☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ 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 |
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
tofile number: File
Cayman Islands | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
630 Ramona St. Palo Alto, CA | 94301 | |
| ||
(Address of principal executive offices) | (Zip Code) |
(617)
☐☒ No ☒☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-acceleratedanon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in
Large accelerated filer | ☐ | |||||
Accelerated filer | ☐ | |||||
Non-accelerated filer | ☒ | Smaller reporting company | ||||
☒ | ||||||
Emerging growth company | ☒ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule
As of December 2, 2021,N
ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2021 2022
TABLE OF CONTENTS
i
UNAUDITED
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 278,202 | $ | 637,566 | ||||
Prepaid expenses and other current assets | 375,420 | 360,072 | ||||||
Total Current Assets | 653,622 | 997,638 | ||||||
Long-Term portion of Prepaid Insurance | 28,125 | 281,250 | ||||||
Cash and investments held in Trust Account | 307,948,085 | 306,017,160 | ||||||
TOTAL ASSETS | $ | 308,629,832 | $ | 307,296,048 | ||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
Current Liabilities | ||||||||
Accrued expenses | $ | 107,510 | $ | 102,703 | ||||
Total Current Liabilities | 107,510 | 102,703 | ||||||
Sponsor Loan | 6,220,000 | 6,220,000 | ||||||
Deferred underwriting fee payable | 11,280,000 | 11,280,000 | ||||||
TOTAL LIABILITIES | 17,607,510 | 17,602,703 | ||||||
Commitments | ||||||||
Class A ordinary shares subject to redemption; 30,000,000 shares at approximately $10.26 and $10.20 per share at September 30, 2022 and December 31, 2021, respectively | 307,948,085 | 306,000,000 | ||||||
Shareholders’ Deficit | ||||||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued or outstanding | — | — | ||||||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 700,000 issued and outstanding (excluding 30,000,000 shares subject to possible redemption) as of September 30, 2022 and December 31, 2021 | 70 | 70 | ||||||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 7,500,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021 | 750 | 750 | ||||||
Accumulated deficit | (16,926,583 | ) | (16,307,475 | ) | ||||
Total Shareholders’ Deficit | (16,925,763 | ) | (16,306,655 | ) | ||||
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | $ | 308,629,832 | $ | 307,296,048 | ||||
September 30, 2021 | ||||
ASSETS | ||||
Current assets – cash | $ | 11,296 | ||
Prepaid expenses and other current assets | 3,398 | |||
Total Current Assets | 14,694 | |||
Deferred offering costs | 219,048 | |||
TOTAL ASSETS | $ | 233,742 | ||
LIABILITIES AND SHAREHOLDER’S EQUITY | ||||
Current liabilities | ||||
Accounts payable and accrued expenses | $ | 198 | ||
Accrued offering costs | 90,186 | |||
Promissory note – related party | 125,000 | |||
Total Current Liabilities | 215,384 | |||
Commitments | ||||
Shareholder’s Equity | ||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding | — | |||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; none issued and outstanding | — | |||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 7,503,750 shares issued and outstanding | 750 | |||
Additional paid-in capital | 24,250 | |||
Accumulated deficit | (6,642 | ) | ||
Total Shareholder’s Equity | 18,358 | |||
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY | $ | 233,742 |
The accompanying notes are an integral part of the unaudited condensed financial statements.
