Item 1.
Financial Statements.
SCION
TECH GROWTH II
CONDENSED
BALANCE SHEETS
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
|
|
(unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current asset - Cash
|
|
$
|
933,500
|
|
|
$
|
-
|
|
Prepaid expenses
|
|
|
456,875
|
|
|
|
-
|
|
Deferred offering costs
|
|
|
-
|
|
|
|
57,039
|
|
Total current assets
|
|
|
1,390,375
|
|
|
|
57,039
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses, non-current
|
|
|
278,630
|
|
|
|
-
|
|
Cash held in Trust Account
|
|
|
345,000,000
|
|
|
|
-
|
|
Total Assets
|
|
$
|
346,669,005
|
|
|
$
|
57,039
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accrued offering costs and expenses
|
|
$
|
26,247
|
|
|
$
|
35,000
|
|
Due to related party
|
|
|
47,048
|
|
|
|
-
|
|
Total current liabilities
|
|
|
73,295
|
|
|
|
35,000
|
|
Warrant liability
|
|
|
22,172,001
|
|
|
|
-
|
|
Deferred underwriting discount
|
|
|
11,375,000
|
|
|
|
-
|
|
Total liabilities
|
|
|
33,620,296
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
Class A ordinary shares subject to possible redemption, 30,804,870 shares and 0 shares at redemption value, respectively
|
|
|
308,048,700
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity:
|
|
|
|
|
|
|
|
|
Preference shares, $0.0001 par value; 2,000,000 shares authorized; none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 3,695,130 shares and 0 shares issued and outstanding (excluding 30,804,870 shares and 0 shares subject to possible redemption) at June 30, 2021 and December 31, 2020, respectively
|
|
|
370
|
|
|
|
-
|
|
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 8,625,000 issued and outstanding
|
|
|
863
|
|
|
|
863
|
|
Additional paid-in capital
|
|
|
8,820,629
|
|
|
|
24,137
|
|
Accumulated deficit
|
|
|
(3,821,853
|
)
|
|
|
(2,961
|
)
|
Total shareholders’ equity
|
|
|
5,000,009
|
|
|
|
22,039
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders’ Equity
|
|
$
|
346,669,005
|
|
|
$
|
57,039
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
SCION
TECH GROWTH II
UNAUDITED
CONDENSED STATEMENT OF OPERATIONS
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
June 30,
2021
|
|
|
June 30,
2021
|
|
|
|
|
|
|
|
|
Formation and operating costs
|
|
$
|
183,673
|
|
|
$
|
328,063
|
|
Loss from operations
|
|
|
(183,673
|
)
|
|
|
(328,063
|
)
|
|
|
|
|
|
|
|
|
|
Other expense
|
|
|
|
|
|
|
|
|
Warrant issuance costs
|
|
|
-
|
|
|
|
(483,829
|
)
|
Unrealized loss on change in fair value of warrants
|
|
|
(2,169,000
|
)
|
|
|
(3,007,000
|
)
|
Total other expense
|
|
|
(2,169,000
|
)
|
|
|
(3,490,829
|
)
|
Net loss
|
|
|
(2,352,673
|
)
|
|
|
(3,818,892
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding, ordinary share subject to redemption
|
|
|
31,040,138
|
|
|
|
23,691,136
|
|
Basic and diluted net income per share
|
|
$
|
-
|
|
|
$
|
-
|
|
Basic and diluted weighted average shares outstanding, ordinary share
|
|
|
12,084,862
|
|
|
|
11,237,731
|
|
Basic and diluted net loss per share
|
|
$
|
(0.19
|
)
|
|
$
|
(0.34
|
)
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
SCION
TECH GROWTH II
UNAUDITED
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
|
|
Class A Ordinary Shares
|
|
|
Class B Ordinary Shares
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total Shareholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance as of December 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
24,137
|
|
|
$
|
(2,961
|
)
|
|
$
|
22,039
|
|
Sale of 34,500,000 Units on February 12, 2021 through IPO
|
|
|
34,500,000
|
|
|
|
3,450
|
|
|
|
-
|
|
|
|
-
|
|
|
|
344,996,550
|
|
|
|
-
|
|
|
|
345,000,000
|
|
Sale of 5,933,334 Private Placement Warrants to Sponsor on February 12, 2021 in private placement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,900,000
|
|
|
|
-
|
|
|
|
8,900,000
|
|
Underwriting fee
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,500,000
|
)
|
|
|
-
|
|
|
|
(6,500,000
|
)
|
Deferred underwriting fee
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,375,000
|
)
|
|
|
-
|
|
|
|
(11,375,000
|
)
|
Offering costs charged to the shareholders' equity
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(498,266
|
)
|
|
|
-
|
|
|
|
(498,266
|
)
|
Initial classification of warrant liability
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(19,165,001
|
)
|
|
|
-
|
|
|
|
(19,165,001
|
)
|
Reclassification of offering costs related to warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
483,829
|
|
|
|
-
|
|
|
|
483,829
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,466,219
|
)
|
|
|
(1,466,219
|
)
|
Change in Class A ordinary shares subject to possible redemption
|
|
|
(31,040,138
|
)
|
|
|
(3,104
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(310,398,276
|
)
|
|
|
-
|
|
|
|
(310,401,380
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2021
|
|
|
3,459,862
|
|
|
$
|
346
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
6,467,973
|
|
|
$
|
(1,469,180
|
)
|
|
$
|
5,000,002
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,352,673
|
)
|
|
|
(2,352,673
|
)
|
Change in Class A ordinary shares subject to possible redemption
|
|
|
235,268
|
|
|
|
24
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,352,656
|
|
|
|
-
|
|
|
|
2,352,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2021
|
|
|
3,695,130
|
|
|
$
|
370
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
8,820,629
|
|
|
$
|
(3,821,853
|
)
|
|
$
|
5,000,009
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
SCION
TECH GROWTH II
UNAUDITED
CONDENSED STATEMENT OF CASH FLOWS
|
|
For the
six months
ended
June 30,
2021
|
|
|
|
|
|
Cash flows from Operating Activities:
