NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
Unaudited
Note
1—Description of Organization, Business Operations and Going Concern
EDOC
Acquisition Corp. (the “Company”) was incorporated in the Cayman Islands on August 20, 2020. The Company was formed for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more businesses (the “Business Combination”). While the Company may pursue an acquisition opportunity in any
industry or geographic region, the Company intends to focus on businesses primarily operating in the health care and health care provider
space in North America and Asia-Pacific. The Company has selected December 31 as its fiscal year end.
As
of June 30, 2021, the Company had not yet commenced any operations. All activity through June 30, 2021, relates to the Company’s
formation and the Initial Public Offering (“IPO”) described below. 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.
The
Company’s sponsor is American Physicians LLC (the “Sponsor”).
Financing
The
registration statement for the Company’s initial public offering was declared effective on November 9, 2020 (the “Effective
Date”). On November 12, 2020, the Company consummated the initial public offering of 9,000,000 units (each, a “Unit”
and collectively, the “Units”) at $10.00 per Unit (the “Initial Public Offering” or “IPO”), which
is discussed in Note 3.
Simultaneously
with the closing of the IPO, the Company consummated the sale of 479,000 private placement units (“Private Unit)” and collectively,
the “Private Units”), at a price of $10.00 per unit. Of the 479,000 private placement units, 65,000 units, or the “representative
units” were purchased by I-Banker (and/or its designees). In addition, the Company’s sponsor agreed, pursuant to a letter
agreement to purchase up to 3,750,000 of the Company’s rights in the open market at a market price not to exceed $0.20 per right.
I-Bankers also agreed to purchase up to 1,250,000 of the Company’s rights in the open market at a market price not to exceed $0.20
per right, which is discussed in Note 4.
Transaction
costs of the IPO amounted to $3,246,381, consisting of $1,575,000 of cash underwriting fees, the fair value of the representative’s
warrants of $424,270, the fair value of representative’s shares $ 653,250 and $593,861 of other cash offering costs.
Trust
Account
Following
the closing of the IPO on November 12, 2020, $91,530,000 ($10.17 per Unit) from the net proceeds of the sale of the Units in the IPO
and the sale of the Private Placement Warrants was placed in a trust account (“Trust Account”) and invested only in 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, or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only
in direct U.S. government treasury obligations, until the earlier of: (i) the completion of a Business Combination, (ii) the redemption
of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate
of incorporation, and (iii) the redemption of the Company’s public shares if the Company is unable to complete the initial Business
Combination within 24 months from the closing of the IPO (the “Combination Period”), subject to applicable law. The proceeds
deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority
over the claims of the Company’s public stockholder.
Business
Combination
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale
of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating
a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company
must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held
in the Trust Account (as defined below) (net of amounts disbursed to management for working capital purposes and excluding the amount
of any deferred underwriting discount held in trust) 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 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 1940, as amended (the “Investment Company Act”). Upon the closing of the Proposed
Public Offering, an amount equal to at least $10.00 per Unit sold in the Proposed Public Offering, including the proceeds from the sale
of the Private Placement Warrants to the Sponsor, was placed in a trust account (“Trust Account”) located in the United States
with Continental Stock Transfer & Trust Company acting as trustee, and invested only in 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, or in money market
funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government
treasury obligations, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust
Account as described below.
The
Company will provide holders of the Company’s outstanding shares of Class A ordinary shares, par value $0.0001 per share,
sold in the IPO (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares (as defined
below) upon the completion of the initial business combination either (i) in connection with a shareholder meeting called to approve
the initial business combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder
approval of a proposed initial business combination or conduct a tender offer will be made by the Company, solely in its discretion.
The shareholders will be entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust Account (initially
approximately $10.17 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released
to the Company to pay its tax obligations).
The
ordinary shares subject to redemption will be recorded at a redemption value and classified as temporary equity upon the completion of
the Proposed Public Offering, 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.