Three Months Ended September 30, | Nine Months Ended September 30, 2022 | For the Period from May 3, 2021 (Inception) through September 30 2021 | ||||||||||||||
2022 | 2021 | |||||||||||||||
Formation and operating costs | $ | 180,708 | $ | 6,642 | $ | 601,948 | $ | 6,642 | ||||||||
Loss from operations | (180,708 | ) | (6,642 | ) | (601,948 | ) | (6,642 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Interest earned on Investments held in Trust Account | 1,349,618 | — | 1,930,925 | — | ||||||||||||
Net income (loss) | $ | 1,168,910 | $ | (6,642 | ) | $ | 1,328,977 | $ | (6,642 | ) | ||||||
Weighted average shares outstanding of Class A ordinary shares | 30,700,000 | — | 30,700,000 | — | ||||||||||||
Basic and diluted net income (loss) per share, Class A ordinary shares | $ | 0.03 | $ | — | $ | 0.03 | $ | — | ||||||||
Weighted average shares outstanding of Class B ordinary shares | 7,500,000 | 7,187,500 | 7,500,000 | 7,187,500 | ||||||||||||
Basic and diluted net income (loss) per share, Class B ordinary shares | $ | 0.03 | $ | (0.00 | ) | $ | 0.03 | $ | (0.00 | ) | ||||||
FOR THREE MONTHS ENDED SEPTEMBER 30, 2021 | FOR THE PERIOD FROM MAY 3, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021 | |||||||
Operating and formation costs | $ | 6,642 | $ | 6,642 | ||||
Net loss | $ | (6,642 | ) | $ | (6,642 | ) | ||
Basic and diluted weighted average shares outstanding (1) | 6,525,000 | 6,525,000 | ||||||
Basic and diluted net loss per share | $ | (0.00 | ) | $ | (0.00 | ) |
The accompanying notes are an integral part of the unaudited condensed financial statements.
Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance — January 1, 2022 | 700,000 | $ | 70 | 7,500,000 | $ | 750 | $ | — | $ | (16,307,475 | ) | $ | (16,306,655 | ) | ||||||||||||||
Net loss | — | — | — | — | — | (147,258 | ) | (147,258 | ) | |||||||||||||||||||
Balance — March 31, 2022 | 700,000 | 70 | 7,500,000 | 750 | — | (16,454,733 | ) | (16,453,913 | ) | |||||||||||||||||||
Accretion of Class A Ordinary Shares Subject to Redemption | — | — | — | — | — | (598,467 | ) | (598,467 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | 307,325 | 307,325 | |||||||||||||||||||||
Balance — June 30, 2022 | 700,000 | 70 | 7,500,000 | 750 | — | (16,745,875 | ) | (16,745,055 | ) | |||||||||||||||||||
Accretion of Class A Ordinary Shares Subject to Redemption | — | — | — | — | — | (1,349,618 | ) | (1,349,618 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | 1,168,910 | 1,168,910 | |||||||||||||||||||||
Balance — September 30, 2022 | 700,000 | $ | 70 | 7,500,000 | $ | 750 | $ | — | $ | (16,926,583 | ) | $ | (16,925,763 | ) | ||||||||||||||
Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance — May 3, 2021 | — | $ | — | 7,503,750 | $ | 750 | $ | 24,250 | $ | — | $ | 25,000 | ||||||||||||||||
Net loss | — | — | — | — | — | — | — | |||||||||||||||||||||
Balance — June 30, 2021 | — | — | 7,503,750 | 750 | 24,250 | — | 25,000 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (6,642 | ) | (6,642 | ) | |||||||||||||||||||
Balance — September 30, 2021 | — | $ | — | 7,503,750 | $ | 750 | $ | 24,250 | $ | (6,642 | ) | $ | 18,358 | |||||||||||||||
Ordinary Shares | Additional Paid-in | Accumulated | Total Shareholder’s | |||||||||||||||||
Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
Balance — May 3, 2021 | 7,503,750 | $ | 750 | $ | 24,250 | $ | — | $ | 25,000 | |||||||||||
Net loss | — | — | — | — | — | |||||||||||||||
Balance – June 30, 2021 | 7,503,750 | $ | 750 | $ | 24,250 | $ | — | $ | 25,000 | |||||||||||
Net loss | — | — | — | (6,642 | ) | (6,642 | ) | |||||||||||||
Balance – September 30, 2021 | 7,503,750 | $ | 750 | $ | 24,250 | $ | (6,642 | ) | $ | 18,358 |
The accompanying notes are an integral part of the unaudited condensed financial statements.