|
|
|
|
Net loss
|
|
$
|
(3,818,892
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
Warrant issuance costs
|
|
|
483,829
|
|
Unrealized loss on change in fair value of warrants
|
|
|
3,007,000
|
|
Changes in current assets and current liabilities:
|
|
|
|
|
Prepaid assets
|
|
|
(708,705
|
)
|
Accrued offering costs and expenses
|
|
|
154,476
|
|
Due to related party
|
|
|
47,048
|
|
Net cash used in operating activities
|
|
|
(835,244
|
)
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
Cash deposited in Trust Account
|
|
|
(345,000,000
|
)
|
Net cash used in investing activities
|
|
|
(345,000,000
|
)
|
|
|
|
|
|
Cash flows from Financing Activities:
|
|
|
|
|
Proceeds from Initial Public Offering, net of underwriters’ fees
|
|
|
338,500,000
|
|
Proceeds from private placement
|
|
|
8,900,000
|
|
Payments of promissory note to related party
|
|
|
(132,990
|
)
|
Payments of offering costs
|
|
|
(498,266
|
)
|
Net cash provided by financing activities
|
|
|
346,768,744
|
|
|
|
|
|
|
Net change in cash
|
|
|
933,500
|
|
Cash, beginning of the period
|
|
|
-
|
|
Cash, end of the period
|
|
$
|
933,500
|
|
|
|
|
|
|
Supplemental disclosure of noncash investing and financing activities:
|
|
|
|
|
Deferred underwriting commissions charged to additional paid in capital
|
|
$
|
11,375,000
|
|
Initial value of Class A ordinary shares subject to possible redemption
|
|
$
|
311,370,870
|
|
Change in value of Class A ordinary shares subject to possible redemption
|
|
$
|
(3,322,170
|
)
|
Initial classification of warrant liability
|
|
$
|
19,165,001
|
|
Deferred offering costs paid by Sponsor loan
|
|
$
|
106,190
|
|
Prepaid expenses paid by Sponsor loan
|
|
$
|
26,800
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements.
SCION
TECH GROWTH II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
1 — Organization and Business Operations
Organization
and General
ScION
Tech Growth II (the “Company”) was incorporated as a Cayman Islands exempted company on December 23, 2020. The Company was
incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses (the “Business Combination”). The Company is an “emerging growth company”,
as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”). The Company’s efforts to identify a prospective target business
will not be limited to a particular industry or geographic location.
The
Company has selected December 31 as its fiscal year end.
As
of June 30, 2021, the Company had not yet commenced any operations. All activity for the period from December 23, 2020 (inception) through
June 30, 2021 relates to the Company’s formation and the Initial Public Offering (“IPO”) described below, and, since
the closing of the IPO, the search for a prospective initial Business Combination. The Company will not generate any operating revenues
until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the
form of interest income on cash and cash equivalents from the proceeds derived from the IPO and will recognize changes in the fair value
of warrant liability as other income (expense).
The
Company’s sponsor is ScION 2 Sponsor LLC, a Delaware limited liability company (the “Sponsor”).
Financing
The
registration statement for the Company’s IPO was declared effective on February 9, 2021 (the “Effective Date”). On
February 12, 2021, the Company consummated the IPO of 34,500,000 units, including the issuance of 4,500,000 units as a result of the
underwriters’ exercise of the over-allotment option in full (the “Units” and, with respect to the ordinary shares included
in the Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $345,000,000, which is
discussed in Note 3.
Simultaneously
with the closing of the IPO, the Company consummated the sale of 5,933,334 warrants (the “Private Placement Warrants”) at
a price of $1.50 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $8,900,000, which
is discussed in Note 4.
Offering
costs amounted to $18,373,266 consisting of $6,500,000 of upfront underwriting discounts, $11,375,000 of deferred underwriting commissions,
and $498,266 of other offering costs.
Trust
Account
Following
the closing of the IPO on February 12, 2021, $345,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO
and the sale of the Private Placement Warrants was placed in a Trust Account, which can only be invested in U.S. government securities,
within the meaning set forth in Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less or in money market
funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government
treasury obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company
to pay its taxes and, if any, the proceeds from the IPO and the sale of the Private Placement Warrants will not be released from the
Trust Account until the earliest of (i) the completion of the Business Combination, (ii) the redemption of the Company’s Public
Shares if the Company is unable to complete the initial Business Combination within 24 months from February 12, 2021 (the “Combination
Period”), the closing of the IPO, subject to applicable law, or (iii) the redemption of the Company’s Public Shares properly
submitted in connection with a shareholder vote to amend the Company’s amended and restated memorandum and articles of association
to (A) modify the substance or timing of the Company’s obligation to allow redemption in connection with its initial Business Combination
or to redeem 100% of the Public Shares if the Company has not consummated an initial Business Combination within the Combination Period,
or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial Business Combination activity.