The
Company will have 12 months (or up to 18 months if the Company extends the period of time) from the closing of the Proposed
Public Offering to consummate a Business Combination (the “Combination Period”). However, if the Company is unable to complete
a Business Combination within the Combination Period, the Company will redeem 100% of the outstanding public shares for a pro rata portion
of the funds held in the trust account, equal to the aggregate amount then on deposit in the trust account including interest earned
on the funds held in the trust account and not previously released to the Company to pay its franchise and income taxes, divided by the
number of then outstanding public shares, subject to applicable law and as further described in registration statement, and then seek
to dissolve and liquidate.
The
Sponsor, officers and directors and Representative (defined in Note 6) have agreed to (i) waive their redemption rights with respect
to their founder shares, private shares, and public shares in connection with the completion of the initial business combination, (ii) waive
their redemption rights with respect to their founder shares, private shares, and public shares in connection with a shareholder vote
to approve an amendment to the Company’s amended and restated certificate of incorporation, and (iii) waive their rights to
liquidating distributions from the trust account with respect to their founder shares and private shares if the Company fails to complete
the initial business combination within the Combination Period.
The
Company’s Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services
rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of
intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below
the lesser of (i) $10.17 per public share and (ii) the actual amount per public share held in the trust account as of the date of
the liquidation of the trust account, if less than $10.17 per share due to reductions in the value of the trust assets, less taxes payable,
provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any
and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under
the Company’s indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities
Act. However, the Company has not asked its Sponsor to reserve for such indemnification obligations, nor has the Company independently
verified whether its Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Company’s Sponsor’s
only assets are securities of the Company. Therefore, the Company cannot assure that its Sponsor would be able to satisfy those obligations.
Risks
and Uncertainties
Management
is currently evaluating the impact of the COVID-19 pandemic on the industry 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 and/or search for a target
company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not
include any adjustments that might results from the outcome of this uncertainty.
Going Concern
As of June 30, 2021, the Company had $567,940
in the operating bank account and working capital of $260,516. available for working capital needs.
The
Company’s liquidity needs to date have been satisfied through a contribution of $25,000 from the Sponsor to cover certain of
the Company’s expenses in exchange for the issuance of the Founder Shares, the loan proceeds of $300,000 from the Sponsor
pursuant to the Note (see Note 5), and the net 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 Sponsors,
officers, directors and Initial Shareholders may, but are not obligated to, provide the Company a working capital loan. As of June
30, 2021, there were no amounts outstanding under any Working Capital Loan.
Until the consummation of a Business Combination,
the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing
due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring,
negotiating and consummating the Business Combination. The Company will need to raise additional capital through loans or additional investments
from its Sponsor, shareholders, officers, directors, or third parties. The Company’s Sponsor, officers and directors may, but are
not obligated to, loan the Company funds from time to time or at any time, in whatever amount they deem reasonable in their sole discretion,
to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company
is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but
not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses.
The Company cannot provide any assurance that
new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the
Company’s ability to continue as a going concern until the earlier of the consummation of the Business Combination or the date the
Company is required to liquidate. 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—Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying financial statements of the Company is presented in U.S. dollars in conformity with accounting principles generally accepted
in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange
Commission (“SEC”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been
made that are necessary to present fairly the financial position, and the results of its operations and its cash flows.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Form 10-K for the period
from August 20, 2020 (inception) through December 31, 2020 as filed with the SEC on May 24, 2021, which contains the audited financial
statements and notes thereto.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of 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 independent registered public accounting firm 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 stockholder 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 an emerging growth 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 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 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.
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 limit of $250,000. As of June 30, 2021, the Company had not experienced
losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Use
of Estimates
The
preparation of financial statements in conformity with US GAAP requires the Company’s management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities during the reporting period
and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
The Company considers the valuation of warrants
and accrued expenses to be key 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.
Investment
Held in Trust Account
At
June 30, 2021, the Trust Account had $91,555,036 held in marketable securities. During period January 1, 2021 to June 30, 2021, the Company
did not withdraw any of interest income from the Trust Account to pay its tax obligations.
Fair
Value Measurements
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under the Financial Accounting Standards
Board (“FASB”) ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented
in the balance sheet.
Derivative
warrant liabilities
The
Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates
all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain
features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including
whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The
Company accounts for its 479,000 Private Warrants and 450,000 Representative’s Warrants issued in connection with its Initial Public
Offering as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments
as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement
at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations.