Nine Months Ended September 30, 2022 | For the period from May 3, 2021 (inception) through September 30, 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | 1,328,977 | $ | (6,642 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Interest earned on investments held in Trust Account | (1,930,925 | ) | — | |||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other current assets | 237,777 | (3,398 | ) | |||||
Accrued expenses | 4,807 | 198 | ||||||
Net cash used in operating activities | (359,364 | ) | (9,842 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from issuance of Class B ordinary shares | — | 25,000 | ||||||
Proceeds from promissory note – related party | — | 125,000 | ||||||
Payment of deferred offering costs | — | (128,862 | ) | |||||
Advances from related party | 3,671 | — | ||||||
Repayment of advances from related party | (3,671 | ) | — | |||||
Net cash provided financing activities | — | 21,138 | ||||||
Net Change in Cash | (359,364 | ) | 11,296 | |||||
Cash – Beginning | 637,566 | — | ||||||
Cash – Ending | $ | 278,202 | $ | 11,296 | ||||
Non-Cash Investing and Financing Activity: | ||||||||
Accretion of Class A Ordinary Shares Subject to Redemption | $ | 1,349,618 | $ | — | ||||
Deferred offering costs included in accrued offering costs | $ | — | $ | 90,186 | ||||
FOR THE PERIOD FROM MAY 3, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021
Cash Flows from Operating Activities: | ||||
Net loss | $ | (6,642 | ) | |
Changes in operating assets and liabilities: | ||||
Prepaid expenses and other current assets | (3,398 | ) | ||
Accrued expenses | 198 | |||
Net cash used in operating activities | (9,842 | ) | ||
Cash Flows from Financing Activities: | ||||
Proceeds from issuance of Class B ordinary shares | 25,000 | |||
Proceeds from promissory note – related party | 125,000 | |||
Payment of deferred offering costs | (128,862 | ) | ||
Net cash provided by financing activities | 21,138 | |||
Net Change in Cash | 11,296 | |||
Cash – Beginning of period | — | |||
Cash – End of period | $ | 11,296 | ||
Non-Cash investing and financing activities: | ||||
Deferred offering costs included in accrued offering costs | $ | 90,186 |
The accompanying notes are an integral part of the unaudited condensed financial statements.
UNAUDITED
The registration statement for the Company’s Initial Public Offering became effective on October 18, 2021. On October 21, 2021, the Company consummated the Initial Public Offering of 30,000,000 units (the “Public Units”“Units”), which includesincluding 3,900,000 Units issued pursuant to the partial exercise byof the underwriterunderwriters’ over-allotment option. Each Unit consists of its over-allotment option inone Class A ordinary share of the amount Company, par value $0.0001 per share (a “Public Share”), and
Following the closing of the Initial Public Offering on October 21, 2021, an amount of $306,000,000 ($10.20 per Public Shares) from the net proceeds of the sale of the Public Shares in the Initial Public Offering and the sale of the Placement Units was placed in a trust accountTrust Account (the “Trust Account”), and will be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting certain conditions of Rule
ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP.
UNAUDITED NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering, the sale of the Placement Units and Sponsor Loan (as defined in Note 5) proceeds, although substantially all of the net proceeds are intended to be applied generally toward completing a Business Combination. Nasdaq rules provide that the Business Combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the assets held in the Trust Account (as defined below). The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully effect a Business Combination. Upon the closing of the Proposed Public Offering, management has agreed that $10.20 per Unit sold in the Proposed Public Offering, including proceeds of the sale of the Placement Units, will be held in a trust account (“Trust Account”) and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earliest of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.
The Company will provide the holders of the Class A ordinary shares (the “Public Shares”) included in the Public UnitsShares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their public sharesPublic Shares upon the completion of the Business Combination, either (i) in connection with a general meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their Public Shares, equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the completion of the Business Combination (initially(Initially anticipated to be $10.20 per Public Share), including interest (which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, subject to certain limitations as described in the prospectus. The
The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001, either prior to or upon completion of the Business Combination, after payment of the deferred underwriting commission, and, if the Company seeks shareholder approval, it receives an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the Company. If a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions pursuant to
ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP.