Initial
Business Combination
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale
of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating
a Business Combination.
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 (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.
The
Company will provide its public shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion
of the initial Business Combination either (i) in connection with a general meeting called to approve the initial Business Combination
or (ii) without a shareholder vote by means of a tender offer. The decision as to whether the Company will seek shareholder approval
of a proposed initial Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The shareholders
will be entitled to redeem their shares for cash equal to the aggregate amount then on deposit in the Trust Account (initially $10.00
per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay
its taxes).
The
ordinary shares subject to redemption will be recorded at a redemption value and classified as temporary equity upon the completion of
the IPO, in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination if
the Company has net tangible assets of at least $5,000,001 and, if the Company seeks shareholder approval, a majority of the issued and
outstanding shares voted are voted in favor of the Business Combination.
If
the Company seeks shareholder approval of a Business Combination and the Company does not conduct redemptions in connection with the
Business Combination pursuant to the tender offer rules, the Company’s amended and restated memorandum and articles of association
provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is
acting in concert as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than an aggregate of 15% of the shares sold in the IPO without the Company’s prior consent, which the
Company refers to as the “Excess Shares.” However, the Company would not restrict their shareholders’ ability to vote
all of their shares (including Excess Shares) for or against the Business Combination.
If the Company is unable to complete the initial Business
Combination within 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 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 on the funds held in the Trust
Account (less tax payable and up to $100,000 of interest to pay dissolution 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 Company’s remaining shareholders and the Company’s board of directors, liquidate
and dissolve, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Cayman Islands law to provide
for claims of creditors and in all cases subject to the other requirements of applicable law.
The Sponsor, officers and directors have agreed to
(i) waive their redemption rights with respect to their founder shares and Public Shares in connection with the completion of the
initial Business Combination, (ii) waive their redemption rights with respect to their founder shares and Public Shares in connection
with a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and articles of association, (iii) waive
their rights to liquidating distributions from the Trust Account with respect to their founder shares if the Company fails to complete
the initial Business Combination within the Combination Period, and (iv) vote any founder shares held by them and any Public Shares
purchased during or after the IPO (including in open market and privately-negotiated transactions) in favor of the initial Business
Combination.
The Sponsor has agreed that it will be liable to the
Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target
business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or Business Combination
agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual
amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share
due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a
third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether
or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the IPO
against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). However,
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 the Company believes that the Sponsor’s only assets are
securities of the Company. Therefore, the Company cannot assure that the Sponsor would be able to satisfy those obligations. None of the
Company’s officers or directors will indemnify the Company for claims by third parties including, without limitation, claims by
vendors and prospective target businesses.
On
March 30, 2021, the Company announced that, commencing on April 5, 2021, the holders of Units may elect to separately trade the Class
A ordinary shares and warrants included in the Units. The Units not separated will continue to trade on the NASDAQ Capital Market under
the symbol “SCOBU.” Class A ordinary shares and warrants will separately trade on The Nasdaq Capital Market under the symbols
“SCOB” and “SCOBW”, respectively.
Liquidity
and Capital Resources
As
of June 30, 2021, the Company had approximately $0.9 million in its operating bank account and working capital of approximately $1.3
million.
Prior
to the completion of the IPO, the Company’s liquidity needs were satisfied through a capital contribution from the Sponsor of $25,000,
to cover certain offering costs, for the founder shares (see Note 5), and the loan under an unsecured promissory note from the Sponsor
of $132,990 (see Note 5). The Company paid the promissory note in full on May 21, 2021. Subsequent to the consummation of the IPO 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 Company’s Sponsor or an affiliate
of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital
Loans (see Note 5). To date, there were no Working Capital Loans.
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.
Note
2 — Summary of 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 (“GAAP”) for financial information and pursuant to the rules and regulations of
the SEC. Accordingly, they do not include all of the information and footnotes required by 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 periods presented. Operating results for the three months and six months ended June 30, 2021 are
not necessarily indicative of the results that may be expected through December 31, 2021.
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 February 19, 2021 and February 10, 2021, respectively.
Emerging
Growth Company Status
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (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 unaudited condensed 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.
Use
of Estimates
The
preparation of the unaudited condensed 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 unaudited
condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those
estimates.
Cash
and Cash Equivalents
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 June 30, 2021 and December 31, 2020.
Cash
Held in Trust Account
At
June 30, 2021, the assets held in the Trust Account were held in cash. At June 30, 2021, the Company had $345.0 million in cash held
in the Trust 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. 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.
The
fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value
Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet. The fair values of cash and
cash equivalents, prepaid expenses, accounts payable and accrued expenses, due to related party are estimated to approximate the carrying
values as of June 30, 2021 due to the short maturities of such instruments.
The
Company’s warrant liability is based on a valuation model utilizing management judgment and pricing inputs from observable and
unobservable markets with less volume and transaction frequency than active markets. Significant deviations from these estimates and
inputs could result in a material change in fair value. The fair value of the warrant liability is classified as Level 3. See Note 6
for additional information on assets and liabilities measured at fair value.
