NOTES
TO FINANCIAL STATEMENTS
SEPTEMBER
30, 2021
(Unaudited)
NOTE
1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Organization
and General
Thrive
Acquisition Corporation (the “Company”) is blank check company incorporated as a Cayman Islands exempted company on April 27,
2021. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization
or similar business combination with one or more businesses that the Company has not yet identified (the “Initial Business Combination”). The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the “Securities
Act”, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
As
of September 30, 2021, the Company had not commenced any operations. All activity for the period from April 27, 2021 (inception)
through September 30, 2021 relates to the Company’s formation and the initial public offering (“IPO”), which is described
below. The Company will not generate any operating revenues until after the completion of an Initial Business Combination, at the earliest.
The Company generates non-operating income in the form of interest income from the proceeds derived from the IPO. The Company has selected
December 31 as its fiscal year end.
Sponsor
and Proposed Financing
The
Company’s sponsor is Thrive Acquisition Sponsor LLC, a Cayman Islands limited liability company (the “Sponsor”). The
Company intends to finance its Initial Business Combination with proceeds from the $172,500,000 initial public offering of Units (as
defined below) (see Note 3) and a $9,150,000 sale of private placement warrants (see Note 4). Upon the closing of the IPO and the private
placement, a portion of the purchase price of the Private Placement Warrants was added to the proceeds from the IPO to be held in
the Trust Account (the “Trust Account”) (see Note 4).
The
Trust Account
The
proceeds held in the Trust Account are invested only in U.S. government treasury bills with a maturity of one hundred eighty-five (185)
days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of 1940 and that
invest only in direct U.S. government obligations. Funds will remain in the Trust Account until the earlier of (i) the consummation of
the Initial Business Combination or (ii) the distribution of the Trust Account proceeds as described below. The remaining proceeds outside
the Trust Account may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general
and administrative expenses.
The
Company’s memorandum and articles of association provide that, other than the withdrawal of interest to pay taxes, if any, none
of the funds held in the Trust Account will be released until the earlier of: (i) the completion of the Initial Business Combination;
(ii) the redemption of any Class A ordinary shares, $0.0001 par value, included in the Units being sold in the IPO (the “Public
Shares”) if an initial business combination is not consummated within 15 months from the closing of the IPO (or 18 months from
the closing of the IPO if the Company extends the time to complete a business combination so long as the Sponsor or its affiliates or
designees deposits into the trust account an additional $0.10 per unit), subject to applicable law, or (iii) the redemption of the Company’s
Public Shares properly submitted in connection with a shareholder vote to approve an amendment to the Company’s memorandum and
articles of association (A) that would modify the substance or timing of the Company’s obligation to provide holders of the Company’s
Class A ordinary shares the right to have their shares redeemed in connection with the initial business combination or to redeem 100%
of the Company’s public shares if the Company does not complete an initial business combination within 15 months from the closing
of the IPO (or 18 months from the closing of the IPO if the Company extends the time to complete a business combination so long as the
Sponsor or its affiliates or designees deposits into the trust account an additional $0.10 per unit) or (B) with respect to any other
provision relating to the rights of holders of the Company’s Class A ordinary shares. 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 shareholders.
Initial
Business Combination
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO, although substantially
all the net proceeds of the IPO are intended to be generally applied toward consummating an Initial Business Combination. The Initial
Business Combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80%
of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust
Account) at the time of the agreement to enter the Initial Business Combination. Furthermore, there is no assurance that the Company
will be able to successfully effect an Initial Business Combination.