The fair value of warrants issued by the Company in connection with the Public Offering and Private Placement has been estimated using
Monte-Carlo simulations at each measurement date.
Offering
Costs Associated with IPO
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
that are related to the Public Offering and that were charged to shareholders’ equity upon the completion of the IPO. Accordingly,
on December 31, 2020, offering costs totaling $3,246,381 have been charged to shareholders’ equity (consisting of $1,575,000 of
underwriting fee, the fair value of the representative’s warrants of $424,270, the fair value of representative’s shares
$653,250 and $593,861 of other cash offering costs).
Class
A Ordinary shares Subject to Possible Redemption
The
Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) 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 the Company’s
control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s
ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the
occurrence of uncertain future events. Accordingly, as of June 30, 2021, 8,496,629 shares of Class A ordinary shares subject to possible
redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s
balance sheet.
Net
Loss Per Ordinary Share
Net
loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding for each of the
periods. The calculation of diluted loss per ordinary share does not consider the effect of the warrants and rights issued in connection
with the (i) IPO since the exercise of the warrants and rights are contingent upon the occurrence of future events and the inclusion
of such warrants would be anti-dilutive. The warrants and rights are exercisable for 6,137,400 shares of Class A ordinary shares in the
aggregate.
|
|
For the
Three Months
ended
June 30,
2021
|
|
|
For the
Six Months
ended
June 30,
2021
|
|
Ordinary shares subject to possible redemption
|
|
|
|
|
|
|
|
|
Numerator: Net income allocable to Class A ordinary shares subject to possible redemption
|
|
|
|
|
|
|
|
|
Interest earned on Treasury securities held in trust
|
|
$
|
4,020
|
|
|
$
|
14,546
|
|
Less: interest available to be withdrawn for payment of taxes
|
|
|
(4,020
|
)
|
|
|
(14,546
|
)
|
Net income allocable to Class A ordinary shares subject to possible redemption
|
|
$
|
-
|
|
|
$
|
-
|
|
Denominator: Weighted Average Redeemable Class A ordinary shares
|
|
|
|
|
|
|
|
|
Redeemable Class A Ordinary shares, Basic and Diluted
|
|
|
8,557,471
|
|
|
|
8,527,340
|
|
Basic and Diluted net income per share, Redeemable Class A Ordinary shares
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
Non-Redeemable Ordinary shares
|
|
|
|
|
|
|
|
|
Numerator: Net Income minus Redeemable Net Earnings
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
(625,630
|
)
|
|
$
|
1,004
|
|
Less: redeemable Net Income
|
|
|
-
|
|
|
|
-
|
|
Non-Redeemable Net Loss
|
|
$
|
(625,630
|
)
|
|
$
|
1,004
|
|
Denominator: Weighted Average Non-Redeemable Ordinary shares
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, ordinary shares
|
|
|
3,246,529
|
|
|
|
3,276,660
|
|
Basic and diluted net loss per share, ordinary shares
|
|
$
|
(0.19
|
)
|
|
$
|
0.00
|
|
Income
Taxes
The
Company accounts 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.
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 June 30, 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.
There
is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman federal income tax regulations,
income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements.
The Company’s management does not expect the total amount of unrecognized tax benefits will materially change over the next twelve
months.
Recently Adopted Accounting Standards
In August 2020, the FASB issued ASU 2020-06, Debt-Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting
for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions
that are required for equity-linked contracts to qualify for scope exception, and it simplifies the diluted earnings per share calculation
in certain areas. The Company adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did not impact the Company’s financial
position, results of operations or cash flows.
The Company’s 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
financial statements.
Note 3—Initial Public Offering
Pursuant
to the IPO, the Company sold 9,000,000 Units at a purchase price of $10.00 per unit. Each unit consists of one share of Class A
ordinary shares, one-half warrant to purchase one share of Class A ordinary shares (“Public Warrants”), and one right
(“Rights”). Each Public Warrant will entitle the holder to purchase one share of Class A ordinary shares at a price
of $11.50 per share, subject to adjustment. Each Public Warrant will become exercisable on the later of 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 (see Note 7). Each right entitles the holder to receive one-tenth (1/10) of one
share of Class A ordinary shares upon the consummation of an initial Business Combination (see Note 7).