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 June 30, 2021 and December 31, 2020, the Company
has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Ordinary
Shares Subject to Possible Redemption
The
Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if
any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary
shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of
uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, ordinary shares
are classified as shareholders’ equity. The Company’s ordinary shares feature certain redemption rights that is considered
to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, ordinary shares subject
to possible redemption is presented at redemption value as temporary equity, outside of the shareholders’ equity section of the
Company’s balance sheet.
Net
Loss Per Ordinary Share
Net
loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary share outstanding for each of the
periods. The calculation of diluted loss per ordinary share does not consider the effect of the warrants issued in connection with the
(i) IPO, (ii) exercise of overallotment and (iii) Private Placement since the exercise of the warrants are contingent upon the occurrence
of future events and the inclusion of such warrants would be anti-dilutive. The warrants are exercisable to purchase 17,433,334 shares
of ordinary share in the aggregate.
The
Company’s statement of operations includes a presentation of loss per share for ordinary share subject to possible redemption in
a manner similar to the two-class method of loss per ordinary share. Net income per ordinary share, basic and diluted, for redeemable
ordinary share is calculated by dividing the interest income earned on the Trust Account, by the weighted average number of redeemable
ordinary share outstanding since original issuance. Net loss per ordinary share, basic and diluted, for non-redeemable ordinary share
is calculated by dividing the net loss, adjusted for income attributable to redeemable ordinary share, by the weighted average number
of non-redeemable ordinary share outstanding for the periods. Non-redeemable ordinary share includes the founder shares as these ordinary
shares do not have any redemption features and do not participate in the income earned on the Trust Account.
|
|
For the
three months
ended
June 30,
2021
|
|
|
For the
six months
ended
June 30,
2021
|
|
Ordinary share subject to possible redemption
|
|
|
|
|
|
|
Numerator: Net income allocable to ordinary share subject to possible redemption amortized interest income on marketable securities held in trust
|
|
$
|
-
|
|
|
$
|
-
|
|
Less: interest available to be withdrawn for payment of taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
Net income allocable to ordinary share subject to possible redemption
|
|
$
|
-
|
|
|
$
|
-
|
|
Denominator: Weighted average redeemable ordinary share redeemable ordinary share, basic and diluted
|
|
|
31,040,138
|
|
|
|
23,691,136
|
|
Basic and diluted net income per share, redeemable ordinary share
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Non-redeemable ordinary share
|
|
|
|
|
|
|
|
|
Numerator: Net loss minus redeemable net earnings
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,352,673
|
)
|
|
$
|
(3,818,892
|
)
|
Redeemable net earnings
|
|
|
|
|
|
|
|
|
Non-redeemable net loss
|
|
$
|
(2,352,673
|
)
|
|
$
|
(3,818,892
|
)
|
Denominator: weighted average non-redeemable ordinary share basic and diluted weighted average shares outstanding, ordinary share
|
|
|
12,084,862
|
|
|
|
11,237,731
|
|
Basic and diluted net loss per share, ordinary share
|
|
$
|
(0.19
|
)
|
|
$
|
(0.34
|
)
|
Offering
Costs
The
Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - “Expenses
of Offering”. Offering costs consisted principally of professional and registration fees incurred through the balance sheet date
that are related to the IPO. Offering costs were allocated to the separable financial instruments issued in the IPO based on a relative
fair value basis compared to total proceeds received. Offering costs associated with warrant liability were expensed, and offering costs
associated with Class A ordinary shares were charged to the shareholders’ equity.
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”. Derivative instruments are recorded at fair value
on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative
assets and liabilities are classified on 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 are a derivative
instrument.
FASB
ASC 470-20, Debt with Conversion and Other Options addresses the allocation of proceeds from the issuance of convertible debt into its
equity and debt components. The Company applies this guidance to allocate IPO proceeds from the Units between Class A ordinary shares
and warrants, using the residual method by allocating IPO proceeds first to fair value of the warrants and then the Class A ordinary
shares.
Income
Taxes
The
Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax
assets and liabilities for both the expected impact of differences between the condensed 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 unaudited condensed financial statements
and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be
sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties,
accounting in interim period, disclosure and transition.
The
Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of June 30, 2021 and December 31, 2020. 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 a Cayman Islands exempted company and is presently not subject to income taxes or income tax filing requirements in the Cayman
Islands or the United States.
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic on the Company’s financial statements 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 operations and/or
search for a target company, the specific impact is not readily determinable as of the date of the financial statements. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect
on the Company’s unaudited condensed financial statements.
Note
3 — Initial Public Offering
Pursuant
to the IPO, the Company sold 34,500,000 Units, including 4,500,000 Units as a result of the underwriters’ full exercise of the
over-allotment option, at a price of $10.00 per Unit. Each Unit consists of one Class A ordinary share and one-third of one redeemable
warrant. Each whole warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment.
The warrants will become exercisable on the later of 30 days after the completion of the initial Business Combination or 12 months from
the closing of the IPO and will expire five years after the completion of the initial Business Combination or earlier upon redemption
or liquidation.
An
aggregate of $10.00 per Unit sold in the IPO was held in the Trust Account and can only be invested in United States “government
securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money
market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.
government treasury obligations. As of June 30, 2021, $345,000,000 of the IPO proceeds was held in the Trust Account.