The
Company, after signing a definitive agreement for an Initial Business Combination, will either (i) seek shareholder approval of the Initial
Business Combination at a meeting called for such purpose in connection with which shareholders may seek to redeem their shares, regardless
of whether they vote for or against the Initial Business Combination, for cash equal to their pro rata share of the aggregate amount
then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including
interest but less taxes payable, or (ii) provide shareholders with the opportunity to sell their Public Shares to the Company by means
of a tender offer (and thereby avoid the need for a shareholder vote) for an amount in cash equal to their pro rata share of the aggregate
amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including
interest but less taxes payable. The decision as to whether the Company will seek shareholder approval of the Initial Business Combination
or will allow shareholders to sell their Public Shares in a tender offer will be made by the Company, solely in its discretion, and will
be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require
the Company to seek shareholder approval, unless a vote is required by law or under NASDAQ rules. If the Company seeks shareholder approval,
it will complete its Initial Business Combination only if a majority of the outstanding ordinary shares voted are voted in favor of the
Initial Business Combination. In such case, the Company would not proceed with the redemption of its Public Shares and the related Initial
Business Combination, and instead may search for an alternate Initial Business Combination.
If
the Company holds a shareholder vote or there is a tender offer for shares in connection with an Initial Business Combination, a public
shareholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on
deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including interest
but less taxes payable. As a result, such Class A ordinary shares will be recorded at redemption amount and classified as temporary equity
upon the completion of the IPO, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) 480, “Distinguishing Liabilities from Equity.”
Pursuant
to the Company’s memorandum and articles of association if the Company is unable to complete the Initial Business Combination within
15 months from the closing of the Initial Public Offering (or 18 months from the closing of the IPO if the Company extends the time to
complete a business combination so long as the Sponsor or its affiliates or designees deposits into the trust account an additional $0.10
per unit), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but
no more than ten business days thereafter subject to lawfully available funds therefor, redeem the Public Shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned and not previously released
to pay the Company’s franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses and net of taxes payable),
divided by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholder’s rights
as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly
as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and the Company’s
board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands law to provide
for claims of creditors and the requirements of other applicable law. The Sponsor and the Company’s independent director nominees
will not be entitled to rights to liquidating distributions from the Trust Account with respect to any Founder Shares (as defined below)
held by them if the Company fails to complete the Initial Business Combination within 15 months of the closing of the IPO (or 18 months
from the closing of the IPO if the Company extends the time to complete a business combination so long as the Sponsor or its affiliates
or designees deposits into the trust account an additional $0.10 per unit). However, if the Sponsor or any of the Company’s directors,
officers or affiliates acquires Class A ordinary shares in or after the IPO, they will be entitled to liquidating distributions from
the Trust Account with respect to such shares if the Company fails to complete the Initial Business Combination within the prescribed
period.
In
the event of a liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s shareholders
are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision
is made for each class of shares, if any, having preference over the ordinary shares. The Company’s shareholders have no preemptive
or other subscription rights. There are no sinking fund provisions applicable to the ordinary shares, except that the Company will provide
its shareholders with the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate amount then
on deposit in the Trust Account, upon the completion of the Initial Business Combination, subject to the limitations described herein.
Liquidity
and Capital Resources
As
of September 30, 2021, the Company had a cash balance of $15,354. However, the Company’s liquidity needs are satisfied through
using net proceeds from the IPO and Private Placement Warrants (see Notes 3 and 4) for existing accounts payable, identifying and evaluating
prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices,
plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target
businesses, selecting the target business to acquire and structuring, negotiating and consummating the Initial Business Combination.
If
the Company’s estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an Initial
Business Combination are less than the actual amount necessary to do so, the Company may have insufficient funds available to operate
its business prior to an Initial Business Combination. Moreover, the Company may need to obtain additional financing either to complete
an Initial Business Combination or because it becomes obligated to redeem a significant number of its public shares upon completion of
an Initial Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Initial
Business Combination. 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 provide the Company
Working Capital Loans (as discussed in Note 4). As of September 30, 2021, there were no working capital loans outstanding.
Note
2 — Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying audited financial statements are presented in conformity with accounting principles generally accepted in the United States
of America (“GAAP”) and pursuant to the rules and regulations of the SEC. In the opinion of management, the accompanying
financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of
the financial position, operating results and cash flows for the period presented. The results for the period from April 27, 2021 (inception)
through September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for
any future interim periods.
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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure
obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding
a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
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 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 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.
