QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Cayman Islands | 001-40549 | 98-1581385 | |||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||
Class A ordinary shares included as part of the Units, par value $0.0001 per share | EOCW | The New York Stock Exchange | ||||
Redeemable warrants to acquire one Class A ordinary share included as part of the Units | EOCW WS | The New York Stock Exchange | ||||
Units, each consisting of one Class A ordinary share and one-fourth of a redeemable warrant to acquire one Class A ordinary share | EOCW.U | The New York Stock Exchange |
Large accelerated filer | | Accelerated filer | |||||
Non-accelerated filer | | Smaller reporting company | |||||
Emerging growth company |
ELLIOTT OPPORTUNITY II CORP.
Form 10-Q
For the Quarter Ended March 31, 2022
Table of Contents
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Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk | ||||
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| 27 | |||
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| 28 | |||
| 28 | |||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities | ||||
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| 30 | |||
Item 1. | Financial Statements. |
March 31, 2023 (Unaudited) | December 31, 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 216,824 | $ | 356,174 | ||||
Prepaid expenses | 279,031 | 428,561 | ||||||
Total Current Assets | 495,855 | 784,735 | ||||||
Investment held in Trust Account | 625,163,280 | 618,545,624 | ||||||
TOTAL ASSETS | $ | 625,659,135 | $ | 619,330,359 | ||||
Liabilities and Shareholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Accrued expenses | $ | 111,970 | $ | 44,635 | ||||
Due to related party | 1,281,310 | 1,251,310 | ||||||
Total Current Liabilities | 1,393,280 | 1,295,945 | ||||||
Deferred underwriters’ discount | 21,332,500 | 21,332,500 | ||||||
Warrant liability | 1,980,947 | 2,061,642 | ||||||
Total liabilities | 24,706,727 | 24,690,087 | ||||||
Commitments and contingencies (Note 6) | ||||||||
Class A ordinary shares subject to possible redemption, 60,950,000 at redemption value of $10.26 and $10.15 at March 31, 2023 and December 31, 2022, respectively | 625,163,280 | 618,545,624 | ||||||
Shareholders’ Deficit | ||||||||
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; none issued or outstanding (excluding 60,950,000 shares subject to possible redemption) at March 31, 2023 and December 31, 2022 | — | — | ||||||
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 15,237,500 issued and outstanding at March 31, 2023 and December 31, 2022 | 1,524 | 1,524 | ||||||
Additional paid-in capital | — | — | ||||||
Accumulated deficit | (24,212,396 | ) | (23,906,876 | ) | ||||
Total Shareholders’ Deficit | (24,210,872 | ) | (23,905,352 | ) | ||||
Total Liabilities and Shareholders’ Deficit | $ | 625,659,135 | $ | 619,330,359 | ||||
February 1, 2021 (Inception) to | ||||||||
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Formation and operating costs | $ | 387,351 | $ | 426,919 | ||||
Loss from operations | (387,351 | ) | (426,919 | ) | ||||
Other income: | ||||||||
Interest earned on investment held in Trust Account | 6,617,656 | 48,767 | ||||||
Interest earned on cash held in bank account | 1,136 | 270 | ||||||
Change in fair value of warrant liability | 80,695 | 12,545,861 | ||||||
Total other income, net | 6,699,487 | 12,594,898 | ||||||
Net income | $ | 6,312,136 | $ | 12,167,979 | ||||
Weighted average shares outstanding of Class A ordinary shares subject to possible redemption | 60,950,000 | 60,950,000 | ||||||
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption | $ | 0.08 | $ | 0.16 | ||||
Weighted average shares outstanding, Class B ordinary shares | 15,237,500 | 15,237,500 | ||||||
Basic and diluted net income per share, Class B ordinary shares | $ | 0.08 | $ | 0.16 | ||||
Class A Ordinary shares | Class B Ordinary shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance as of January 1, 2023 | — | $ | — | 15,237,500 | $ | 1,524 | $ | — | $ | (23,906,876 | ) | $ | (23,905,352 | ) | ||||||||||||||
Change in value of ordinary shares subject to redemption | — | — | — | (6,617,656 | ) | (6,617,656 | ) | |||||||||||||||||||||
Net income | — | — | — | — | — | 6,312,136 | 6,312,136 | |||||||||||||||||||||
March 31, 2023 | — | $ | — | 15,237,500 | $ | 1,524 | $ | — | $ | (24,212,396 | ) | $ | (24,210,872 | ) | ||||||||||||||
Class A Ordinary shares | Class B Ordinary shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance as of January 1, 2022 | — | $ | — | 15,237,500 | $ | 1,524 | $ | — | $ | (48,722,457 | ) | $ | (48,720,933 | ) | ||||||||||||||
Net income | — | — | — | — | — | 12,167,979 | 12,167,979 | |||||||||||||||||||||
March 31, 2022 | — | $ | — | 15,237,500 | $ | 1,524 | $ | — | $ | (36,554,478 | ) | $ | (36,552,954 | ) | ||||||||||||||
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 6,312,136 | $ | 12,167,979 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Interest earned on marketable securities held in Trust Account | (6,617,656 | ) | (48,767 | ) | ||||
Change in fair value of warrant liability | (80,695 | ) | (12,545,861 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expense | 149,530 | 221,068 | ||||||