Note
4—Private Placement
Simultaneously
with the closing of the IPO, the Sponsor and I-Bankers purchased an aggregate of 414,000 Private Units and 65,000 Private Units,
respectively, for an aggregate of 479,000 Private Units at a price of $10.00 per Private Unit, for an aggregate purchase price of $4,790,000,
in a private placement. A portion of the proceeds from the private placement was added to the proceeds from the IPO held in the Trust
Account.
Each
Private Unit is identical to the Units sold in the IPO, except that warrants that are part of the Private Placement Units (“Private
Warrants”) are not redeemable by the Company so long as they are held by the original holders or their permitted transferees. In
addition, for as long as the warrants that are part of the Private Placement Units are held by I-Bankers or its designees or affiliates,
they may not be exercised after five years from the effective date of the Registration Statement.
The
Company’s Sponsor, officers, and directors have agreed to (i) waive their redemption rights with respect to their founder
shares, private shares, and public shares in connection with the completion of the Company’s initial Business Combination, (ii) waive
their redemption rights with respect to the founder shares, private shares, and public shares in connection with a shareholder vote to
approve an amendment to the Company’s amended and restated certificate of incorporation (A) to modify the substance or timing
of the Company’s obligation to redeem 100% of its public shares if the Company does not complete its initial Business Combination
within the Combination Period or (B) with respect to any other provision relating to shareholders’ rights or pre-initial Business
Combination activity and (iii) waive their rights to liquidating distributions from the Trust Account with respect to their founder
shares if the Company fails to complete its initial Business Combination the Combination Period. In addition, the Company’s Sponsor,
officers, and directors have agreed to vote any founder shares, private shares, and public shares held by them and any public shares
purchased during or after the IPO (including in open market and privately negotiated transactions) in favor of the Company’s initial
business combination.
Note
5—Related Party Transactions
Founder
Shares
In September 2020, the Sponsor subscribed 2,875,000
shares of the Company’s Class B ordinary shares for $25,000, or approximately $0.01 per share, in connection with formation.
On November 9, 2020, the Sponsor surrendered an aggregate of 287,500 founder shares, which were cancelled, resulting in an aggregate
of 2,587,500 founder shares outstanding and held by the Sponsor. The founder shares included an aggregate of up to 337,500 shares subject
to forfeiture if the over-allotment option was not exercised by the underwriters in full. On December 24, 2020, 337,500 shares were forfeited
as the over-allotment option was not exercised by the underwriters. As a result, the Company has 2,250,000 Founder Shares outstanding.
Promissory
Note—Related Party
In
September 2020, the Company issued an unsecured promissory note to the Sponsor, pursuant to which the Company may borrow up to an
aggregate principal amount of $300,000 to be used for a portion of the expenses of the IPO. This loan is non-interest bearing, unsecured
and due at the earlier of June 30, 2021 or the closing of the IPO. As of November 12, 2020, the Sponsor had loaned to the Company an
aggregate of $177,591 under the promissory note to pay for formation costs and a portion of the expenses of the IPO. The note was repaid
in full in connection with the closing of our initial public offering, and as of June 30, 2021 and December 31, 2020 respectively, no
amounts were outstanding.
Working
Capital Loans
In
addition, in order to finance transaction costs in connection with a 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 a Business Combination, the Company would repay the Working Capital Loans out of the
proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside
the Trust Account. In the event that a Business Combination does not close, the Company 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. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements
exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at
the lender’s discretion, Up to $1,500,000 of such Working Capital Loans may be convertible upon consummation of our business combination
into additional private units at a price of $10.00 per unit. At June 30, 2021 and December 31, 2020 respectively, no Working Capital
Loans were outstanding. To date, the Company has no borrowings under the Working Capital Loans.
Administrative
Support Agreement
The
Company agreed, for a period commencing on November 9, 2020 and ending upon completion of the Company’s Business Combination or
its liquidation, to pay the Company’s Sponsor a monthly fee of $10,000 for office space, utilities and secretarial and administrative
support. Since the initial public offering, the Company has not made any payments under the agreement, and has paid for services rendered
and expenses advanced by the Sponsor on an as-needed basis. Effective March 31, 2021, the Company and Sponsor terminated the agreement
and agreed to waive any accrued fees from inception. As of June 30, 2021 no fees were due to the Sponsor.
