Item 1. Interim Financial Statements.
GESHER I ACQUISITION
CORP.
CONDENSED BALANCE SHEETS
|
|
December
31,
2021
|
|
|
September 30,
2021
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
Assets:
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
446,883
|
|
|
$
|
-
|
|
Prepaid expenses
|
|
|
230,110
|
|
|
|
-
|
|
Deferred offering costs
|
|
|
-
|
|
|
|
208,199
|
|
Total current assets
|
|
|
676,993
|
|
|
|
208,199
|
|
Prepaid expenses, non-current
|
|
|
171,164
|
|
|
|
-
|
|
Marketable securities held in Trust Account
|
|
|
116,152,462
|
|
|
|
-
|
|
Total assets
|
|
$
|
117,000,619
|
|
|
$
|
$208,199
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ (Deficit) Equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accrued offering costs and expenses
|
|
$
|
30,935
|
|
|
|
22,318
|
|
Promissory note – related party
|
|
|
-
|
|
|
|
175,827
|
|
Due to related party
|
|
|
25,000
|
|
|
|
-
|
|
Total current liabilities
|
|
|
55,935
|
|
|
|
198,145
|
|
Deferred underwriting commissions
|
|
|
4,025,000
|
|
|
|
-
|
|
Total liabilities
|
|
|
4,080,935
|
|
|
|
198,145
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 6)
|
|
|
|
|
|
|
|
|
Ordinary shares subject to possible redemption, 11,500,000 and 0 shares at redemption value of $10.10 at December 31, 2021 and September 30, 2021, respectively.
|
|
|
116,152,462
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ (Deficit) Equity:
|
|
|
|
|
|
|
|
|
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Ordinary shares, $0.0001 par value; 100,000,000 shares authorized; 3,075,000 shares issued and outstanding (excluding 11,500,000 and 0 shares subject to possible redemption) at December 31, 2021 and September 30, 2021, respectively.
|
|
|
308
|
|
|
|
308
|
|
Additional paid-in capital
|
|
|
-
|
|
|
|
24,692
|
|
Accumulated deficit
|
|
|
(3,233,086
|
)
|
|
|
(14,946
|
)
|
Total shareholders’ (deficit) equity
|
|
|
(3,232,778
|
)
|
|
|
10,054
|
|
Total Liabilities and Shareholders’ (Deficit) Equity
|
|
$
|
117,000,619
|
|
|
$
|
208,199
|
|
The accompanying notes
are an integral part of these unaudited condensed financial statements.
GESHER I ACQUISITION
CORP.
UNAUDITED CONDENSED STATEMENT OF OPERATIONS
FOR THE Three Months Ended DECEMBER 31, 2021
Formation and operating costs
|
|
$
|
216,576
|
|
Loss from operations
|
|
|
(216,576
|
)
|
|
|
|
|
|
Other income
|
|
|
|
|
Change in fair value of over-allotment units
|
|
|
44,550
|
|
Interest income earned on Trust Account
|
|
|
2,462
|
|
Total other income
|
|
|
47,012
|
|
|
|
|
|
|
Net loss
|
|
$
|
(169,564
|
)
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, ordinary shares subject to redemption
|
|
|
9,777,174
|
|
Basic and diluted net loss per ordinary share subject to possible redemption
|
|
$
|
(0.01
|
)
|
Basic and diluted weighted average shares outstanding, nonredeemable ordinary shares
|
|
|
2,997,554
|
|
Basic and diluted net loss per nonredeemable ordinary share
|
|
$
|
(0.01
|
)
|
The accompanying notes
are an integral part of these unaudited condensed financial statements.
GESHER I ACQUISITION
CORP.
UNAUDITED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
FOR THE Three Months Ended DECEMBER 31, 2021
|
|
Ordinary shares
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Shareholders’
Equity
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
(Deficit)
|
|
Balance as of October 1, 2021
|
|
|
3,075,000
|
|
|
$
|
308
|
|
|
$
|
24,692
|
|
|
$
|
(14,946
|
)
|
|
$
|
10,054
|
|
Proceeds allocated to Public Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
8,165,000
|
|
|
|
-
|
|
|
|
8,165,000
|
|
Proceeds allocated to Private Placement Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000,000
|
|
|
|
-
|
|
|
|
5,000,000
|
|
Incentives to anchor investors and forward purchasers
|
|
|
-
|
|
|
|
-
|
|
|
|
4,073,565
|
|
|
|
-
|
|
|
|
4,073,565
|
|
Offering costs allocated to warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
(956,456
|
)
|
|
|
-
|
|
|
|
(956,456
|
)
|
Accretion of redeemable shares to redemption value
|
|
|
-
|
|
|
|
-
|
|
|
|
(16,306,801
|
)
|
|
|
(3,048,576
|
)
|
|
|
(19,355,377
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(169,564
|
)
|
|
|
(169,564
|
)
|
Balance as of December 31, 2021
|
|
|
3,075,000
|
|
|
|
308
|
|
|
|
-
|
|
|
|
(3,233,086
|
)
|
|
|
(3,232,778
|
)
|
The accompanying notes
are an integral part of these unaudited condensed financial statements.