Public
Warrants
Each
whole warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment as discussed
herein. In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes
in connection with the closing of the initial Business Combination (excluding any issuance of forward purchase securities) at an issue
price or effective issue price of less than $9.20 per Class A ordinary share (with such issue price or effective issue price to be determined
in good faith by the Company’s board of directors and in the case of any such issuance to the Company’s initial shareholders
or their affiliate, without taking into account any founder shares held by the Company’s initial shareholders 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 (including from such issuances, the IPO and the sale of the forward purchase units), and interest
thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination
(net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A ordinary shares during the 20
trading day period starting on the trading day prior to the day on which the Company consummates its 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, and the $18.00 per share redemption trigger prices
described below under “Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00” and “Redemption
of warrants when the price per Class A ordinary share equals or exceeds $10.00” 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 adjacent
to the caption “Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00” will be adjusted
(to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
The
warrants will become exercisable on the later of 12 months from the closing of the IPO or 30 days after the completion of its initial
Business Combination and will expire five years after the completion of the Company’s initial Business Combination, at 5:00 p.m.,
New York City time, or earlier upon redemption or liquidation.
The
Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation
to settle such warrant exercise unless a registration statement under the Securities Act with respect to Class A ordinary shares underlying
the warrants is then effective and a prospectus relating thereto is current. No warrant will be exercisable, and the Company will not
be obligated to issue a Class A ordinary share upon exercise of a warrant unless the Class A ordinary share issuable upon such warrant
exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered
holder of the warrants. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement
is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for
the unit solely for the Class A ordinary share underlying such unit.
Redemption
of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $18.00
Once
the warrants become exercisable, the Company may redeem the outstanding warrants:
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●
|
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 (the “30-day redemption period”);
and
|
|
●
|
if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share, subject to adjustment, for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders.
|
Redemption
of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $10.00
Once
the warrants become exercisable, the Company may redeem the outstanding warrants:
|
●
|
in whole and
not in part;
|
|
●
|
at a price
of $0.10 per warrant; 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” (as defined below) of Class A ordinary shares except as otherwise described below; and
|
|
●
|
if, and only
if, the closing price of Class A ordinary shares equals or exceeds $10.00 per share, subject to adjustment, for any 20 trading days
within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders;
and
|
|
●
|
if the closing price of the Class A ordinary shares 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 sends the notice of redemption to the warrant holders is less than $18.00 per share, subject to adjustment, the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding warrants sold as part of the units in our initial public offering (whether they are were purchased in our initial public offering or thereafter in the open market) (the “Public Warrants”), as described above.
|
In addition, if a registration statement covering
the Class A ordinary shares issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the closing
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 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. Notwithstanding the above, if Class A ordinary shares are
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, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not
so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is
not available. In such event, each holder would pay the exercise price by surrendering each such warrant for that number of shares of
the Company’s Class A ordinary shares equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number
of Class A ordinary shares underlying the warrants, multiplied the excess of the “fair market value” over the exercise price
of the warrants by (y) the fair market value and (B) 0.361. The “fair market value” shall mean the average reported closing
price of the Class A ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of
warrant exercise is sent to the warrant agent.
Note
4 — Private Placement
Simultaneously
with the closing of the IPO, the Sponsor purchased an aggregate of 5,933,334 Private Placement Warrants at a price of $1.50 per Private
Placement Warrant, for an aggregate purchase price of $8,900,000, in a private placement. The proceeds from the Private Placement Warrants
were added to the proceeds from the IPO held in the Trust Account.
The
Private Placement warrants are identical to the warrants sold in the IPO, except that the Private Placement Warrants, so long as they
are held by the Sponsor or its permitted transferees, (i) will not be redeemable by the Company, (ii) may not (including the Class A
ordinary shares issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred, assigned or sold by
the holders until 30 days after the completion of the Company’s initial Business Combination, (iii) may be exercised by the holders
on a cashless basis and (iv) will be entitled to certain registration rights.
The
Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the Sponsor. If the
Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will
be redeemable by the Company and exercisable by the holders on the same basis as the warrants included in the units being sold in the
IPO.
The
Sponsor has agreed to (i) waive its redemption rights with respect to its founder shares and Public Shares in connection with the completion
of the initial Business Combination, (ii) waive its redemption rights with respect to its founder shares and Public Shares in connection
with a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and articles of association (A)
to modify the substance or timing of the Company’s obligation to allow redemption in connection with the initial Business Combination
or to redeem 100% of the Company’s Public Shares if the Company has not consummated its initial Business Combination within the
Combination Period or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial Business
Combination activity, (iii) waive its rights to liquidating distributions from the Trust Account with respect to its founder shares if
the Company fails to complete its initial Business Combination within the Combination Period, and (iv) vote any founder shares held by
the Sponsor and any Public Shares purchased during or after the IPO (including in open market and privately-negotiated transactions)
in favor of the initial Business Combination.
Note
5 — Related Party Transactions
Founder
Shares
On
December 23, 2020, the Sponsor paid $25,000, or approximately $0.003 per share, to cover certain offering costs in consideration for
8,625,000 Class B ordinary shares, par value $0.0001 (the “Founder Shares”). Up to 1,125,000 Founder Shares are subject to
forfeiture by the Sponsor depending on the extent to which the underwriters’ over-allotment option is exercised. In connection
with the underwriters’ exercise of their over-allotment option in full on February 12, 2021, the 1,125,000 shares were no longer
subject to forfeiture.