The
Sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred
in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence
on suitable Business Combinations. The Company’s audit committee will review on a quarterly basis all payments that were made to
the Sponsor, officers, directors or their affiliates.
Note
6—Commitments and Contingencies
Registration
Rights
The
holders of the founder shares, private placement warrants, and warrants that may be issued upon conversion of Working Capital Loans will
have registration rights to require the Company to register a sale of any of its securities held by them pursuant to a registration rights
agreement to be signed prior to or on the effective date of the IPO. These holders will be entitled to make up to three demands, excluding
short form registration demands, that the Company registers such securities for sale under the Securities Act. In addition, these holders
will have “piggy-back” registration rights to include their securities in other registration statements filed by the Company.
Underwriting
Agreement
On
November 12, 2020, the Company issued to the underwriter (and/or its designees) (the “Representative”) 75,000 shares of Class A
ordinary shares for $0.01 per share (the “Representative Shares”). The fair value of the Representative Shares was estimated
to $653,250 and were treated as underwriters’ compensation and charged directly to shareholders’ equity.
The
underwriter (and/or its designees) agreed (i) to waive its redemption rights with respect to such shares in connection with the
completion of the initial Business Combination and (ii) to waive its rights to liquidating distributions from the Trust Account
with respect to such shares if the Company fails to complete its initial Business Combination within the Combination Period.
In
addition, the Company issued to the Representative a warrant (“Representative’s Warrant) to purchase up to 450,000 Class A
ordinary shares. Such warrants will not be redeemable for as long as they are held by the Representative and they may not be exercised
after five years from the Effective Date of the registration statement. Except as described above, the warrants are identical to those
underlying the units offered by in the IPO.
The
Company initially estimated the fair value of the Representative’s Warrants at $424,270 using the Monte Carlo simulation model.
As of June 30, 2021, the fair value of the Representative’s Warrant granted to the underwriters is estimated to be $234,090 using
the following assumptions: (1) expected volatility of 11.6%, (2) risk-free interest rate of 0.93% and (3) expected life of
5.34 years. The expected volatility was determined by the Company based on the historical volatilities of a set of comparative special
purpose acquisition companies (“SPAC”), and the risk-fee interest rate was determined by reference to the U.S. Treasury yield
curve in effect for time period equals to the expected life of the Representative’s Warrant.
On November 12, 2020, the underwriters were paid
a cash underwriting discount of 1.75% of the gross proceeds of the Initial Public Offering, or $1,575,000.
Business
Combination Marketing Agreement
The
Company engaged the Representative as an advisor in connection with its Business Combination to (i) assist the Company in preparing presentations
for each potential Business Combination; (ii) assist the Company in arranging meetings with its shareholders, including making calls
directly to shareholders, to discuss each potential Business Combination and each potential target’s attributes and providing regular
market feedback, including written status reports, from these meetings and participate in direct interaction with shareholders, in all
cases to the extent legally permissible; (iii) introduce the Company to potential investors to purchase the Company’s securities
in connection with each potential Business Combination; and assist the Company with the preparation of any press releases and filings
related to each potential Business Combination or target. Pursuant to the business combination marketing agreement, the Representative
is not obligated to assist the Company in identifying or evaluating possible acquisition candidates. Pursuant to the Company’s
agreement with the Representative, an advisory fee of 2.75% of the gross proceeds of the IPO, or $2,475,000 will be payable to the Representative
at the closing of the Company’s Business Combination.