UNAUDITED NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Sponsor has agreed (a) to waive its redemption rights with respect to any Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Memorandum and Articles of Association (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s Initial Business Combination or to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to shareholders’ rights or
ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP.
UNAUDITED
(Unaudited)
Management’s Plan
Prior to the completion
Risks and Uncertainties
Management continuesCompany will be required to evaluatecease all operations, except for the impactpurpose of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could havewinding up, if a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impactBusiness Combination is not readily determinable as of the date of the financial statements. Theconsummated. These unaudited condensed financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might result frombe necessary should the outcome of this uncertainty.
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s prospectus Annual Report on Form
ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP.
UNAUDITED NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
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
Cash Equivalents
Deferred Offering Costs
Gross proceeds | $ | 300,000,000 | ||
Less: | ||||
Proceeds allocated to Public Warrants | (12,450,000 | ) | ||
Class A ordinary shares issuance costs | (17,078,457 | ) | ||
Plus: | ||||
Accretion of carrying value to redemption value | 35,528,457 | |||
Class A ordinary shares subject to possible redemption, December 31, 2021 | $ | 306,000,000 | ||
Plus: | ||||
Accretion of carrying value to redemption value | 1,948,085 | |||
Class A ordinary shares subject to possible redemption, September 30, 2022 | $ | 307,948,085 | ||
As of September 30, 2021, there were $219,048 of deferred offering costs recorded in the accompanying unaudited condensed balance sheets.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements andTaxes,” which prescribes a recognition threshold and a measurement processattribute for the unaudited condensed financial statement recognition and measurement of a tax positionpositions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-notmore likely than not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. ThereAs of September 30, 2022 and December 31, 2021, there were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2021.penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to incomeCompany’s management does not expect that the total amount of unrecognized tax examinations by major taxing authorities since inception.
ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP.
UNAUDITED NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Net Loss per Ordinary Share
Net loss(loss) per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding duringfor the period, excludingperiod. Accretion associated with the redeemable Class A ordinary shares subject to forfeiture. Weighted average shares were reduced foris excluded from earnings per share as the redemption value approximates fair value.
Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted income per ordinary share | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 939,412 | $ | 229,498 | $ | 1,068,052 | $ | 260,925 | ||||||||
Denominator: | ||||||||||||||||
Basic and diluted weighted average shares outstanding | 30,700,000 | 7,500,000 | 30,700,000 | 7,500,000 | ||||||||||||
Basic and diluted net income per ordinary share | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.03 | ||||||||
Three Months Ended September 30, 2021 | For the Period from May 3, 2021 (inception) Through September 30, 2021 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted income per ordinary share | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | — | $ | (6,642 | ) | $ | — | $ | (6,642 | ) | ||||||
Denominator: | ||||||||||||||||
Basic and diluted weighted average shares outstanding | — | 7,187,500 | — | 7,187,500 | ||||||||||||
Basic and diluted net income per ordinary share | $ | — | $ | (0.00 | ) | $ | — | $ | (0.00 | ) | ||||||
of Financial Instruments
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:
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.
In August 2020, the Financial Accounting Standards Board (“FASB”)FASB issued Accounting Standards Update (“ASU”)
Pursuant to the Initial Public Offering, on October 21, 2021, the Company sold 30,000,000 Units, which includes a partial exercise by the underwriters of their over-allotment option in the amount of 3,900,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one Class A ordinary share and
ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP.
UNAUDITED NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 4.4 — PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor and the representatives of the underwriters purchased an aggregate of 700,000 Placement Units (of which an aggregate of 600,000 Placement Units were purchased by the Sponsor and 100,000 Placement Units were purchased by the representatives of the underwriters) at a price of $10.00 per Private Placement Unit, for an aggregate purchase price of $7,000,000, in a private placement. Each Placement Unit consists of one share of Class A ordinary share (“Placement Share”) and
NOTE 5.5 — RELATED PARTY TRANSACTIONS
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earliest of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the closing price of the Class A ordinary shares equals or exceesdsexceeds $12.00 per share (as adjusted for share
ServicesSupport Agreement
ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP.