Accrued expenses | 67,335 | (1,768 | ) | |||||
Due to related party | 30,000 | 30,000 | ||||||
Net cash used in operating activities | (139,350 | ) | (177,349 | ) | ||||
Net change in cash | (139,350 | ) | (177,349 | ) | ||||
Cash, beginning of period | 356,174 | 720,480 | ||||||
Cash, end of the period | $ | 216,824 | $ | 543,131 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Remeasurement of carrying value to redemption value | $ | 6,617,656 | $ | — | ||||
Unrealized Gains | Unrealized Losses | as of March 31, 2022 | ||||||||||||||
Carrying Value as of March 31, 2023 | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of March 31, 2023 | |||||||||||||
Cash | $ | 506 | $ | — | $ | — | $ | 506 | ||||||||
U.S. Treasury Securities | 624,944,544 | 218,229 | — | 625,162,774 | ||||||||||||
$ | 624,945,051 | $ | 218,229 | $ | — | $ | 625,163,280 | |||||||||
Unrealized Gains | Unrealized Losses | as of December 31, 2021 | ||||||||||||||
Carrying Value as of December 31, 2022 | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of December 31, 2022 | |||||||||||||
Cash | $ | 1,051 | $ | — | $ | — | $ | 1,051 | ||||||||
U.S. Treasury Securities | 618,143,315 | 401,259 | — | 618,544,573 | ||||||||||||
$ | 618,144,365 | $ | 401,259 | $ | — | $ | 618,545,624 | |||||||||
Gross Proceeds from IPO | $ | 609,500,000 | ||
Less: | ||||
Proceeds allocated to public warrants | (17,852,479 | ) | ||
Class A ordinary shares issuance costs | (33,791,129 | ) | ||
Plus: | ||||
Remeasurement of carrying value to redemption value | 60,689,232 | |||
Class A ordinary shares subject to possible redemption, December 31, 2022 | $ | 618,545,624 | ||
Remeasurement of carrying value to redemption value | 6,617,656 | |||
Class A ordinary shares subject to possible redemption, March 31, 2023 | $ | 625,163,280 | ||
Ended March 31, 2022 | ||||||||
(Inception) to March 31, 2021 | ||||||||
For the Three Months Ended March 31, | ||||||||||||||||
2023 | 2022 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted net income per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 5,049,709 | $ | 1,262,427 | $ | 9,734,383 | $ | 2,433,596 | ||||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | 60,950,000 | 15,237,500 | 60,950,000 | 15,237,500 | ||||||||||||
Basic and diluted net income per share | $ | 0.08 | $ | 0.08 | $ | 0.16 | $ | 0.16 |
Level 1 | Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. | |
Level 2 | Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. | |
Level 3 | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
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(the “30-day redemption period”) 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 (as adjusted share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading dayswithin 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. |
in whole and not in part; |
at $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 Class A ordinary shares to be determined by reference to the redemption date and the “fair market value” of the Company’s Class A ordinary shares (as defined below); |
if, and only if, the closing price of our Class A ordinary shares equals or exceeds $10.00 per public share (as adjusted per share subdivisions, share dividends, reorganizations, recapitalizations and the like) on the trading day before the Company sends the notice of redemption to the warrant holders. |
March 31, 2023 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
Assets: | ||||||||||||||||
Cash and Investments Held in Trust Account | $ | 625,163,280 | $ | 625,163,280 | $ | — | $ | — | ||||||||
$ | 625,163,280 | $ | 625,163,280 | $ | — | $ | — | |||||||||
Liabilities: | ||||||||||||||||
Public Warrants Liability | $ | 1,159,574 | $ | 1,159,574 | $ | — | $ | — | ||||||||
Private Placement Warrants Liability | 821,373 | — | 821,373 | — | ||||||||||||
$ | 1,980,947 | $ | 1,159,574 | $ | 821,373 | $ | — | |||||||||
December 31, 2022 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
Assets: | ||||||||||||||||
Cash and Investments Held in Trust Account | $ | 618,545,624 | $ | 618,545,624 | $ | — | $ | — | ||||||||
$ | 618,545,624 | $ | 618,545,624 | $ | — | $ | — | |||||||||
Liabilities: | ||||||||||||||||
Public Warrants Liability | $ | 1,206,810 | $ | 1,206,810 | $ | — | $ | — | ||||||||
Private Placement Warrants Liability | 854,832 | — | 854,832 | — | ||||||||||||
$ | 2,061,642 | $ | 1,206,810 | $ | 854,832 | $ | — | |||||||||
2021 | ||||||||||||||||
2022 | 2021 | (Initial Measurement) | ||||||||||