Open
Market Purchases
The
Sponsor has agreed to enter into an agreement in accordance with the guidelines of Rule 10b5-1 under the Exchange Act, to place limit
orders, through an independent broker-dealer registered under Section 15 of the Exchange Act which is not affiliated with the Company
nor part of the underwriting or selling group, to purchase an aggregate of up to 3,750,000 of the Company’s rights in the open
market at market prices, and not to exceed $0.20 per right during the period commencing on the later of (i) the date separate trading
of the rights commences or (ii) sixty calendar days after the end of the “restricted period” under Regulation M, continuing
until the date that is the earlier of (a) twelve (12) months from the date of the IPO and (b) the date that the Company announces that
it has entered into a definitive agreement in connection with its initial Business Combination, or earlier in certain circumstances as
described in the limit order agreement. The limit orders will require the Sponsor to purchase any rights offered for sale (and not purchased
by another investor) at or below a price of $0.20, until the earlier of (x) the expiration of the buyback period or (y) the date such
purchases reach 3,750,000 rights in total. The Sponsor will not have any discretion or influence with respect to such purchases and will
not be able to sell or transfer any rights purchased in the open market pursuant to such agreements until following the consummation
of a Business Combination. It is intended that the broker’s purchase obligation will be subject to applicable law, including Regulation
M under the Exchange Act, which may prohibit or limit purchases pursuant to the limit order agreement in certain circumstances. The Representative
has also agreed to purchase up to 1,250,000 of the Company’s rights in the open market at market prices not to exceed $0.20 per
right, on substantially similar terms as the Sponsor.
Note
7 -Warrants and Rights
Warrants —Each
whole warrant entitles the holder to purchase one share of the Company’s Class A ordinary shares at a price of $11.50 per
share, subject to adjustment as discussed herein. In addition, if (x) the Company issues additional Class A ordinary shares
or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue
price or effective issue price of less than $9.50 per share of Class A ordinary shares (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
Sponsor or its affiliates, without taking into account any founder shares held by the Company’s Sponsor or its affiliates, 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 consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of
the Company’s ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company
consummates the initial Business Combination (such price, the “Market Value”) is below $9.50 per share, the exercise price
of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Market Value, and the $18.00 per share redemption trigger
price described below under “Redemption of warrants” will be adjusted (to the nearest cent) to be equal to 180% of the Market
Value.
The
warrants will become exercisable on the later of 12 months from the closing of the IPO or upon 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., Eastern Time, or earlier
upon redemption or liquidation.
In
no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within
the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such
funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust
Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
The
Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation
to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A ordinary shares
underlying the warrants is then effective and a prospectus is current. No warrant will be exercisable, and the Company will not be obligated
to issue Class A ordinary shares upon exercise of a warrant unless Class A ordinary shares issuable upon such warrant exercise
has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of
the warrants. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is
not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for
the unit solely for the share of Class A ordinary shares underlying such unit.
The
Company may call the warrants for redemption (excluding the private warrants, and any outstanding Representative’s Warrants, and
any warrants underlying units issued to the Sponsor, initial shareholders, officers, directors or their affiliates in payment of Working
Capital Loans made to the Company), in whole and not in part, at a price of $0.01 per warrant:
|
●
|
at
any time while the warrants are exercisable,
|
|
●
|
upon
not less than 30 days’ prior written notice of redemption to each warrant holder,
|
|
●
|
if,
and only if, the reported last sale price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for
stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period ending
on the third trading business day prior to the notice of redemption to warrant holders, and
|
|
●
|
if, and only if, there is a current registration statement in effect with respect to the issuance of the Class A ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day until the date of redemption.
|
If
the Company calls the warrants for redemption as described above, the management will have the option to require any holder that wishes
to exercise its warrant to do so on a “cashless basis.” If the management takes advantage of this option, all holders of
warrants would pay the exercise price by surrendering their warrants for that number of shares of Class A ordinary shares equal
to the quotient obtained by dividing (x) the product of the number of shares of Class A ordinary shares underlying the warrants,
multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the
fair market value. The “fair market value” shall mean the average reported last sale price of the Class A ordinary shares
for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of
warrants.
Rights —
Except in cases where the Company is not the surviving company in a Business Combination, each holder of a right will automatically receive
one-tenth (1/10) of a share of Class A ordinary shares upon consummation of the initial Business Combination, even if the holder
of a right converted all shares held by him, her or it in connection with the initial Business Combination or an amendment to the Company’s
memorandum and articles of association with respect to its pre-business combination activities. In the event that the Company will not
be the surviving company upon completion of the initial Business Combination, each holder of a right will be required to affirmatively
convert his, her or its rights in order to receive the one-tenth (1/10) of a share of Class A ordinary shares underlying each right
upon consummation of the Business Combination. No additional consideration will be required to be paid by a holder of rights in order
to receive his, her or its additional share of Class A ordinary shares upon consummation of an initial Business Combination. The
shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company). If the
Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive
agreement will provide for the holders of rights to receive the same per share consideration the holders of share of Class A ordinary
shares will receive in the transaction on an as-converted into Class A ordinary shares basis.