UNAUDITED
(Unaudited)
Promissory Note — Related Party
On July 9, 2021, the Company issued an unsecured promissory note (the “Promissory Note”) to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $300,000. The Promissory Note is non-interest bearing and payable on the earlier of December 31, 2021 and the completion of the Initial Public Offering. As of September 30, 2021, there was $125,000 outstanding under the Promissory Note.
6.6 — COMMITMENTS
ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP.
UNAUDITED NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Underwriting Agreement
At the closing of the Initial Public Offering, the underwriter exercised a partial overallotment of 3,900,000 additional Units and forfeited the remaining 15,000 Units.
The underwriters paidwere entitled to a cash underwriting discount of $0.20 per Unit, or $5,220,000 in the aggregate, which was paid upon the closing of the Initial Public Offering. In addition, the underwriters are entitled to a deferred fee of (i) $0.35 per Unit of the gross proceeds of the ProposedInitial 26,100,000 Units sold in the ProposedInitial Public Offering, or $9,135,000, and (ii) $0.55 per Unit of the gross proceeds from the Units sold pursuant to the over-allotment option, or $2,145,000. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
The Class B ordinary shares will automatically convert into Class A ordinary shares at the time of a Business Combination or earlier at the option of the holders thereof at a ratio such that the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an 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 the Class A ordinary shares underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable, and the Company will not be obligated to issue 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. Shares — Shares—no700,000 Class A ordinary shares issued or outstanding.ClassShares — Shares—7,503,7507,500,000 Class B ordinary shares issued and outstanding, of which an aggregate of up to 978,750 shares are subject to forfeiture depending on the extent to which the underwriters’ over-allotment option is exercised, so that the number of Class B ordinary shares will equal 20% of the Company’s issued and outstanding ordinary shares after the Proposed Public Offering (assuming the Sponsor does not purchase any Public Shares in the Initial Public Offering and excluding the Representative Shares).ProposedInitial Public Offering, plus (ii) 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 completion of a Business Combination (including the forward purchase shares, but not the forward purchase warrants), excluding any forward purchases securities and Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in a Business Combination and any Placement Units issued to the Sponsor, its affiliates or any member of the Company’s management team upon conversion of Working Capital Loans. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less thanWarrantsno15,350,000 warrants issued and outstanding. Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the warrants. The warrants will become exercisable at any time commencing 30 days after the completion of a Business Combination. The warrants will expire five years from the completion of a Business Combination or earlier upon redemption or liquidation.ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP.UNAUDITED NOTES TO CONDENSED FINANCIAL STATEMENTSSEPTEMBER 30, 2021(Unaudited)In the event thatIf the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will the Company be required to net cash settle any warrant. In the event thatIf 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.an Initiala Business Combination, the Company will use its commercially reasonable best efforts to file with the SEC a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants, to cause such registration statement to become effective within 60 days after the closing of Initiala Business Combination and to maintain a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement; provided that if the Class A ordinary shares 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 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 elects, it will not be required to file or maintain in effect a registration statement, but it will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60 Initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption, but the Company will use its 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 the warrants for that number of Class A ordinary shares equal to the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” as used in the paragraph shall mean the volume weighted average price of the of the Class A ordinary shares as reported during the ten (10) day period ending on the trading date prior to the date that notice of exercise is received by the warrant agent.
The Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those Class A ordinary shares is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable, If the Company calls the warrants. Warrants. Once the warrants become exercisable, the Company may redeem the outstanding warrants:●in whole and not in part;●at a price of $0.01 per warrant;●upon a minimum of 30 days’ prior written notice of redemption 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) for any 20 trading days within a 30-trading day period ending three trading days before the date on which the Company sends the notice of redemption to the warrant holders.itthe Company may exercise its redemption right even if it was unable to register or qualify the underlying securities for sale under all applicable state securities laws.ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP.UNAUDITED NOTES TO CONDENSED FINANCIAL STATEMENTSSEPTEMBER 30, 2021(Unaudited)warrantsWarrants for redemption as described above, its management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis”. In such event, each holder would pay the exercise price by surrendering the warrants for that number of Class A ordinary shares equal to the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value (defined above) by (y) the fair market value. The Company has established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the forgoing conditions are satisfied and itthe Company issues a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her, or its warrant prior to the scheduled redemption date. However, the price of the Class A ordinary shares may fall below the $18.00 redemption trigger price (as discussed for the share Private Placement Warrants, underlying the units issuable upon conversion of the Working Capital Loan (“Working Capital Warrants”), if any,Warrants, and Warrants underlying the Sponsor Loan Units (“Sponsor Loan Warrants”) shall be identical to the Public Warrants, except that, the Private Placement Warrants, the Working Capital Warrants, and the Sponsor Loan Warrants may not be transferred, assigned or sold until thirty (30) days after the completion by the Company of an initial Business Combination; provided, however, that the Private Placement Warrants, the Working Capital Warrants, and Sponsor Loan Warrants and any ordinary sharesOrdinary Shares held by either the Sponsor or any officers or directors of the Company or any Permitted Transferees, as applicable.
Held-To-Maturity | Level | Amortized Cost | Gross Holding Gain (Loss) | Fair Value | ||||||||||||||
December 31, 2021 | U.S. Treasury Securities (Mature on 1/20/2022) | 1 | $ | 153,013,893 | $ | 2,577 | $ | 153,016,470 | ||||||||||
September 30, 2022 | U.S. Treasury Securities (Mature on 04/21/2022) | 1 | $ | 154,032,028 | $ | (921 | ) | $ | 154,031,107 |
2021
2022 1 $ 153,002,783 $ 153,915,387 8.10 — SUBSEQUENT EVENTSsheetsheets date up to the date that the unaudited condensed financial statements were issued. Based upon this review, other than as described in these unaudited condensed financial statements related to the Initial Public Offering on October 21, 2021 and below, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.In October 2021, the Company effected a 1.044 for 1 stock dividend for each Class B ordinary share outstanding, resulting in the initial stockholders holding an aggregate of 7,503,750 Founder Shares (up to 978,750 of which are subject to forfeiture depending on the extent to which the underwriters’ over-allotment option is exercised).
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Enterprise 4.0 Technology Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to ENT4.0 Technology Sponsor, LLC. 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 Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements other than statements of historical fact included in this Form 10-QReport including, without limitation, statements inunder this “Management’s“Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the completion of the Proposed Business Combination (as defined below), the Company’sour financial position, business strategy and the plans and objectives of management for future operations, are forward-lookingforward- looking statements. WordsWhen used in this Report, words such as “expect,“anticipate,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations“expect,” “intend” and similar words and expressions, are intendedas they relate to us or our management, identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs,are based on the beliefs of management, as well as assumptions made by, and information currently available. A number of factorsavailable to, the Company’s management. Actual results could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, including that the conditions of the Proposed Business Combination are not satisfied. For information identifying important factors that could cause actual results to differ materially from those anticipated incontemplated by the forward-looking statements please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of newcertain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.