Net
loss Per Ordinary Share
Net
loss per ordinary share is computed by dividing net loss applicable to ordinary shareholders by the weighted average number of ordinary
shares outstanding during the period, excluding shares of ordinary shares subject to forfeiture, plus, to the extent dilutive, the incremental
number of shares of ordinary share to settle warrants, as calculated using the treasury stock method. Weighted average ordinary shares
were reduced for the effect of an aggregate of 562,500 of Founder Shares that were subject to forfeiture if the over-allotment option
was not exercised in full or in part by the underwriters (see Note 6). At September 30, 2021, the Company did not have any dilutive securities
and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company
under the treasury stock method. As a result, diluted loss per ordinary share is the same as basic ordinary share for the periods presented.
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 Corporation coverage limits of $250,000. The Company has not experienced
losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair
Value of Financial Instruments
The
Company applies ASC 820, Fair Value Measurement (“ASC 820”), which establishes framework for measuring fair value and clarifies
the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received
for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between
market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize
the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions
that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent
of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments
about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best
information available in the circumstances.
The
valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input
that is significant to the fair value measurement. The levels within the valuation hierarchy are described below:
Level
1 – Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement
are observable inputs, such as quoted prices in active markets for identical assets or liabilities.
Level
2 – Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying
terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted
intervals.
Level
3 – Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when
little or no market data exists for the assets or liabilities.
Use
of Estimates
The
preparation of unaudited condensed financial statements in conformity with 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 at the
date of the unaudited condensed financial statements and the reported amounts of revenues and 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 unaudited condensed 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.
Deferred
Offering Costs
The
Company complies with the requirements of the FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — “Expenses
of Offering.” Deferred offering costs at September 30, 2021 of $748,242, consist of costs that are directly related to the IPO.
The Company has concluded that a portion of the transaction costs which directly relate to the IPO and Private Placement should be allocated
to the warrants upon their issuance, based on their relative fair value against total proceeds and recognized as transaction costs in
the statement of operations. The remaining costs were charged to temporary shareholder’s equity upon completion of the IPO.
Income
Taxes
ASC
Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than
not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September 30, 2021. The Company
recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the
payment of interest and penalties at September 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. The Company is subject to income tax examinations by major
taxing authorities since inception. 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 unaudited condensed financial statements. The Company’s management does not expect that the total amount
of unrecognized tax benefits will materially change over the next twelve months.
Recent
Accounting Standards
In
August, the FASB issued a new standard (ASU 2020-06) to reduce the complexity of accounting for convertible debt and other equity-linked
instruments. For certain convertible debt instruments with a cash conversion feature, the changes are a trade-off between simplifications
in the accounting model (no separation of an “equity” component to impute a market interest rate, and simpler analysis of
embedded equity features) and a potentially adverse impact to diluted EPS by requiring the use of the if-converted method. The new standard
will also impact other financial instruments commonly issued by both public and private companies. For example, the separation model
for beneficial conversion features is eliminated simplifying the analysis for issuers of convertible debt and convertible preferred shares.
Also, certain specific requirements to achieve equity classification and/ or qualify for the derivative scope exception for contracts
indexed to an entity’s own equity are removed, enabling more freestanding instruments and embedded features to avoid mark-to-market
accounting. The new standard is effective for companies that are SEC filers (except for Smaller Reporting Companies) for fiscal years
beginning after December 15, 2021 and interim periods within that year, and two years later for other companies. Companies can early
adopt the standard at the start of a fiscal year beginning after December 15, 2020. The standard can either be adopted on a modified
retrospective or a full retrospective basis. The Company is currently reviewing the newly issued standard and does not believe it will
materially impact the Company.
Note
3 — Public Offering
On
October 25, 2021, the Company consummated its IPO of 17,250,000 units (the “Units”), including the issuance of 2,250,000
Units as a result of the underwriters’ exercise of their over-allotment option in full. Each Unit consists of one Class A
ordinary share of the Company, par value $0.0001 per share (the “Class A Ordinary Shares”), and one-half of
one redeemable warrant of the Company (each whole warrant, a “Warrant”), with each Warrant entitling the holder thereof to
purchase one Class A Ordinary Share for $11.50 per share, subject to adjustment. The Units were sold at a price of $10.00 per Unit,
generating gross proceeds to the Company of $172,500,000.