The
Company will not issue fractional shares in connection with an exchange of rights. Fractional shares will either be rounded down to the
nearest whole share or otherwise addressed in accordance with the applicable provisions of the Cayman Islands law. As a result, the holders
of the rights must hold rights in multiples of 10 in order to receive shares for all of the holders’ rights upon closing of a Business
Combination. If the Company is unable to complete an initial Business Combination within the required time period and the Company liquidates
the funds held in the Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they
receive any distribution from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights
will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon
consummation of an initial Business Combination. Additionally, in no event will the Company be required to net cash settle the rights.
Accordingly, the rights may expire worthless.
Note
8—Shareholders’ Equity
Preferred
Shares — The Company is authorized to issue a total of 5,000,000 preferred shares at par value of $0.0001 each. At
June 30, 2021, there were no preferred shares issued or outstanding.
Class A
Ordinary Shares — The Company is authorized to issue a total of 500,000,000 Class A ordinary shares at par value
of $0.0001 each. At June 30, 2021 and December 31, 2020, there were 1,057,370 and 1,057,469 Class A ordinary shares issued and outstanding,
respectively, excluding 8,496,629 and 8,496,531 Class A ordinary shares subject to possible redemption, respectively.
Class B
Ordinary Shares — The Company is authorized to issue a total of 50,000,000 Class B ordinary shares at par value
of $0.0001 each. In September 2020, the Sponsor subscribed 2,875,000 shares of the Company’s Class B ordinary shares for $25,000,
or approximately $0.01 per share, in connection with formation. On November 9, 2020, the founders surrendered an aggregate of 287,500
Class B ordinary shares for no consideration, resulting in an aggregate of 2,587,500 Class B ordinary shares issued and outstanding.
On December 24, 2020, 337,500 shares were forfeited as the over-allotment option was not exercised by the underwriters, resulting in
an aggregate of 2,250,000 Class B ordinary shares issued and outstanding at June 30, 2021.
The
Company’s initial shareholders have agreed not to transfer, assign or sell 50% its founder shares until the earlier to occur of
(i) six months after the date of the consummation of the initial Business Combination or (ii) the date on which the closing
price of the Company’s Class A ordinary shares equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends,
reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after the initial Business
Combination and the remaining 50% of the founder shares may not be transferred, assigned or sold until six months after the date of the
consummation of the initial Business Combination, or earlier, in either case, if, subsequent to the initial Business Combination, the
Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the shareholders
having the right to exchange their shares for cash, securities or other property.
The
Class B ordinary shares will automatically convert into the Company’s Class A ordinary shares at the time of its initial
Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, 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 offered in the IPO and related to the closing of the initial Business
Combination, the ratio at which Class B ordinary shares shall convert into Class A ordinary shares will be adjusted (unless
the holders of a majority of the outstanding Class B ordinary shares agree to waive such adjustment with respect to any such issuance
or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of all shares of Class B ordinary
shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of ordinary shares 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 or any private placement-equivalent units issued to the Sponsor or its affiliates upon conversion of loans made
to the Company).
Holders
of the Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all matters
submitted to a vote of the Company’s shareholders, with each share of ordinary shares entitling the holder to one vote.
Note
9— Fair Value Measurements
Financial Accounting Standards Board’s (“FASB”)
Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurements and Disclosures” (“ASC 820”)
defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller
at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and
cost approach shall be used to measure fair value. ASC 820 establishes a fair value hierarchy for inputs, which represent the assumptions
used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs.
Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources
independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs that the buyer and seller would
use in pricing the asset or liability developed based on the best information available in the circumstances.
The fair value hierarchy is categorized into three
levels based on the inputs as follows:
Level 1 – Valuations based on
unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments
and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an
active market, valuation of these securities does not entail a significant degree of judgment.
Level 2 – Valuations based on
(i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical
or similar assets, (iii) inputs other than quoted prices for the assets and liabilities, or (iv) inputs that are derived principally from
or corroborated by market through correlation or other means.