GESHER I ACQUISITION
CORP.
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
FOR THE Three Months Ended DECEMBER 31, 2021
Cash flows from operating activities:
|
|
|
|
Net loss
|
|
$
|
(169,564
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
Interest earned on marketable securities held in Trust Account
|
|
|
(2,462
|
)
|
Changes in current assets and liabilities:
|
|
|
|
|
Prepaid assets
|
|
|
(401,274
|
)
|
Due to related party
|
|
|
25,000
|
|
Accrued offering costs and expenses
|
|
|
8,617
|
|
Net cash used in operating activities
|
|
|
(539,683
|
)
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Principal deposited in Trust Account
|
|
|
(116,150,000
|
)
|
Net cash used in investing activities
|
|
|
(116,150,000
|
)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Proceeds from initial public offering, net of costs
|
|
|
112,655,450
|
|
Proceeds from private placement
|
|
|
5,000,000
|
|
Payment of promissory note to related party
|
|
|
(182,127
|
)
|
Payment of deferred offering costs
|
|
|
(336,757
|
)
|
Net cash
provided by financing activities
|
|
|
117,136,566
|
|
|
|
|
|
|
Net change in cash
|
|
|
446,883
|
|
Cash, beginning of period
|
|
|
-
|
|
Cash, end of period
|
|
$
|
446,883
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
Deferred underwriting commissions payable charged to additional paid in capital
|
|
$
|
4,025,000
|
|
Deferred offering costs paid by Sponsor loan
|
|
$
|
6,300
|
|
Incentives to anchor investors and forward purchasers
|
|
$
|
4,073,565
|
|
The accompanying notes
are an integral part of these unaudited condensed financial statements.
GESHER I ACQUISITION
CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
Note
1—Organization and Business Operation
Gesher I
Acquisition Corp. (the “Company”) is a newly organized blank check company incorporated as a Cayman Islands exempted company
on February 23, 2021. The Company was formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share
purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”).
The Company may pursue a Business Combination opportunity in any business or industry the Company chooses although it currently intends
to focus on target businesses located in Israel, particularly those that conduct business internationally in Asia, Europe or North America.
None of the Company’s officers, directors, promoters and other affiliates has engaged in any substantive discussions on the Company’s
behalf with representatives of other companies regarding the possibility of a potential Business Combination with the Company.
As of December
31, 2021, the Company has neither engaged in any operations nor generated any revenues. All activity for the period from February 23,
2021 (inception) through December 31, 2021 relates to the Company’s formation and the initial public offering 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 Initial Public Offering (the “IPO”).
On October
12, 2021, the Company changed its fiscal year end from December 31 to September 30.
The Company’s
sponsor is Gesher I Sponsor LLC, a Delaware limited liability company (the “Sponsor”).
The registration
statement for the Company’s IPO was declared effective on October 12, 2021 (the “Effective Date”). On October 14, 2021,
the Company’s consummated the IPO of 10,000,000 units at $10.00 per unit (the “Units”), which is discussed
in Note 3 (the “IPO”), generating gross proceeds to the Company of $100,000,000. Each Unit consists of one ordinary share
(the “Public Shares”) and one-half of one warrant (the “Public Warrants”). Each whole warrant entitles the holder
to purchase one ordinary share at a price of $11.50 per share.
Simultaneously
with the consummation of the IPO, the Company consummated the private placement of 4,550,000 warrants (the “Private Placement
Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement, generating gross proceeds to the Company
of $4,550,000, which is described in Note 4.
On October
20, 2021, the Company issued an additional 1,500,000 Units in connection with the full exercise by the underwriters of their over-allotment
option, generating gross proceeds of $15,000,000, which is discussed
in Note 3. Simultaneously with the closing of the underwriters’ full exercise of the over-allotment option, the Company sold an
additional 450,000 Private Placement Warrants, at a price of $1.00 per Private Placement Warrant, in a private placement (together with
the Private Placement, the “Private Placements”) generating gross proceeds of $450,000, which is discussed in Note 4.