The
initial shareholders have agreed not to transfer, assign or sell any of their Founder Shares and any Class A ordinary shares issuable
upon conversion thereof until the earlier to occur of: (i) one year after the completion of the initial Business Combination, or (ii)
the date on which the Company completes a liquidation, merger, share exchange or other similar transaction after the initial Business
Combination 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; except to certain permitted transferees and under certain circumstances (the “lock-up”). Notwithstanding
the foregoing, if (1) the closing price of Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions,
share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing
at least 150 days after the initial Business Combination or (2) if the Company consummates a transaction after the initial Business Combination
which results in the Company’s shareholders having the right to exchange their shares for cash, securities or other property, the
Founder Shares will be released from the lock-up.
Due
to Related Parties
The
balance of $47,048 as of June 30, 2021 represents the amount accrued for the administrative support services provided by Sponsor as of
June 30, 2021.
Promissory
Note — Related Party
On
December 31, 2020, the Sponsor agreed to loan the Company up to $300,000 to be used for a portion of the expenses of the IPO. These loans
were non-interest bearing, unsecured and due at the earlier of December 31, 2021 or the closing of the IPO. The Company borrowed $132,990
under the promissory note. On May 21, 2021, the Company paid the promissory note in full.
Related
Party Loans
In
order to finance transaction costs in connection with an intended Business Combination, the Sponsor or an affiliate of the Sponsor, or
certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes the 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 the working capital held outside
the Trust Account to repay the Working Capital Loans but no proceeds from the Trust Account would be used to repay the Working Capital
Loans. Up to $1,500,000 of such Working Capital Loans may be convertible into warrants at a price of $1.50 per warrant at the option
of the lender. Such warrants would be identical to the Private Placement Warrants. As of June 30, 2021 and December 31, 2020, the Company
had no Working Capital Loans.
Administrative
Service Fee
Commencing
on the Effective Date of the registration statement, the Company has agreed to pay the Sponsor $10,000 per month for office space, utilities,
secretarial and administrative support services provided to members of the Company’s management team. Upon completion of the initial
Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. As of June 30, 2021, the Company
has recorded $47,048 for the period from February 9, 2021 through June 30, 2021.
Forward
Purchase Agreement
On February 9, 2021, the Company entered into a forward
purchase agreement pursuant to which an affiliate of the Sponsor committed that it will purchase from the Company 10,000,000 forward purchase
units, or at its option up to an aggregate maximum of 30,000,000 forward purchase units, each consisting of one Class A ordinary share,
or a forward purchase share, and one-third of one warrant (the “Forward Purchase Warrants”) to purchase one Class A ordinary
share, or a Forward Purchase Warrant, for $10.00 per unit, or an aggregate amount of $100,000,000, or at the purchaser’s option
up to an aggregate amount of $300,000,000, in a private placement that will close concurrently with the closing of the Company’s
initial Business Combination. The proceeds from the sale of these forward purchase units, together with the amounts available to the Company
from the Trust Account (after giving effect to any redemptions of Public Shares) and any other equity or debt financing obtained by the
Company in connection with the Business Combination, will be used to satisfy the cash requirements of the Business Combination, including
funding the purchase price and paying expenses and retaining specified amounts to be used by the post-Business Combination company for
working capital or other purposes. The forward purchase shares will be identical to the Class A ordinary shares included in the units
being sold in the IPO, except that they will be subject to transfer restrictions and registration rights. The Forward Purchase Warrants
will have the same terms as the Private Placement Warrants so long as they are held by the purchaser or its permitted assignees and transferees.
Note
6 — Recurring Fair Value Measurements
The
following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring
basis as of June 30, 2021, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such
fair value.
|
|
June 30,
|
|
|
Quoted
Prices In
Active
Markets
|
|
|
Significant
Other
Observable
Inputs
|
|
|
Significant
Other
Unobservable
Inputs
|
|
|
|
2021
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash held in Trust Account
|
|
$
|
345,000,000
|
|
|
$
|
345,000,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
345,000,000
|
|
|
$
|
345,000,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Placement Warrants
|
|
$
|
5,458,667
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,458,667
|
|
Public Warrants
|
|
|
10,580,000
|
|
|
|
10,580,000
|
|
|
|
-
|
|
|
|
-
|
|
Forward Purchase Warrants
|
|
|
6,133,334
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,133,334
|
|
Warrant Liability
|
|
$
|
22,172,001
|
|
|
$
|
10,580,000
|
|
|
$
|
-
|
|
|
$
|
11,592,001
|
|
Warrants
The
Warrants (Public, Private and FPA) are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant
liabilities on the Balance Sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with
changes in fair value presented within change in fair value of warrant liabilities in the Statement of Operations.
The
mid-point of the Forward Purchase Agreement ($200 million) has been used as an estimate for the purpose of deriving the associated warrant
liability; this estimate is reassessed at each reporting period.
Initial
Measurement
The
Company established the initial fair value for the Warrants on February 9, 2021, the date of the Company’s Initial Public
Offering, using a Monte Carlo simulation model for the Public Warrants, and the Black-Sholes Model for Private Placement Warrants and
Forward Purchase Warrants based on their relative fair values at the initial measurement date. The Warrants were classified as Level
3 at the initial measurement date due to the use of unobservable inputs.
