This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the
“COVID-19
outbreak”). In March 2020, the WHO classified the
COVID-19
outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the
COVID-19
outbreak continues to evolve. The impact of the
COVID-19
outbreak on the Company’s results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the
COVID-19
outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results of operations, financial position and cash flows may be materially adversely affected. Additionally, the Company’s ability to complete an Initial Business Combination may be materially adversely affected due to significant governmental measures being implemented to contain the
COVID-19
outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an Initial Business Combination in a timely manner. The Company’s ability to consummate an Initial Business Combination may also be dependent on the ability to raise additional equity and debt financing, which may be impacted by the
COVID-19
outbreak and the resulting market downturn.
Liquidity and Capital Resources
As of December 31, 2020, the Company had approximately $1.2 million in its operating bank account and working capital of approximately $1.4 million. To date, the Company’s liquidity needs have been satisfied through a payment of $25,000 from the Sponsor to cover certain expenses on behalf of the Company in exchange for the issuance of the Founder Shares (as defined in Note 5), a loan of approximately $89,000 pursuant to the Note issued to the Sponsor (Note 5) and the net proceeds from the consummation of the Private Placement not held in the Trust Account. The Company fully repaid the Note on October 20, 2020. In addition, in order to finance transaction costs in connection with a Business Combination, the Company’s officers, directors and Initial Shareholders may, but are not obligated to, provide the Company Working Capital Loans (see Note 5). To date, there were no amounts outstanding under any Working Capital Loans.
Based on the foregoing, management has determined that the amount of working capital raises substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of the Business Combination or the date the Company is required to liquidate. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern. 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 Initial Business Combination. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after October 20, 2022.
Note 2 —Restatement of previously issued financial statements
In connection with the change in presentation of Class A ordinary shares subject to possible redemption, the Company concluded it should restate its previously filed financial statements to classify all Public Shares in temporary equity. In accordance with the SEC and its staff’s guidance on redeemable equity instruments in ASC
redemption provisions not solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of its Public Shares in permanent equity, or total shareholders’ equity. Although the Company did not specify a maximum redemption threshold, its charter currently provides that, the Company will not redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. Previously, the Company did not consider redeemable shares classified as temporary equity as part of net tangible assets. Effective with its financial losses statements for quarterly period ended September 30, 2021, the Company revised this interpretation to include temporary equity in net tangible assets. In addition, in connection with the change in presentation for the Public Shares, the Company determined it should restate its earnings per share calculation to allocate income and shared pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of shares share pro rata in the income and losses of the Company.
In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the corrections and has determined that the related impact was material to the previously filed financial statements that contained the error. Therefore, the Company, in consultation with its Audit Committee, concluded that the following financial statements should be restated: (i) audited balance sheet as of October 20, 2020 (the “Post IPO Balance Sheet”), as previously revised in the Company’s Annual Report on Form
10-K,
as amended, for the fiscal year ended December 31, 2020, filed with the SEC on June 17, 2021 (“2020 Form
10-K/A
No. 1”); (ii) audited financial statements included in the 2020 Form
10-K/A
No. 1; (iii) unaudited interim financial statements included in the Company’s Quarterly Report on Form
10-Q
for the quarterly period ended March 31, 2021, filed with the SEC on June 25, 2021; and (iv) unaudited interim financial statements included in the Company’s Quarterly Report on Form
10-Q
for the quarterly period ended June 30, 2021, filed with the SEC on August 16, 2021 (collectively, the “Affected Periods”), should be restated to report all Public Shares as temporary equity and should no longer be relied upon. As such, the Company will restate its financial statements for the Affected Periods in this Form
10-K/A
for the Post IPO Balance Sheet and the Company’s audited financial statements included in the 2020 Form
10-K/A
No. 1. The unaudited condensed financial statements for the periods ended March 31, 2021 and June 30, 2021 will be amended in the Company’s Quarterly Report on Form
10-Q/A
for the quarterly period ended September 30, 2021, to be filed with the SEC (the “Q3 Form
10-Q”).
The restatement does not have an impact on the Company’s cash position and cash held in the trust account established in connection with the IPO (the “Trust Account”).
The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported balance sheet as of December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported As Previously Restated in 10-K/A Amendment No. 1 |
|
|
|
|
|
|
|
Class A ordinary shares subject to possible redemption |
|
|
84,344,920 |
|
|
|
13,405,080 |
|
|
|
97,750,000 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
176 |
|
|
|
(134 |
) |
|
|
42 |
|
|
|
|
244 |
|
|
|
— |
|
|
|
244 |
|
Additional paid-in capital |
|
|
7,910,466 |
|
|
|
(7,910,466 |
) |
|
|
— |
|
|
|
|
(2,910,880 |
) |
|
|
(5,494,480 |
) |
|
|
(8,405,360 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders’ equity (deficit) |
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s statement of shareholders’ equity (deficit) has been restated to reflect the changes to the impacted shareholders’ equity accounts described above.
The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported statement of cash flows for the period from August 28, 2020 (inception) through December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Period From August 28, 2020 (inception) through December 31, 2020 |
|
|
|
As Reported As Previously Restated in 10-K/A Amendment No. 1 |
|
|
|
|
|
|
|
Value of Class A ordinary shares subject to possible redemption |
|
$ |
86,929,580 |
|
|
$ |
(86,929,580 |
) |
|
$ |
— |
|
Change in value of Class A ordinary shares subject to possible redemption |
|
$ |
(2,584,660 |
) |
|
$ |
2,584,660.00 |
|
|
$ |
— |
|
The impact to the reported amounts of weighted average shares outstanding and basic and diluted earnings per share is presented below for the period from August 28, 2020 (inception) through December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported As Previously Restated in 10-K/A Amendment No. 1 |
|
|
|
|
|
|
|
For the period From August 28, 2020 (Inception) Through December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(2,910,880 |
) |
|
$ |
— |
|
|
$ |
(2,910,880 |
) |
Weighted average shares outstanding - Class A ordinary shares |
|
|
10,190,500 |
|
|
|
(4,092,906 |
) |
|
|
6,097,594 |
|
Basic and diluted loss per share - Class A ordinary shares |
|
$ |
— |
|
|
$ |
(0.35 |
) |
|
$ |
(0.35 |
) |
Weighted average shares outstanding - Class B ordinary shares |
|
|
2,315,727 |
|
|
|
— |
|
|
|
2,315,727 |
|
Basic and diluted loss per share - Class B ordinary shares |
|
$ |
|
(1.26) |
|
$ |
0.91 |
|
|
$ |
(0.35 |
) |
The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported balance sheet as of October 20, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported As Previously Restated in 10-K/A Amendment No. 1 |
|
|
|
|
|
|
|
Class A ordinary shares subject to possible redemption |
|
|
86,929,580 |
|
|
|
10,820,420 |
|
|
|
97,750,000 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
150 |
|
|
|
(108 |
) |
|
|
42 |
|
|
|
|
244 |
|
|
|
— |
|
|
|
244 |
|
Additional paid-in capital |
|
|
5,305,833 |
|
|
|
(5,305,833 |
) |
|
|
— |
|
|
|
|
(306,217 |
) |
|
|
(5,514,479 |
) |
|
|
(5,820,696 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders’ equity (deficit) |
|
|
|
|
|
|
|
|
|
|
|
|