Transaction
costs amounted to $10,949,821 consisting of $2,300,000 of underwriting commissions, $4,025,000 of deferred underwriting
commissions, $4,073,565 of incentives to Anchor Investors (see Note 3) and Forward Purchase Investors (see Note 6), and $551,256 of
other offering costs.
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.
The Company
must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the value of the
assets held in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the Trust Account) 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 outstanding 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”). There is no assurance that the Company
will be able to complete a Business Combination successfully.
Following
the closing of the IPO on October 14, 2021 and underwriters’ full exercise of their over-allotment option on October 20, 2021, $116,150,000 ($10.10 per
Unit) from the net proceeds of the sale of the Units and the sale of the Private Placement Warrants was deposited into a trust account
(the “Trust Account”), invested in United States “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act with a maturity of 180 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. Except with respect to
interest earned on the funds held in the Trust Account that may be released to the Company to pay its income or other tax obligations
as described in the IPO, the proceeds will not be released from the Trust Account until the earlier of the completion of a Business Combination
or the redemption of 100% of the outstanding public shares if the Company has not completed a Business Combination within the time required
time period.
The Company
will either (1) give the shareholders the opportunity to vote on the Business Combination or (2) provide the public shareholders with
the opportunity to sell their ordinary shares to the Company in a tender offer for cash equal to their pro rata share of the aggregate
amount then on deposit in the Trust Account, less taxes.
All of the
Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s
liquidation, if there is a shareholder vote or tender offer in connection with the initial Business Combination and in connection with
certain amendments to the Company’s amended and restated memorandum and articles of association.
In accordance
with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480-10-S99,
redemption provisions not solely within the control of a company require ordinary shares subject to redemption to be classified outside
of permanent equity. Given that the Public Shares will be issued with other freestanding instruments (i.e., public warrants), the initial
carrying value of ordinary shares classified as temporary equity will be the allocated proceeds determined in accordance with FASB ASC
470-20. The Public Shares are subject to FASB ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the
Company has the option to either (i) accrete changes in the redemption value over the period from the date of issuance (or from the date
that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or (ii)
recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption
value at the end of each reporting period. The Company has elected to recognize the changes immediately.
The ordinary
shares subject to redemption were recorded at redemption value and classified as temporary equity upon the completion of the IPO, in accordance
with FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination if
the Company’s ordinary shares are not considered a “penny stock” 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 18 months from the closing of the IPO to complete the initial Business Combination. If the Company does not consummate an initial
Business Combination within 18 months from the closing of the IPO (the “Combination Period”), the Company will (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in
the Trust Account, including any interest not previously released to the Company but net of taxes payable (and less up to $50,000 of interest
to pay liquidation expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public
shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable
law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and
the board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to the Company’s obligations under
Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
The Sponsor
has agreed (a) to waive its redemption rights with respect to the founder shares and Public Shares held by it in connection with the completion
of a Business Combination and (b) not to propose an amendment to the amended and restated memorandum and articles of association that
would affect a public shareholders’ ability to convert or sell their shares to the Company in connection with a Business Combination
or affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete
a Business Combination, unless the Company provides the public shareholders with the opportunity to redeem their Public Shares in conjunction
with any such amendment.
The Sponsor
has agreed that it will be liable to ensure that the proceeds in the Trust Account are not reduced below $10.10 per share by the
claims of target businesses or claims of vendors or other entities that are owed money by the Company for services rendered or contracted
for or products sold to the Company. The agreement entered into by the Sponsor specifically provides for two exceptions to the indemnity
it has given: it will have no liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed
an agreement with the Company waiving any right, title, interest or claim of any kind they may have in or to any monies held in the Trust
Account, or (2) as to any claims for indemnification by the underwriters of the IPO against certain liabilities, including liabilities
under the Securities Act. Marcum LLP, the Company’s independent registered public accounting firm, and the underwriters of the IPO,
will not execute agreements with the Company waiving such claims to the monies held in the Trust Account. The Company has not asked the
Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient
funds to satisfy its indemnity obligations and believes that the Sponsor’s only assets are securities of the Company. Therefore,
the Company believes it is unlikely that the Sponsor will be able to satisfy its indemnification obligations if it is required to do so.