The
key inputs into the Monte Carlo simulation model and Black-Scholes Model were as follows:
Input
|
|
February 9,
2021
(Initial
Measurement)
|
|
Risk-free interest rate
|
|
|
0.61
|
%
|
Expected term (years)
|
|
|
5.75
|
|
Expected volatility
|
|
|
15.0
|
%
|
Exercise price
|
|
$
|
11.50
|
|
Input
|
|
June 30,
2021
|
|
Risk-free interest rate
|
|
|
0.70
|
%
|
Expected term (years)
|
|
|
5.59
|
|
Expected volatility
|
|
|
15.0
|
%
|
Exercise price
|
|
$
|
11.50
|
|
Subsequent
Measurement
As at June 30, 2021, the
Public Warrants are measured at the observable quoted price in active markets. The Private Placement Warrants and Forward Purchase Warrants
were measured at the greater of Black-Scholes Model and the observable quoted price in active markets for Public Warrants.
The change in the fair value of the derivative warrant liabilities
measured utilizing Level 1 and Level 3 inputs for the six months ended June 30, 2021 is summarized as follows:
Derivative warrant liabilities at January 1, 2021 - Level 3
|
|
$
|
--
|
|
Issuance of Derivative Warrants - Level 3
|
|
|
19,165,001
|
|
Transfer of Public Warrants to Level 1
|
|
|
--
|
|
Change in fair value of derivative warrant liabilities - Level 3
|
|
$
|
838,000
|
|
Derivative warrant liabilities at March 31, 2021 - Level 3
|
|
$
|
20,003,001
|
|
Transfer of Public Warrants to Level 1
|
|
$
|
9,545,000
|
|
Change in fair value of derivative warrant liabilities - Level 3
|
|
|
1,134,000
|
|
Derivative warrant liabilities at June 30, 2021 - Level 3
|
|
$
|
11,592,001
|
|
Note
7 — Commitments and Contingencies
Registration
Rights
The holders of the Founder Shares, Private Placement
Warrants, the forward purchase warrants which will be issued in a private placement concurrently with the closing of the initial Business
Combination and the Class A ordinary shares underlying such Private Placement Warrants and forward purchase securities, and Private Placement
Warrants, Forward Purchase Warrants and warrants that may be issued upon conversion of Working Capital Loans will have registration rights
to require the Company to register a sale of any of its securities held by them and any other securities of the Company acquired by them
prior to the consummation of the Business Combination pursuant to a registration rights agreement signed on February 9, 2021. The holders
of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities.
In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent
to the Company’s completion of the initial Business Combination. 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 February 12, 2021 to purchase up to an additional 4,500,000 units to cover over-allotments.
On February 12, 2021, the underwriters fully exercised the over-allotment option.
On
February 12, 2021, the Underwriters received an underwriting discount of $6,500,000. Additionally, the underwriters will be entitled
to deferred underwriting $11,375,000 upon the completion of the Company’s initial Business Combination.
Note
8 — Shareholders’ Equity
Preference
shares— The Company is authorized to issue 2,000,000 preference shares with a par value of $0.0001 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 June
30, 2021 and December 31, 2020 there were no preference shares issued or outstanding.
Class
A Ordinary Shares— The Company is authorized to issue 200,000,000 Class A ordinary shares with a par value of $0.0001 per
share. As of June 30, 2021 and December 31, 2020, there were 3,695,130 and 0 Class A ordinary shares issued and outstanding, excluding
30,804,870 and 0 Class A ordinary shares subject to possible redemption, respectively.
Class
B Ordinary Shares— The Company is authorized to issue 20,000,000 Class B ordinary shares with a par value of $0.0001 per
share. Holders are entitled to one vote for each share of Class B ordinary shares. At June 30, 2021 and December 31, 2020 there were
8,625,000 Class B ordinary shares issued and outstanding. Of the 8,625,000 Class B ordinary shares, an aggregate of up to 1,125,000 shares
were subject to forfeiture to the Company for no consideration to the extent that the underwriters’ over-allotment option is not
exercised in full or in part, so that the initial shareholders will collectively own 20% of the Company’s issued and outstanding
ordinary shares after the IPO. In connection with the underwriters’ exercise of their over-allotment option in full on February
12, 2021, the 1,125,000 shares were no longer subject to forfeiture.
Prior
to the closing of the Company’s initial Business Combination, only holders of the Class B ordinary shares will be entitled to vote
on the appointment and removal of directors or continuing the company in a jurisdiction outside the Cayman Islands. On any other matters
submitted to a vote of the Company’s shareholders, holders of the Class B ordinary shares and holders of the Class A ordinary shares
will vote together as a single class, except as required by law.
The Class B ordinary shares will automatically convert
into Class A ordinary shares concurrently with or immediately following the consummation of the initial Business Combination on a one-for-one
basis, subject to adjustment for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like, and subject
to further adjustment. In the case that additional Class A ordinary shares or equity-linked securities are issued or deemed issued in
connection with the initial Business Combination, the number of Class A ordinary shares issuable upon conversion of all Founder Shares
will equal, in the aggregate, 20% of the total number of Class A ordinary shares outstanding after such conversion (after giving effect
to any redemptions of Class A ordinary shares by public shareholders), including the total number of Class A ordinary shares issued,
or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company
in connection with or in relation to the consummation of the initial Business Combination (including the forward purchase shares but
not the Forward Purchase Warrants), excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible
into Class A ordinary shares issued, or to be issued, to any seller in the initial Business Combination and any Private Placement Warrants
issued to the Sponsor, officers or directors upon conversion of Working Capital Loans; provided that such conversion of Founder Shares
will never occur on a less than one-for-one basis.