Each
Unit consists of one Public Share and half of one warrant (each, a “Warrant” and, collectively, the “Warrants”).
Each whole Warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share. No fractional warrants
will be issued upon separation of the Units and only whole Warrants will trade. Each Warrant will become exercisable on the later of
30 days after the completion of the Company’s Initial Business Combination or 12 months from the closing of the IPO and will expire
five years after the completion of the Company’s Initial Business Combination or earlier upon redemption or liquidation. Once the
Warrants become exercisable, the Company may redeem the outstanding Warrants in whole and not in part at a price of $0.01 per Warrant
upon a minimum of 30 days’ prior written notice of redemption, if and only if the last sale price of the Company’s Class
A ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading
day prior to the date on which the Company sent the notice of redemption to the Warrant holders.
Note
4 — Related Party Transactions
Founder
Shares
In
May 2021, the Company issued an aggregate of 5,750,000 Class B ordinary shares (the “Founder Shares”) in exchange
for a $25,000 payment from the Sponsor to cover certain expenses on behalf of the Company (approximately $0.004 per share). As used herein,
unless the context otherwise requires, “Founder Shares” shall be deemed to include the Class A ordinary shares issuable upon
conversion thereof. The Founder Shares are identical to the Class A ordinary shares included in the Units being sold in the IPO except
that the Founder Shares automatically convert into Class A ordinary shares at the time of the Company’s Initial Business Combination
and are subject to certain transfer restrictions, as described in more detail below. The Sponsor and Charles Urbain subsequently surrendered
to the Company an aggregate of 1,437,500 shares for no additional consideration resulting in a decrease in the total number of founder
shares outstanding to 4,312,500. In September 2021, the Sponsor transferred 798,650 Founder Shares to GR Sleep LLC (an entity controlled
by Peter Graham) at a price of $0.004 per share. The Sponsor will not be entitled to redemption rights with respect to any Founder Shares
and any Public Shares held by them in connection with the completion of the Initial Business Combination. If the Initial Business Combination
is not completed within 15 months from the closing of the IPO (or 18 months from the closing of the IPO if the Company extends the time
to complete a business combination so long as the Sponsor or its affiliates or designees deposits into the trust account an additional
$0.10 per unit), the Sponsor, Charles Urbain, and GR Sleep LLC will not be entitled to rights to liquidating distributions from the Trust
Account with respect to any Founder Shares held by them.
The
Sponsor, GR Sleep LLC, and the Company’s directors and executive officers have agreed, subject to certain limited exceptions, not
to transfer, assign or sell any of the Founder Shares until the earlier of (A) one year after the completion of an Initial Business
Combination and (B) subsequent to an Initial Business Combination, (x) if the last reported sale price of the Class A
ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after an Initial Business Combination,
or (y) the date on which the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction
that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities
or other property.
The
excess of the fair value of the Founder Shares was determined to be an offering cost in accordance with Staff Accounting Bulletin Topic
5A. Accordingly, the offering cost will be allocated to the separable financial instruments issued in the Proposed Public Offering based
on a relative fair value basis, compared to total proceeds received. Offering costs allocated to derivative warrant liabilities will
be expensed as incurred in the statement of operations. Offering costs allocated to the Public Shares will be charged to shareholder’s
equity upon the completion of the Proposed Public Offering.
Director
Shares
In
addition to the 798,650 Founder Shares transferred to GR Sleep LLC, between May 2021 and September 2021, the Sponsor transferred to the
Company’s executive officers, independent directors, and special advisor an aggregate of 437,520 Founder Shares at a price of $0.004
per share. In September 2021, Charles Urbain surrendered 78,338 Founder Shares for cancellation for no consideration.
Private
Placement Warrants
On
October 25, 2021, simultaneously with the closing of the IPO, pursuant to the Sponsor Private Placement Warrants Purchase Agreement,
the GR Sleep Private Placement Warrants Purchase Agreement and the Urbain Private Placement Warrants Purchase Agreement, the Company
completed the private sale of an aggregate 9,150,000 warrants (the “Private Placement Warrants”) to the Sponsor, GR Sleep
and Charles Urbain at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company of $9,150,000.