Liquidity
and Capital Resources
As of December
31, 2021, the Company had $446,883 in cash and working capital of $621,058.
Prior
to the completion of the Initial Public Offering, the Company’s liquidity
needs had been satisfied through a payment from the Sponsor of $25,000 (see Note 5) for the founder shares to cover certain offering
costs, and the loan under an unsecured promissory note from the Sponsor of $182,127 (see Note
5). The promissory note was paid in full on October 18, 2021. Subsequent to the consummation of
the Initial Public Offering and Private Placement, the Company’s liquidity needs have been satisfied through the 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 Sponsor, initial shareholders, officers, directors
or their affiliates may, but are not obligated to, provide the Company Working Capital Loans, as defined below (see Note 5). As of December
31, 2021, there were no amounts outstanding under any Working Capital Loans. Furthermore, the Sponsor has committed to provide funding
of approximately $237,000 to the Company. The amount will be due on demand and payable without interest.
Based on
the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through
the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using
these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing
due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire,
and structuring, negotiating and consummating the Business Combination.
Risks
and Uncertainties
Management
is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could
have a negative effect on the Company’s financial position and/or search for a target company, the specific impact is not readily
determinable as of the date of the financial statement. The financial statement does not include any adjustments that might result from
the outcome of this uncertainty.
Note
2—Significant Accounting Policies
Basis
of Presentation
The accompanying
unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in
the United States of America (“US GAAP”) for financial information and pursuant to the rules and regulations of the
U.S. Securities and Exchanges Commission (“SEC”). Accordingly, they do not include all
of the information and footnotes required by US GAAP. In the opinion of management, the unaudited condensed financial statements reflect
all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the
period presented. Operating results for the three months ended December 31, 2021 are not necessarily indicative of the results that may
be expected through September 30, 2022.
The accompanying unaudited
condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Form
8-K and the final prospectus filed by the Company with the SEC on October 21, 2021 and October 13, 2021, respectively.
Emerging
Growth Company Status
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 auditor 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 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 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 statement with another public company which is neither an emerging
growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because
of the potential differences in accounting standards used.
Use of
Estimates
The preparation
of the 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 financial statements and the
reported amounts of expenses during the reporting period. Making estimates requires management to exercise significant judgement. It is
at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date
of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more
future confirming events. Accordingly, the actual results could differ significantly from those 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. The Company
did not have any cash equivalents as of December 31, 2021 and September 30, 2021.
Marketable Securities Held in Trust Account
At December 31, 2021, the assets held in the Trust
Account were held in treasury funds. All of the Company’s investments held in the Trust Account are classified as trading securities.
Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from
the change in fair value of investments held in Trust Account are included in interest income in the accompanying statement of operations.
The estimated fair value of investments held in Trust Account are determined using available market information.
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution,
which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. At December 31, 2021 and September 30, 2021, the Company
has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair
Value Measurements
Fair value
is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between
market participants at the measurement date. US 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.
|
In some circumstances, the inputs used to measure
fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is
categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Ordinary
Shares Subject to Possible Redemption
All of the 11,500,000 ordinary
shares sold as part of the Units contain a redemption feature which allows for the redemption of such Public Shares in connection with
the Company’s liquidation, if there is a shareholder vote or tender offer in connection with the Business Combination and in connection
with certain amendments to the Company’s amended and restated memorandum and articles of association. In accordance with ASC 480-10-S99,
redemption provisions not solely within the control of the Company require ordinary shares subject to redemption to be classified outside
of permanent equity. Therefore, all 11,500,000 ordinary shares were classified outside of permanent equity as of December 31, 2021.
The Company
recognized changes in redemption value immediately as they occur upon the IPO and will adjust the carrying value of redeemable ordinary
shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable
ordinary shares are affected by charges against additional paid in capital and accumulated deficit.
Offering Costs associated with the Initial
Public Offering
The
Company complies with the requirements of the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees
and other costs incurred through the IPO that were directly related to the IPO. The Company incurred offering costs amounting to
$10,949,821 as a result of the IPO consisting of $2,300,000 of underwriting commissions, $4,025,000 of deferred underwriting commissions,
$4,073,565 of incentives to Anchor Investors (see Note 3) and Forward Purchase Investors (see Note 6), and $551,256 of other offering
costs.