References to the 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 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 Overview We are a Our sponsor is Elliott Opportunity Sponsor II L.P., a Delaware limited partnership (the Concurrently with the closing of the Initial Public Offering, we completed the private sale (the Upon the closing of the Initial Public Offering and the Private Placement, $609,500,000 ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a U.S.-based trust account (the under Rule 2a-7 promulgated under the Investment Company Act that invest only in direct U.S. government treasury obligations. Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.We will have 24 months from the closing of the Initial Public Offering, or July 1, 2023, to complete the initial Business Combination (the 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 and not previously released to us to pay the income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding Public Shares, which redemption will completely extinguish public 20 Public Shares the right to have their shares redeemed in connection with our initial Business Combination or to redeem 100% of our Public Shares if we do not complete our initial Business Combination within the Combination Period, (B) with respect to any other provision relating to the rights of holders of our Public Shares or pre-initial business combination activity and, (iii) waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares or Private Placement Warrants they hold if we fail to consummate the initial Business Combination within the Combination Period (although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if we fail to complete our initial Business Combination within the Combination Period). In the event of any such liquidating distribution from the Trust Account, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the Initial Public Offering price per Unit in the Initial Public Offering.Results of Operations All activity for the period from February 1, 2021 (inception) through March 31, 2023 relates to our formation, the Initial Public Offering and, We generate non-operating income in the form of interest income on cash from the proceeds derived from the Initial Public Offering. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. For the three months ended March 31, 2023, we had net income of $6,312,136. This consisted of interest income from investment in Trust Account and cash of $6,617,656, interest income from bank of $1,136 and gain from change in fair market value of warrants of $80,695, offset by formation and operating costs of $387,351. For the three months ended March 31, 2022, we had Liquidity and Capital Resources As of March 31, 2023 and December 31, 2022 the Company had $216,824 and $356,174 in cash, respectively, and The Company’s liquidity needs 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 The Company received a commitment letter dated March 30, 2022 that confirms the Sponsor will commit to provide periodic financial support to the Company at the request of the Company, sufficient for it to satisfy its obligations as they come due until the earlier of: (a) the completion of the 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, we will be using these funds to pay 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. Going Concern The Company does not believe it will need to raise additional funds in order to meet the expenditures required for operating our business. However, if the estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, the Company may have insufficient funds available to operate our business prior to a Business Combination. Moreover, the Company may need to obtain additional financing either to complete a Business Combination or because the Company becomes obligated to redeem a significant number of public shares upon consummation of a Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, the Company would only complete such financing simultaneously with the completion of a Business Combination. If the Company is unable to complete a Business Combination because it does not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account. In addition, following a Business Combination, if cash on hand is insufficient, the Company may need to obtain additional financing in order to meet its obligations. 21 The Company is a Special Purpose Acquisition Corporation with a scheduled liquidation date of July 1, 2023. The Company plans to complete the transaction before the liquidation date. In connection with the Special Purpose Acquisition Corporation’s assessment of going concern considerations in accordance with ASC Topic 205-40 Presentation of Financial Statements—Going Concern, although the Company intends to consummate a Business Combination on or before July 1, 2023, Management has determined that the mandatory liquidation deadline less than 12 months away, should a Business Combination not occur and an extension is not requested by the Sponsor, raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after July 1, 2023. 