The Private Placement Warrants will be identical to the public warrants underlying the Units sold in the IPO (the “Public Warrants”),
except that the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants
will not be transferable, assignable or saleable until 30 days after the completion of an Initial Business Combination, subject to certain
limited exceptions. Additionally, the Private Placement Warrants will be exercisable for cash or on a cashless basis, at the holder’s
option, and be non-redeemable so long as they are held by the Sponsor, GR Sleep or Charles Urbain, or their permitted transferees (except
for certain limited exceptions described in the Registration Statement). If the Private Placement Warrants are held by someone other
than the Sponsor, GR Sleep or Charles Urbain, or their permitted transferees, the Private Placement Warrants will be redeemable by the
Company in all redemption scenarios and exercisable by such holders on the same basis as the Public Warrants. No underwriting discounts
or commissions were paid with respect to such sale. The issuance of the Private Placement Warrants was made pursuant to the exemption
from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
Each
Private Placement Warrant is exercisable to purchase one ordinary share at an exercise price of $11.50 per share, subject to adjustment
(see Note 7). A portion of the proceeds from the Private Placement Warrants were added to the proceeds from the IPO held in the Trust
Account. If the Company does not complete an Initial Business Combination within the Combination Period, the proceeds from the sale of
the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements
of applicable law), and the Private Placement Warrants will expire worthless.
Registration
Rights
The
holders of Founder Shares, Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans, if any,
will be entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to Class A ordinary
shares) pursuant to a registration rights agreement to be signed on or before the date of our prospectus for the IPO. These holders will
be entitled to certain demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection
with the filing of any such registration statements.
Administrative
Services Agreement
The
Company has agreed, commencing on the date that the Company’s securities are first listed on a U.S. national securities exchange
through the earlier of the Company’s consummation of an Initial Business Combination and its liquidation, to pay the Sponsor or
an affiliate thereof a total of $1,000 per month for office space, secretarial, and administrative support. Upon completion of the Initial
Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the period from April
27, 2021 (inception) to September 30, 2021, the Company has incurred no monthly fees to the affiliate of the Sponsor.
Related
Party Loans – Promissory Note
In
May 2021, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which
the Company may borrow up to an aggregate principal amount of $300,000. As of September 30, 2021, the Company had drawn down $246,366
under the Promissory Note to pay for offering expenses, comprised of $195,000 cash provided by the Sponsor and $51,366 of expenses paid
by the Sponsor on behalf of the Company. The Promissory Note was non-interest bearing and $246,366 was outstanding upon the closing
of the IPO.
Working
Capital Loans
In
addition, to finance transaction costs in connection with its Initial Business Combination, the Sponsor or an affiliate of the Sponsor,
or 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 its Initial Business Combination, the Company would repay the Working Capital Loans.
In the event that the Initial 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. If the
Sponsor makes any Working Capital Loans, up to $1,500,000 of such loans may be converted into warrants of the post business combination
entity at the price of $1.00 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants,
including as to exercise price, exercisability, and exercise period. As of September 30, 2021, the Company had no borrowings under the
Working Capital Loans.
Note
5 — Commitments and Contingencies
Underwriting
Agreement
The
Company paid an underwriting discount and commission of 2.0% of the per Unit offering price to the underwriters at the closing of the
IPO, with an additional underwriting discount and commission of 3.5% of the gross offering proceeds payable only upon the Company’s
completion of its Initial Business Combination (the “Deferred Commission”). The Deferred Commission will become payable to
the underwriters from the amounts held in the Trust Account solely in the event the Company completes its Initial Business Combination.
Risks
and Uncertainties
The
Company continues to evaluate 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 condensed financial statements. The condensed
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note
6 — Shareholder’s deficit
Preference
shares
The
Company is authorized to issue up to 5,000,000 preference shares with a par value of $0.0001. At September 30, 2021, there were no preferred
shares issued or outstanding.