Net Loss
Per Ordinary Share
The Company has two categories
of shares, which are referred to as redeemable ordinary shares and non-redeemable ordinary shares. Earnings and losses are shared pro
rata between the two categories of shares. The table below presents a reconciliation of the numerator and denominator used to compute
basic and diluted net loss per share for each category:
|
|
For the Three Months Ended
December 31, 2021
|
|
|
|
Redeemable
|
|
|
Non-redeemable
|
|
Numerator
|
|
|
|
|
|
|
Allocation of net loss
|
|
$
|
(129,776
|
)
|
|
$
|
(39,788
|
)
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
9,777,174
|
|
|
|
2,997,554
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
Derivative
Financial Instruments
The Company
evaluates its 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”. For derivative financial instruments that are accounted for as
liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting
date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including
whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative
liabilities are classified in the balance sheet 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. The Company has determined the warrants to be issued
in the IPO meet the requirements for equity classification.
Income
Taxes
The Company
accounts 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.
The Company
is subject to potential Israeli income tax and filing requirements due to its presence in Tel Aviv. Income of the Israeli company will
be taxable at corporate tax rate of 23%.
Recent
Accounting Pronouncements
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 February 23, 2021. Adoption
of the ASU did not impact the Company’s financial statements.
Management
does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material
effect on the Company’s financial statement.
Note
3—Initial Public Offering
On October
14, 2021, the Company sold 10,000,000 Units at a purchase price of $10.00 per Unit. Each Unit consists of one ordinary
share and one-half of one warrant. Each whole warrant entitles the holder to purchase one ordinary share at a price of $11.50 per share. Each
warrant will become exercisable 30 days after the completion of an initial Business Combination and will expire on the fifth anniversary
of the completion of an initial Business Combination, or earlier upon redemption or liquidation.
Following
the closing of the IPO on October 14, 2021, $101,000,000 ($10.10 per Unit) from the net proceeds of the sale of the Units in
the IPO and the sale of the Private Placement Warrants was deposited into the Trust Account. The net proceeds deposited into the Trust
Account are invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company
Act with a maturity of 180 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.
Prior to
the IPO, five members of the Sponsor and one institutional investor (collectively, the “Anchor Investors”) have each expressed
an interest to purchase units in the IPO at a level of up to and in no event exceeding 9.9% of the units subject to the IPO. As incentives
for the Anchor Investors, upon consummation of the IPO, the Sponsor transferred 50,000 founder shares, with an aggregate fair
value of $339,500, to one Anchor Investor for the same price originally paid for such shares. Five Anchor Investors received an aggregate
of 250,000 membership interests in the Sponsor, with an aggregate fair value of $1,697,500, for no consideration. The excess
of the fair value of the founder shares transferred over the original issuance price of $339,065 and the fair value of the membership
interests transferred of $1,697,500 were accounted for as offering costs with an offset to additional paid-in capital upon the IPO.
The Company
granted the underwriters a 45-day option from the date of the IPO to purchase up to an additional 1,500,000 Units to cover over-allotments.
On October 20, 2021, the underwriters exercised the over-allotment option in full to purchase 1,500,000 Units, at a purchase price
of $10.00 per Unit, generating gross proceeds to the Company of $15,000,000.
As of December 31, 2021, the ordinary shares reflected on the balance
sheet are reconciled in the following table:
Gross proceeds from IPO
|
|
$
|
115,000,000
|
|
Less:
|
|
|
|
|
Proceeds allocated to Public Warrants
|
|
|
(8,165,000)
|
|
Ordinary shares issuance costs
|
|
|
(10,037,915
|
)
|
Plus:
|
|
|
|
|
Accretion of carrying value to redemption value
|
|
|
19,355,377
|
|
|
|
|
|
|
Ordinary shares subject to redemption
|
|
$
|
116,152,462
|
|
Note
4—Private Placement
Simultaneously
with the closing of the IPO, the Sponsor and EarlyBirdCapital, Inc., the representative of the underwriters, purchased an aggregate of 4,550,000 Private
Placement Warrants, each exercisable to purchase one ordinary share at $11.50 per share, at a price of $1.00 per warrant, or
$4,550,000 in the aggregate, in a private placement.
On October
20, 2021, simultaneous with the exercise of the over-allotment option in full, the Sponsor and EarlyBirdCapital, Inc., purchased an aggregate
of 450,000 additional Private Placement Warrants, at a purchase price of $1.00 per warrant, generating gross proceeds to
the Company of $450,000.
The Private
Placement Warrants are identical to the warrants included in the Units sold in the IPO.
