a Business Combination, we may repay the Working Capital Loans out
of the proceeds of the Trust Account released to us. Otherwise, the Working
Capital Loans may be repaid only out of funds held outside the Trust Account. In
the event that a Business Combination does not close, we may use a portion of
proceeds held outside the Trust Account to repay the Working Capital Loans but
no proceeds held in the Trust Account would be used to repay the Working Capital
Loans, other than the interest on such proceeds that may be released for working
capital purposes. Our amended and restated memorandum and articles of
association provide that we will have only until
On
At
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In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standard's Board ("FASB") Accounting
Standards Update ("ASU")
2014-15,
"Disclosures of Uncertainties about an Entity's Ability to Continue as a Going
Concern," the Company has until May 6, 2023 to consummate a Business
Combination. It is uncertain that the Company will be able to consummate a
Business Combination by this time. If a Business Combination is not consummated
by this date, there will be a mandatory liquidation and subsequent dissolution
of the Company. Management has determined that the liquidity condition and
mandatory liquidation, should a Business Combination not occur, and potential
subsequent dissolution raises substantial doubt about the Company's ability to
continue as a going concern. No adjustments have been made to the carrying
amounts of assets or liabilities should the Company be required to liquidate
after May 6, 2023 .
Critical Accounting Policies
Use of Estimates
The preparation of our 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 unaudited condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
We consider all short-term investments with an original maturity of three months
or less when purchased to be cash equivalents. As of
Offering Costs Associated with IPO
We comply with the requirements of ASC 34-10-S99-1 andSEC Staff Accounting Bulletin ("SAB") Topic 5A-"Expenses of Offering". Deferred offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that were directly related to the IPO. Offering costs are charged to temporary equity or the unaudited condensed statements of operations based on the relative value of the Public Warrants to the proceeds received from the Units sold upon the completion of the IPO. Accordingly, onMay 11, 2021 (upon the underwriters exercising their overallotment option), offering costs totaling$13,112,968 (consisting of$4,600,000 of underwriting fee,$8,050,000 of deferred underwriting fee and$462,968 of other offering costs) were recognized with$548,600 which was allocated to the Public Warrants and Private Warrants, included in the unaudited condensed statements of operations as a component of other income/(expense) and$12,564,368 included in temporary equity.
Fair Value of Financial Instruments
The fair value of our assets and liabilities, which qualify as financial
instruments under the
Convertible Promissory Note
We account for the Convertible Note under ASC 815, "Derivatives and Hedging"
("ASC 815"). Under
815-15-25,
an election can made be at the inception of a financial instrument to account
for the instrument under the fair value option under ASC 825. The Company has
made such election for its Convertible Note. Using the fair value option, the
Convertible Note is required to be recorded at its initial fair value on the
date of issuance, and each balance sheet date thereafter. Changes in the
estimated fair value of the Convertible Note is recognized as a
non-cash
gain or loss on the condensed statements of operations.
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Derivative Financial Instruments
We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, "Derivatives and Hedging". Our derivative instruments are recorded at fair value as of the IPO (May 6, 2021 ) and re-valued at each reporting date, with changes in the fair value reported in the unaudited condensed statements of operations. Derivative assets and liabilities are classified on the condensed balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. We have determined the warrants are a derivative instrument. As the warrants meet the definition of a derivative, the warrants are measured at fair value at issuance and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the unaudited condensed statements of operations in the period of change.
Warrant Instruments
We have accounted for the 12,066,667 warrants issued in connection with the IPO,
Private Placement, and the underwriters exercise of the over-allotment option in
accordance with the guidance contained in FASB ASC 815 "Derivatives and Hedging"
whereby under that provision the warrants do not meet the criteria for equity
treatment and must be recorded as a liability. Accordingly, we will classify the
warrant instruments as a liability at fair value and adjust the instruments to
fair value at each reporting period. This liability
will be re-measured at each
balance sheet date until the warrants are exercised or expire, and any change in
fair value will be recognized in our unaudited condensed statements of
operations. The fair value of warrants will be estimated using an internal
valuation model utilizing inputs such as assumed share prices, volatility,
discount factors and other assumptions and may not be reflective of the price at
which they can be settled. Such warrant classification is also subject
to re-evaluation at each
reporting period.
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset
or paid to 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.
Stock Based Compensation
We comply with ASC 718 Compensation - Stock Compensation regarding founder shares acquired by our directors at prices below fair value. The acquired shares shall vest upon our Company consummating an initial Business Combination (the "Vesting Date"). If prior to the Vesting Date, the director ceases to be a director, the shares will be forfeited. The founder shares owned by the director (1) may not be sold or transferred, until one year after the consummation of a business combination, (2) not be entitled to redemption from the funds held in the trust account, or any liquidating distributions. We have 24 months from the date of our initial public offering to consummate a business combination, and if a business combination is not consummated, our Company will liquidate and the shares will become worthless.
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Net Income Per Ordinary Share
We have 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. We have not considered the effect of the warrants sold in the Initial Public Offering and the Private Placement to purchase an aggregate of 12,066,667 of our Class A ordinary shares in the calculation of diluted income per share, since their exercise is contingent upon future events. As a result, diluted net income per ordinary share is the same as basic net income per ordinary share.
Concentration of Credit Risk
Financial instruments that potentially subject us to concentrations of credit
risk consist of a cash account in a financial institution, which, at times, may
exceed the
Class A 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 "Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and 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 ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders' equity section of our condensed balance sheets.
Income Taxes
We account for income taxes under FASB 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.
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
Recent Accounting Standards
InMay 2021 , the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of theEmerging Issues Task Force ). The standard clarifies an issuer's accounting for certain modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange, and it provides guidance on how an issuer would measure and recognize the effect of these transactions. Specifically, the ASU provides a principles-based framework to determine whether an issuer should recognize the modification or exchange as an adjustment to equity or an expense. The amendments in this update are effective for all entities for fiscal years beginning afterDecember 15, 2021 , including interim periods within those fiscal years. The guidance was adopted startingJanuary 1, 2022 . Adoption of the ASU did not impact our financial position, results of operations or cash flows. 27
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Our 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 accompanying unaudited condensed financial statements.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
Registration Rights Agreement
Pursuant to a registration rights agreement entered into on
Underwriting Agreement
Pursuant to the underwriting agreement, the underwriters received a cash
underwriting discount of
Additionally, the underwriters will be entitled to a deferred underwriting
discount of 3.5% of the gross proceeds of the IPO and exercise of the
over-allotment option, or
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an "emerging growth company" and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our unaudited condensed financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an "emerging growth company," we choose to rely on such exemptions we may not be required to, among other things, (i) provide an independent registered public accounting firm's attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the report of the independent registered public accounting firm providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO's compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of this offering or until we are no longer an "emerging growth company," whichever is earlier.
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