Class
A Ordinary Shares
The
Company is authorized to issue 500,000,000 shares of Class A ordinary shares with a par value of $0.0001 per share. Holders of Class A
ordinary shares are entitled to one vote for each share. If the Company enters into an Initial Business Combination, it may (depending
on the terms of such an Initial Business Combination) be required to increase the number of Class A ordinary shares which the Company
is authorized to issue at the same time as the Company’s shareholder votes on the Initial Business Combination to the extent the
Company seeks shareholder approval in connection with the Initial Business Combination. Holders of the Company’s ordinary shares
are entitled to one vote for each ordinary share (except as otherwise expressed in the Company’s memorandum and articles
of association). At September 30, 2021, there were no shares of Class A ordinary shares issued and outstanding, subject to possible redemption.
Class
B Ordinary Shares
The
Company is authorized to issue 50,000,000 shares of Class B ordinary shares with a par value of $0.0001 per share. On September
30, 2021, there were 4,312,500 shares of Class B ordinary shares issued and outstanding, including 562,500 shares of Class B ordinary
shares subject to forfeiture if the underwriter’s over-allotment option is not exercised in full or in part, so that such shares
will collectively represent 20% of the Company’s issued and outstanding ordinary shares after the IPO. Holders of Class A
ordinary shares and Class B ordinary shares will vote together as a single class on all matters submitted to a vote of shareholders
except as required by law.
The
shares of Class B ordinary shares will automatically convert into shares of Class A ordinary shares at the time of an Initial
Business Combination on a one-for-one basis, subject to adjustment. In the case that additional shares of 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 an
Initial Business Combination, the ratio at which shares of Class B ordinary shares shall convert into shares of Class A ordinary
shares will be adjusted (unless the holders of a majority of the outstanding shares of Class B ordinary shares agree to waive such
adjustment with respect to any such issuance or deemed issuance) so that the number of shares 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 all shares of ordinary shares outstanding upon the completion of the IPO plus all shares of Class A ordinary
shares and equity-linked securities issued or deemed issued in connection with an Initial Business Combination (excluding any shares
or equity-linked securities issued, or to be issued, to any seller in an Initial Business Combination).
Note
7 — Warrant Liabilities
At
September 30, 2021, there were no warrants outstanding. The Company accounts for the 17,775,000 warrants issued in connection with the
IPO (comprised of the 8,625,000 Public Warrants and the 9,150,000 Private Placement Warrants) in accordance with the guidance contained
in ASC 815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant
must be recorded as a liability.
The
accounting treatment of derivative financial instruments requires that the Company record a derivative liability upon the closing of
the IPO. Accordingly, the Company will classify each warrant as a liability at its fair value and the warrants will be allocated a portion
of the proceeds from the issuance of the Units equal to its fair value. This liability is subject to re-measurement at each balance sheet
date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in
the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the classification
changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification.
Public
Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only
whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 12 months from the closing of the
IPO and (b) 30 days after the completion of an Initial Business Combination.
The
Company will not be obligated to deliver any shares of 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 shares of
Class A ordinary shares underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company
satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable,
and the Company will not be obligated to issue any shares of Class A ordinary shares upon exercise of a warrant unless the share
of 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.
The
Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of an Initial Business
Combination, it will use its commercially reasonable efforts to file with the SEC a registration statement for the registration, under
the Securities Act, of the shares of Class A ordinary shares issuable upon exercise of the warrants, and the Company will use its
commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of an Initial Business
Combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of Class A
ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement; provided that if the Class A ordinary
shares is at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition
of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders
of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of
the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration
statement, but it will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the
extent an exemption is not available. If a registration statement covering the shares of Class A ordinary shares issuable upon exercise
of the warrants is not effective by the 60th business day after the closing of an Initial Business Combination, warrant holders may,
until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an
effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the
Securities Act or another exemption, but the Company will use its commercially reasonably efforts to register or qualify the shares under
applicable blue sky laws to the extent an exemption is not available.