Note
5—Related Party Transactions
Founder
Shares
Effective
February 23, 2021, the Company issued 2,875,000 ordinary shares, par value $0.0001, to the Sponsor for $25,000, or approximately
$0.009 per share, to cover certain offering costs. Up to 375,000 founder shares were subject to forfeiture by the Sponsor
depending on the extent to which the underwriters’ over-allotment option is exercised. Simultaneously, the Company issued to EarlyBirdCapital,
Inc. and its designees the 200,000 representative shares.
Upon consummation
of the IPO, the Sponsor transferred 50,000 founder shares, with an aggregate fair value of $339,500, to one Anchor
Investor for the same price originally paid for such shares (see Note 3). The excess of the fair value of the founder shares transferred
over the original issuance price of $339,065 was accounted for as an offering cost with an offset to additional paid-in capital upon
the IPO.
On October
20, 2021, the underwriters exercised the over-allotment option in full to purchase 1,500,000 Public Units. As a result, 375,000 founder
shares were no longer subject to forfeiture.
On the date
of the IPO, the founder shares were placed into an escrow account maintained in New York, New York by Continental Stock Transfer &
Trust Company, acting as escrow agent. Subject to certain limited exceptions, these shares will not be transferred, assigned, sold or
released from escrow (subject to certain limited exceptions set forth below) until 180 days following the date of the consummation of
the initial Business Combination, or earlier, if, subsequent to the initial Business Combination, the Company consummates a liquidation,
merger, stock exchange or other similar transaction which results in all of the shareholders having the right to exchange their ordinary
shares for cash, securities or other property.
The founder
shares are identical to the ordinary shares included in the Units being sold in the IPO. However, the initial shareholders and officers
and directors have agreed (A) to vote any shares owned by them in favor of any proposed Business Combination, (B) not to convert any shares
in connection with a shareholder vote to approve a proposed initial Business Combination or sell any shares to the Company in a tender
offer in connection with a proposed initial Business Combination and (C) that the founder shares will not participate in any liquidating
distributions from the Trust Account upon winding up if a Business Combination is not consummated.
Promissory
Note—Related Party
On March
1, 2021, the Company entered into a promissory note of an aggregate of $150,000. The loan was to be payable without interest on the earlier
to occur of July 31, 2021, the consummation of the IPO, or the abandonment of the IPO.
On August
9, 2021, the Company entered into a Promissory Note Extension Agreement with the Sponsor to extend the maturity date of the promissory
note from July 31, 2021 to November 30, 2021. The loans will be payable without interest on the earlier to occur of November 30,
2021, the consummation of the IPO, or the abandonment of the IPO.
On September
20, 2021, the Company amended the promissory note to increase the principal to $201,000.
The Company had borrowed $182,127 under such promissory note upon IPO,
which was paid in full on October 18, 2021.
Related
Party Loans
In order
to finance transaction costs in connection with an intended initial Business Combination, the Sponsor, initial shareholders, officers,
directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”).
If the Company consummates an initial Business Combination, the Company would repay such loaned amounts; provided that up to $1,500,000 of
such loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant at the option
of the lender. The warrants would be identical to the Private Placement Warrants. In the event that the initial Business Combination does
not close, the Company 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 would be used for such repayment. As of December 31, 2021 and September 30, 2021, the Company had no borrowings
under the Working Capital Loans.
Administrative
Service Fee
An affiliate
of the Company’s Chief Operating Officer has agreed that, commencing on the effective date of the IPO through the earlier of the
consummation of the initial Business Combination or the liquidation of the Trust Account, it will make available to the Company certain
general and administrative services, including office space, utilities and administrative support, as the Company may require from time
to time. The Company has agreed to pay $10,000 per month for these services. As of December 31, 2021, the Company has
accrued $25,000 of administrative service fees.
Note
6—Commitments and Contingencies
Registration
Rights
The holders
of the founder shares issued and outstanding on the date of the IPO, as well as the holders of the representative shares, Private Placement
Warrants and any warrants the Sponsor, officers, directors or their affiliates may be issued in payment of Working Capital Loans made
to the Company (and all underlying securities), will be entitled to registration rights pursuant to an agreement signed on October 12,
2021. The holders of a majority of these securities are entitled to make up to two demands that the Company registers such securities.