Note
9 — Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed
financial statements were issued. The Company did not identify any subsequent events that would have required adjustment or disclosure
in the condensed financial statements.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
References to the “Company,” “ScION
Tech Growth II,” “our,” “us” or “we” refer to ScION Tech Growth II. The following discussion
and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed
financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis
set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections
about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that
may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels
of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as “may,” “should,” “could,” “would,” “expect,”
“plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of
such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to,
those described in our other SEC filings.
Overview
We are a blank check company incorporated on December
23, 2020 as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition,
share purchase, reorganization or similar Business Combination with one or more businesses. We have not selected any specific Business
Combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions directly or indirectly, with
any Business Combination target with respect to an initial Business Combination with us. While we may pursue an initial Business Combination
target in any industry, we intend to focus our search on global technology, software and FinTech opportunities businesses. We intend to
effectuate our initial Business Combination using cash from the proceeds of the initial public offering, the private placement of the
Private Placement Warrants and the forward purchase securities, the proceeds of the sale of our shares in connection with our initial
Business Combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of the
initial public offering or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of
the target, other securities issuances, or a combination of the foregoing.
The issuance of additional shares in connection with
a Business Combination to the owners of the target or other investors, including the forward purchase securities:
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●
|
may significantly dilute the equity interest of investors in the initial public offering, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares;
|
|
●
|
may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares;
|
|
●
|
could cause a change in control if a substantial number of our Class A ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;
|
|
●
|
may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and
|
|
●
|
may adversely affect prevailing market prices for our Class A ordinary shares and/or warrants. Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:
|
|
●
|
default and foreclosure on our assets if our operating revenues after an initial Business Combination are insufficient to repay our debt obligations;
|
|
●
|
acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
|
|
●
|
our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
|
|
●
|
our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
|
|
●
|
our inability to pay dividends on our Class A ordinary shares;
|
We expect to continue to incur significant costs in
the pursuit of our initial Business Combination. We cannot assure you that our plans to complete a Business Combination will be successful.
Results of Operations
Our entire activity since inception up to June
30, 2021 relates to our formation, the IPO and, since the closing of the IPO, a search for a Business Combination candidate. We will not
be generating any operating revenues until the closing and completion of our initial Business Combination, at the earliest.
For the three months ended June 30, 2021, we had
a net loss of $ $2,352,673 which was comprised of operating costs of $183,673, and unrealized loss on change in fair value of warrants
of $2,169,000.
For the six months ended June 30, 2021, we had
a net loss of $3,818,892 which was comprised of operating costs of $328,063, warrant issuance costs of $483,829, and unrealized loss on
change in fair value of warrants of $3,007,000.
Liquidity and Capital Resources
As of June 30, 2021, we had approximately $0.9
million in our operating bank account, and working capital of approximately $1.3 million.
Prior to the completion of the IPO, our liquidity
needs had been satisfied through a capital contribution from the Sponsor of $25,000, to cover certain offering costs, for the founder
shares, and the loan under an unsecured promissory note from the Sponsor of $132,990. The Company paid the promissory note in full on
May 21, 2021. Subsequent to the consummation of the IPO and Private Placement, our 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, our Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but
are not obligated to, provide us Working Capital Loans. To date, there were no Working Capital Loans.
Based on the foregoing, management believes that
we will have sufficient working capital and borrowing capacity to meet our needs through the earlier of the consummation of a Business
Combination or one year from this filing. Over this time period, we 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.
Critical Accounting Policies and Estimates
The preparation of the unaudited condensed 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 unaudited condensed financial statements and the
reported amounts of expenses during the reporting period. Actual results could differ from those estimates. We have identified the following
as our critical accounting policies:
Ordinary Shares Subject to Possible Redemption
The Company accounts for its ordinary shares subject
to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) is classified as a liability instrument and is
measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either
within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s
control) is classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s
ordinary shares feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence
of uncertain future events. Accordingly, ordinary shares subject to possible redemption is presented at redemption value as temporary
equity, outside of the shareholders’ equity section of the Company’s balance sheet.
Net Loss Per Ordinary Share
Net loss per ordinary share is computed by dividing
net loss by the weighted average number of ordinary share outstanding for each of the periods. The calculation of diluted loss per ordinary
share does not consider the effect of the warrants issued in connection with the (i) IPO, (ii) exercise of overallotment and (iii) Private
Placement since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would
be anti-dilutive. The warrants are exercisable to purchase 17,433,334 shares of ordinary share in the aggregate.
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”. Derivative instruments are recorded at fair value on the grant date and re-valued at each
reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified
on 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 are derivative instruments.
FASB ASC 470-20, Debt with Conversion and Other
Options addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The Company applies
this guidance to allocate IPO proceeds from the Units between Class A ordinary shares and warrants, using the residual method by allocating
IPO proceeds first to fair value of the warrants and then the Class A ordinary shares.
Off-Balance Sheet Arrangements
As of June 30, 2021, we did not have any off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
The JOBS Act contains provisions that, among other
things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and
under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly
traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with
new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.
As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as
of public company effective dates.
Additionally, we are in the process of evaluating
the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth
in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an independent registered public accounting firm’s attestation report on our system of internal controls
over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may
be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the report of the independent registered public accounting
firm providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose
certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of
the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion
of our IPO or until we are no longer an “emerging growth company,” whichever is earlier.