22 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 targets, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the business Combination. Risks and Uncertainties Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the 23 The United States and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the recent invasion of Ukraine by Russia in February 2022. In response to such invasion, the North Atlantic Treaty Organization the United Kingdom, the European Union and other countries have announced various sanctions and restrictive actions against Russia, Belarus and related individuals and entities, including the removal of certain financial institutions from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system. Certain countries, including the United States, have also provided and may continue to provide military aid or other assistance to Ukraine during the ongoing military conflict, increasing geopolitical tensions with Russia. The invasion of Ukraine by Russia and the resulting measures that have been taken, and could be taken in the future, by NATO, the United States, the United Kingdom, the European Union and other countries have created global security concerns that could have a lasting impact on regional and global economies. Although the length and impact of the ongoing military conflict in Ukraine is highly unpredictable, the conflict could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. Additionally, Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Off-Balance Sheet As of March 31, have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) ofRegulation S-K. Inflation We do not believe that inflation had a material impact on our business, revenues or operating results during the period presented. Emerging Growth Company Status We are an 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. We have 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 our 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.Contractual Obligations We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities other than deferred underwriting fee of $21,332,500, warrant liabilities of $1,980,947 as of March 31, 2023 and amounts owed to our Sponsor for administrative services of $210,000 as of March 31, 2023. Administrative Services Agreement We pay the Sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our founding team. Upon completion of the initial Business Combination or our liquidation, we will cease paying such monthly fees. For the three months ended March 31, 2023, $30,000 in administrative fee expense was incurred by the Company and accrued as due to related party. For the three months ended March 31, 2022, we incurred a total of $30,000 in administrative services. Registration Rights The holders of the Founder Shares, Private Placement Warrants, Class A ordinary shares underlying the Private Placement Warrants and Warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and Warrants that may be issued upon conversion of Working Capital Loans) will be entitled to registration rights pursuant to a registration and shareholder rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of the initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements. 24 Underwriting Agreement On July 1, 2021, we paid an underwriting discount of 2% of the per Unit offering price, or approximately $12,190,000 million in the aggregate at the closing of the Initial Public Offering, and the underwriters are entitled to a deferred underwriting discount of 3.5% of the gross proceeds of the Initial Public Offering, or $21,332,500 in the aggregate. The deferred fee will be payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete an initial Business Combination, subject to the terms of the underwriting agreement. Critical Accounting Policies The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies. Ordinary Shares Subject to Possible Redemption All of the Class A Ordinary Shares sold as part of the Units in the Public Offering contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a shareholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s charter. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. Accordingly, at March 31, 2023 and December 31, 2022, all of the Class A ordinary shares subject to possible redemption is presented as temporary equity, outside of the shareholders’ deficit section of the Company’s balance sheets. 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 initially 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 in the balancesheetascurrent or non-current based onwhetheror not net-cash settlement orconversionofthe instrument could be required within 12 months of the balance sheet date. Warrant Liability The Company evaluated the Public Warrants and Private Placement Warrants (collectively, “Warrants”, which are discussed in Note 3, Note 4 and Note 7) in accordance with ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity”, and concluded that a provision in the Warrant Agreement related to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants are recorded as derivative liabilities on the Balance Sheet and measured at fair value at inception (on the date of the IPO) and at each reporting date in accordance with ASC 820, “Fair Value Measurement”, with changes in fair value recognized in the Statement of Operations in the period of change. Net Income per Ordinary Share The Company has two classes of shares, Class A ordinary shares and Class B ordinary shares. Earnings and losses are shared pro rata between the two classes of shares. The Company has not considered the effect of the outstanding warrants to purchase 26,030,833 Class A ordinary shares in the calculation of diluted income per share, since their exercise is contingent upon future events. As a result, diluted net income per ordinary share is the same as basic net income per ordinary share for the periods. 25
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