The holders of the majority of the founder shares can elect to exercise these registration rights at any time commencing three months
prior to the date on which these ordinary shares are to be released from escrow. The holders of a majority of the representative shares,
Private Placement Warrants and warrants issued to the Sponsor, officers, directors or their affiliates in payment of Working Capital Loans
made to the Company (or underlying securities) can elect to exercise these registration rights at any time after the Company consummates
a Business Combination. Notwithstanding anything to the contrary, EarlyBirdCapital, Inc. may only make a demand on one occasion and only
during the five-year period beginning on the effective date of the registration statement. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination; provided,
however, that EarlyBirdCapital, Inc. may participate in a “piggy-back” registration only during the seven-year period beginning
on the effective date of the registration statement. The Company will bear the expenses incurred in connection with the filing of any
such registration statements.
Underwriting
Agreement
The Company
granted the underwriters a 45-day option from the date of the IPO to purchase up to an additional 1,500,000 units to cover over-allotments,
if any.
On October
14, 2021, the Company paid cash underwriting commissions of 2.0% of the gross proceeds of the IPO, or $2,000,000.
The underwriters
are entitled to a deferred underwriting commission of 3.5% of the gross proceeds of the IPO, or $3,500,000, which will be paid from
the funds held in the Trust Account upon completion of the Company’s initial Business Combination subject to the terms of the underwriting
agreement.
On October
20, 2021, the underwriters exercised the over-allotment option in full to purchase 1,500,000 Public Units at a purchase price
of $10.00 per Public Unit, generating gross proceeds to the Company of $15,000,000 (see Note 3), and were, in aggregate, paid
a fixed underwriting discount of $300,000.
Representative
Shares
Effective
February 23, 2021, the Company issued to EarlyBirdCapital, Inc. and its designees the 200,000 representative shares. The holders
of the representative shares have agreed not to transfer, assign or sell any such shares without the Company’s prior consent until
the completion of the initial Business Combination. In addition, the holders of the representative shares have agreed (i) to waive their
conversion rights (or right to participate in any tender offer) with respect to such shares in connection with the completion of the initial
Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if
the Company fails to complete the initial Business Combination within the Combination Period.
The representative
shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the
date of the effectiveness of the registration statement pursuant to Rule 5110(e)(1) of the FINRA Manual. Pursuant to FINRA Rule 5110(e)(1),
these securities will not be sold during the IPO or sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging,
short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period
of 180 days immediately following the effective date of the registration statement or commencement of sales of the IPO, except to any
underwriter and selected dealer participating in the IPO and their bona fide officers or partners, provided that all securities so transferred
remain subject to the lockup restriction above for the remainder of the time period.
Forward
Purchase Agreements
In connection
with the consummation of the IPO, the Company entered into contingent forward purchase agreements (the “FPA”) with certain
members of the Sponsor (the “Forward Purchase Investors”) which provide for the purchase by the Forward Purchase Investors
of an aggregate of up to 4,500,000 units for total gross proceeds of up to $45,000,000. These units will be purchased, subject
to certain conditions, in a private placement to close immediately prior to, or simultaneously with, the consummation of the Company’s
Business Combination. The Company accounted for the FPA in accordance with the guidance contained in ASC 815-40. Such guidance provides
that the FPA meets the criteria for equity treatment due to no circumstances under which the Company can be forced to net cash settle
the FPA.
As incentives
for the FPA, upon consummation of the IPO, the Forward Purchase Investors received an aggregate of 300,000 membership interests
in the Sponsor, with an aggregate fair value of $2,037,000, for no consideration, which were accounted for as offering costs with an offset
to additional paid-in capital upon the IPO.
Note
7—Shareholders’ Equity
Preference
shares—The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share and with
such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As
of December 31, 2021 and September 30, 2021, there were no preference shares issued or outstanding.
Ordinary
shares—The Company is authorized to issue 100,000,000 ordinary shares with a par value of $0.0001 per share. As of
December 31, 2021, there were 3,075,000 ordinary shares issued and outstanding.
Warrants—Each
whole warrant entitles the holder to purchase one ordinary share at a price of $11.50 per share, subject to adjustment as discussed
herein. In addition, if (x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes
in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per ordinary
share (with such issue price or effective issue price to be determined in good faith by the board of directors, and in the case of any
such issuance to the Sponsor, initial shareholders or their affiliates, without taking into account any founder shares held by them prior
to such issuance), (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 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 $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater
of (i) the Market Value or (ii) the price at which the Company issues the additional ordinary shares or equity-linked securities.
The warrants
will become exercisable 30 days after the completion of an initial Business Combination. The warrants will expire at 5:00 p.m., New York
City time, on the fifth anniversary of the completion of an initial Business Combination, or earlier upon redemption.