Level 3 – Valuations based on
inputs that are unobservable and significant to the overall 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 condensed balance
sheet as of June 30, 2021 and the balance sheet as of December 31, 2020. The fair values of cash and cash equivalents, prepaid assets,
accounts payable and accrued expenses are estimated to approximate the carrying values as of June 30, 2021 and December 31, 2020
due to the short maturities of such instruments.
Investment
Held in Trust Account
As of June 30, 2021, investments in the Company’s Trust Account
consisted of $91,555,036 in U.S. Money Market funds. All of the U.S. Treasury Securities matured on May 13, 2021.
The following table presents information about the Company’s assets that were measured at fair value on
a recurring basis as of June 30, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation techniques the Company
utilized to determine such fair value.
June 30, 2021
|
Description:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
U.S. Money Market held in Trust Accounts
|
|
$
|
91,555,036
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
91,555,036
|
|
Total Investments in trust
|
|
$
|
91,555,036
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
91,555,036
|
|
December 31, 2020
|
Description:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
U.S. Money Market held in Trust Accounts
|
|
$
|
91,538,680
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
91,538,680
|
|
Total Investments in trust
|
|
$
|
91,538,680
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
91,538,680
|
|
There were no transfers between Levels 1, 2 or
3 during the six months ended June 30, 2021 or for the year ended December 31, 2020.
Level 1 instruments include investments in money
markets and Treasury securities. The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers
or brokers, and other similar sources to determine the fair value of its investments.
Warrant
Liability
The
Private Warrants and Representative’s Warrant are accounted for as liabilities pursuant to ASC 815-40 and are measured at fair
value as of each reporting period. Changes in the fair value of the Warrants are recorded in the statement of operations each period.
The
following table presents the Company’s fair value hierarchy for liabilities measured at fair value on a recurring basis as of June
30, 2021:
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
|
|
Warrant
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
Warrants
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
170,742
|
|
|
$
|
170,742
|
|
Representative’s
Warrant
|
|
|
|
|
|
|
|
|
|
|
234,090
|
|
|
|
234,090
|
|
Total
warrant liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
404,832
|
|
|
$
|
404,832
|
|
The
Private Warrants and Representative’s Warrant were valued using a Montel Carlo simulation model, which is considered to be a Level
3 fair value measurement. Inherent in an options pricing model are assumptions related to expected stock-price volatility, expected life,
risk-free interest rate and dividend yield. The Company estimates the volatility of its ordinary shares based on historical volatility
that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield
curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed
to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates
to remain at zero.
There were no transfers between Levels 1, 2 or 3 during the six months
ended June 30, 2021.
The
following table provides quantitative information regarding Level 3 fair value measurements for Private Warrants as of June 30, 2021
and December 31, 2020. The Representative’s Warrants were valued using similar information, except for strike price which is at
$12.
|
|
June
30,
2021
|
|
|
December 31,
2020
|
|
Exercise
price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Share
price
|
|
$
|
10.05
|
|
|
$
|
10.24
|
|
Volatility
|
|
|
11.6
|
%
|
|
|
11.7
|
%
|
Expected
life
|
|
|
5.34
|
|
|
|
5.91
|
|
Risk-free
rate
|
|
|
0.93
|
%
|
|
|
0.49
|
%
|
Dividend
yield
|
|
|
-
|
%
|
|
|
-
|
%
|
The
following table presents a summary of the changes in the fair value of the Private Warrants and Representative’s Warrants, a Level
3 liability, measured on a recurring basis.
|
|
Warrant
Liability
|
|
Fair
value, December 31, 2020
|
|
$
|
1,156,512
|
|
Gain
on change in fair value (1)
|
|
|
(751,680
|
)
|
Fair
value, June 30, 2021
|
|
$
|
404,832
|
|
(1)
|
Represents
the non-cash gain on change in valuation of the Private Warrants and Representative’s Warrants and is included in Gain on change
in fair value of warrant liability on the statement of operations.
|
Note
10—Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements
were issued. Based upon this review, other than the event disclosed below, the Company did not identify any subsequent events that would
have required adjustment or disclosure in the financial statements.