Redemption
of warrants when the price per Class A ordinary shares equals or exceeds $18.00. Once the Public Warrants become
exercisable, the Company may redeem the Public Warrants:
|
●
|
in whole and
not in part;
|
|
●
|
at a price
of $0.01 per warrant;
|
|
●
|
upon not less
than 30 days’ prior written notice of redemption to each warrant holder; and
|
|
●
|
if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share (subject to certain adjustments) for any 20 trading days within a 30-trading day period ending three trading days before the notice of redemption is sent to the warrant holders (the “Reference Value”).
|
If
and when the Public Warrants become redeemable by the Company, it may exercise its redemption right even if the Company is unable to
register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption
of warrants when the price per Class A ordinary shares equals or exceeds $10.00. Once the
Public Warrants become exercisable, the Company may redeem the Public Warrants:
|
●
|
in whole and
not in part;
|
|
●
|
upon a minimum
of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless
basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the Class A
ordinary shares;
|
|
●
|
if, and only
if, the Reference Value equals or exceeds $10.00 per share; and
|
|
●
|
if the Reference Value is less than $18.00 per share, the private placement warrants must also be concurrently called for redemption on the same terms as the outstanding public warrants, as described above.
|
In
addition, if (x) the Company issues additional shares of Class A ordinary shares or equity-linked securities for capital raising
purposes in connection with the closing of an Initial Business Combination at an issue price or effective issue price of less than $9.20
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 Sponsor or its affiliates, without taking into account any Founder Shares
held by the Sponsor or such affiliates, as applicable, 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 an Initial Business Combination on the date of the consummation of an Initial Business Combination (net of redemptions), and (z) the
volume weighted average trading price of the shares of Class A ordinary shares during the 20 trading day period starting on the
trading day prior to the day on which the Company consummates an Initial Business Combination (such price, the “Market Value”)
is below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher
of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price and the “Redemption of Warrants when
the price per share of Class A ordinary shares equals or exceeds $10.00” described above will be adjusted (to the nearest
cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price
described above.
The
Private Placement Warrants will be identical to the Public Warrants underlying the Units sold in the IPO, except that the Private Placement
Warrants and the shares of Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable,
assignable or saleable until 30 days after the completion of an Initial Business Combination, subject to certain limited exceptions.
Additionally, the Private Placement Warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and be
non-redeemable so long as they are held by the initial purchasers or their permitted transferees (except for a number of shares of Class A
ordinary shares as described above under Redemption of warrants for Class A ordinary shares). If the Private Placement Warrants
are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable
by the Company in all redemption scenarios and exercisable by such holders on the same basis as the Public Warrants.
Note
8 — Subsequent Events
Management
has evaluated the impact of subsequent events through December 6, 2021, the date that the unaudited condensed financial statements were
issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure
in the unaudited condensed financial statements, other than as described below:
On
October 25, 2021, the Company consummated its initial public offering of 17,250,000 units (the “Units”), including the issuance
of 2,250,000 Units as a result of the underwriters’ exercise of their over-allotment option in full. Each Unit consists of one
Class A ordinary share of the Company, par value $0.0001 per share (the “Class A Ordinary Shares”), and one-half of one redeemable
warrant of the Company (each whole warrant, a “Warrant”), with each Warrant entitling the holder thereof to purchase one
Class A Ordinary Share for $11.50 per share, subject to adjustment. The Units were sold at a price of $10.00 per Unit, generating gross
proceeds to the Company of $172,500,000. See Note 3 for additional information.
On
October 25, 2021, simultaneously with the closing of the IPO, pursuant to the Sponsor Private Placement Warrants Purchase Agreement,
the GR Sleep Private Placement Warrants Purchase Agreement and the Urbain Private Placement Warrants Purchase Agreement, the Company
completed the private sale of an aggregate 9,150,000 warrants (the “Private Placement Warrants”) to the Sponsor, GR Sleep
and Charles Urbain at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company of $9,150,000.
See Note 4 for additional information.
On
October 26, 2021, the Company repaid $246,366 to the Sponsor, which was the full outstanding balance under the promissory note as of
the closing of the IPO on October 25, 2021.