No warrants
will be exercisable for cash unless the Company has an effective and current registration statement covering the ordinary shares issuable
upon exercise of the warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, if a registration
statement covering the ordinary shares issuable upon exercise of the warrants is not effective within a specified period following the
consummation of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement
and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless
basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended, or the Securities Act, provided
that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their
warrants on a cashless basis.
The Company
may redeem the outstanding warrants in whole and not in part, at a price of $0.01 per warrant at any time after the warrants become
exercisable, upon a minimum of 30 days’ prior written notice of redemption, if, and only if, the last sales price of the 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 commencing at any time after the warrants become exercisable and ending three business
days before the Company sends the notice of redemption; and if, and only if, there is a current registration statement in effect with
respect to the ordinary shares underlying such warrants. If the foregoing conditions are satisfied and the Company issues a notice of
redemption, each warrant holder can exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the
ordinary shares may fall below the $18.00 trigger price as well as the $11.50 warrant exercise price after the redemption notice
is issued.
If the Company
calls the warrants for redemption as described above, the Company’s management will have the option to require all holders that
wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering
the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares
underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value”
(defined below) by (y) the fair market value. The “fair market value” for this purpose shall mean the average reported last
sale price of the ordinary shares for the five 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.
The Company
accounted for the 10,750,000 warrants issued in connection with the IPO (including the 5,750,000 Public Warrants included
in the Units and the 5,000,000 Private Placement Warrants) in accordance with the guidance contained in ASC 815-40. Such guidance
provides that the warrants meet the criteria for equity treatment due to the existence of provisions whereby adjustments to the exercise
price of the warrants is based on a variable that is an input to the fair value of a “fixed-for-fixed” option and no circumstances
under which the Company can be forced to net cash settle the warrants.
Note
8—Fair Value Measurements
The following table presents
information about the Company’s assets that are measured at fair value on December 31, 2021, and indicates the fair value hierarchy
of the valuation inputs the Company utilized to determine such fair value:
|
|
December 31,
2021
|
|
|
Quoted
Prices In
Active
Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
|
$
|
116,152,462
|
|
|
$
|
116,152,462
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
116,152,462
|
|
|
$
|
116,152,462
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The over-allotment option
was accounted for as liabilities in accordance with ASC 815-40 and is presented within liabilities on the balance sheet. The over-allotment
liability is measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair
value of over-allotment liability in the statement of operations.
The Company used a Black
Scholes model to value the over-allotment option. The over-allotment option was classified within Level 3 of the fair value hierarchy
at the measurement dates due to the use of unobservable inputs. Inherent in pricing models are assumptions related to expected share-price
volatility, expected life and risk-free interest rate. The Company estimates the volatility of its ordinary shares based on historical
volatility that matches the expected remaining life of the option. 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 option. The expected life of the option is
assumed to be equivalent to their remaining contractual term.
The key inputs into the
Black Scholes model for the over-allotment liability was as follows at initial measurement:
Input
|
|
October 14,
2021
|
|
Risk-free interest rate
|
|
|
0.04
|
%
|
Expected term (years)
|
|
|
0.12
|
|
Expected volatility
|
|
|
5.0
|
%
|
Exercise price
|
|
$
|
10.00
|
|
Unit price
|
|
$
|
10.00
|
|
Input
|
|
October 20,
2021
|
|
Risk-free interest rate
|
|
|
0.04
|
%
|
Expected term (years)
|
|
|
0.11
|
|
Expected volatility
|
|
|
5.0
|
%
|
Exercise price
|
|
$
|
10.00
|
|
Unit price
|
|
$
|
10.00
|
|
The following
table sets forth a summary of the changes in the fair value of the Level 3 over-allotment liability for the three months ended December
31, 2021:
|
|
Over-allotment
Liability
|
|
Fair value as of October 1, 2021
|
|
$
|
-
|
|
Initial fair value of over-allotment liability upon issuance at IPO
|
|
|
105,450
|
|
Change in fair value
|
|
|
(44,550
|
)
|
Charged to shareholders’ deficit upon exercise
|
|
|
(60,900
|
)
|
Fair value as of December 31, 2021
|
|
$
|
—
|
|
Note
9—Subsequent Events
The Company
evaluated subsequent events and transactions that occurred after the balance sheet date up to the date the financial statements were issued.
Based upon this evaluation, the Company did not identify any other subsequent events that would have required adjustments or disclosure
in the financial statements.