The following discussion and analysis of our 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 future events or otherwise.contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Overview
We are a blank check company incorporated in the Cayman Islands on May 3, 2021 formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses.businesses (a “Business Combination”). We intend to effectuate our initial Business Combination using cash derived from the proceeds of the Initial Public Offeringinitial public offering and the sale of the Private Placement Units,placement warrants, our shares, debt or a combination of cash, shares and debt. We are not limited to a particular industry or sector for purposes of completing a Business Combination although it intends to focus its search within the technology industry along the trendlines set by a new wave of cloud native companies that combine artificial intelligence, intelligent automation and proprietary access to data to deliver actionable insights for enterprise businesses. We are an early stage and emerging growth company and, as such, we are subject to all of the risks associated with early stage and emerging growth companies.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities from May 3, 2021 (inception)inception through September 30, 20212022 were organizational activities and those necessary to prepare for the Initial Public Offering,initial public offering, described below, and subsequent tofollowing the Initial Public Offering,initial public offering, identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We expect to generate non-operating income in the form of interest income on marketable securities held inafter the Trust Account.initial public offering. We expect that we will 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.expenses in connection with searching for, and completing, a Business Combination.
For the three months ended September 30, 2022, we had a net income of $1,168,910, which consisted of interest earned on investment held in the Trust Account of $1,349,618, offset by operating expense of $180,708.
For the nine months ended September 30, 2022, we had a net income of $1,328,977 which consisted of interest earned on investment held in the Trust Account of $1,930,925, offset by operating expenses of $601,948.
For the three months ended September 30, 2021, we had a $6,642 net loss.
For the period from May 3, 2021 (inception) through September 30, 2021, we had a $6,642 net loss.
Liquidity and Capital Resources
UntilOn October 21, 2021, the consummationCompany consummated the initial public offering of 30,000,000 Units, including 3,900,000 units issued pursuant to the partial exercise of the Initial Public Offering, our only sourceunderwriters’ over-allotment option. Each unit consists of liquidity was $25,000 from an initial purchaseone Class A ordinary share of Class B ordinary shares,the Company, par value $0.0001 per share (“Founder Shares”(a “public share”), by ENT4.0 Technology Sponsor, LLC.
Subsequentand one-half of one redeemable warrant of the Company (“warrant”), with each whole warrant entitling the holder thereof to purchase one Class A ordinary share of the quarterly period covered by this Quarterly Report, on October 21, 2021, we consummated the Initial Public Offering of 30,000,000 Units, which includes a partial exercise by the underwriters of their over-allotment option in the amount of 3,900,000 Units,Company for $11.50 per share. The units were sold at a purchase price of $10.00 per Unit.,unit, generating total gross proceeds of $300,000,000. Simultaneously with the closing of the Initial Public Offering, the Companyinitial public offering, we consummated the sale of an aggregate of 700,000 Placement Unitsplacement units (the “placement units”) at a price of $10.00 per Placement Unitplacement unit in a private placementsplacement to ENT4.0 Technology Sponsor, LLC and the representatives of the underwriters of the Initial Public Offering, generating gross proceeds of $7,000,000. In addition,
Following the initial public offering and the sale of the placement units and the loan from the Sponsor to the Company entered into a Sponsor Loan in the amount of $6,220,000 at the Initial Public Offering, deposited into the trust account to be used to fund the redemption(the “Sponsor Loan”) as of the closing date of the initial public shares.
Following the Initial Public Offering and the private placements,offering, a total of $306,000,000 ($10.20 per Unit) was placed in the Trust Account. We incurred transaction costs of $17,078,457, consisting of $5,220,000 of underwriting fees, and $11,280,000 of deferred underwriting fees and $578,457 of other offering costs. In addition, at October 21,
For the nine months ended September 30, 2022, net cash used in operating activities was $359,364. Net income of $1,328,977 was affected by interest earned on marketable securities of $1,930,925. Changes in operating assets and liabilities provided $242,584 of cash from operating activities.
For the period from May 3, 2021 (inception) through September 30, 2021, net cash used in operating activities was $9,842. Net loss of $6,642 was affected by changes in operating assets and liabilities which used $3,200 of cash in operating activities.
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At September 30, 2022, we had cash and marketable securities held in the Trust Account of $307,948,085. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, which interest shall be net of taxes payable and excluding deferred underwriting commissions, to complete our initial Business Combination. We may withdraw interest from the Trust Account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
At September 30, 2022, we had cash of $1,585,501 was$278,202 held outside of the Trust Account and is available to pay for offering costs and for working capital purposes.
Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination.
In order toTo finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company wouldwill repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event thatIf a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into units of the post-Business Combination entity at a price of $10.00 per unit.Unit. The unitsUnits would be identical to the Placement Units.
We doplacement units. Except for the foregoing, the terms of such Working Capital Loans, if any, have not believe webeen determined and no written agreements exist with respect to such loans.
Going Concern
The Company will need to raise additional capital through loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in orderwhatever amount they deem reasonable in their sole discretion, to meet the expendituresCompany’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through April 21, 2023, the date that the Company will be required to cease all operations, except for operating our business. However,the purpose of winding up, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less thanis not consummated. These unaudited condensed financial statements do not include any adjustments relating to the actual amountrecovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeemcontinue as a significant number of our public shares upon completion of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.going concern.
Off-BalanceOff-Condensed balance Sheet Financing Arrangements
We have no obligations, assets or liabilities whichthat would be considered off-balanceoff-condensed balance sheet arrangements as of September 30, 2021.2022. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balanceoff-condensed balance sheet arrangements. We have not entered into any off-balanceoff-condensed balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual obligationsObligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay our Sponsor monthly fee of $12,500 for office space, administrative and support services. We began incurring these fees on October 19, 2021 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.
The underwriters were entitled to a cash underwriting discount of $0.20 per unit, or $5,220,000 in the aggregate, which was paid upon the closing of the initial public offering. In addition, the underwriters are entitled to a deferred fee of (i) $0.35 per unit of the gross proceeds of the initial 26,100,000 units sold in the initial public offering, or $9,135,000, and (ii) $0.55 per unit of the gross proceeds from the units sold pursuant to the over-allotment option, or $2,145,000. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account if and only if the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Concurrent with the closing of the initial public offering, the Sponsor loaned the Company $6,220,000 to be deposited into the Trust Account and to be used to fund the redemption of public shares (as necessary). The Sponsor Loan is non-interest bearing and will be repaid or converted into units at a conversion price of $10.00 per unit, at the discretion of the Sponsor at any time up until the consummation of a Business Combination. If the Company does not consummate a Business Combination, the Company will not repay the Sponsor Loan and its proceeds will be distributed to the public shareholders.
Critical Accounting Policies
The preparation of unaudited condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of AmericaGAAP 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 unaudited condensed 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. We have not identified any critical accounting policies.
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Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ deficit section of our condensed balance sheets.
Net Income (Loss) per Ordinary Share
Net income (loss) per ordinary share is computed by dividing net income (loss) by the weighted average number of ordinary share outstanding for the period. The Company applies the two-class method in calculating earnings per share. Accretion associated with the redeemable Class A ordinary shares are excluded from earnings per share as the redemption value approximates fair value.
Recent Accounting StandardsPronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”)FASB issued Accounting Standards Update (“ASU”) ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is for fiscal years beginning after December 15, 2021 and should be applied on a full or modified retrospective basis. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Management is currently evaluatingcontinues to evaluate the impact of adopting ASU 2020-06.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed financial statements.
Factors That May Adversely Affect our Results of Operations
Our results of operations and our ability to complete a Business Combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in the Ukraine. We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete a Business Combination.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Through September 30, 2022, our efforts have been limited to organizational activities, activities relating to our initial public offering and since the initial public offering, the search for a target business with which to consummate an initial Business Combination. We have engaged in limited operations and have not generated any revenues. We have not engaged in any hedging activities since our inception on May 3, 2021. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.
Not required forThe net proceeds of the initial public offering, the sale of the private placement units and the Sponsor Loan held in the Trust Accounts maintained by Continental Stock Transfer & Trust Company, acting as trustee, have been invested in U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk
We are a smaller reporting companies.company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls andare procedures that are designed to ensurewith the objective of ensuring that information required to be disclosed by us in our reports filed under the Exchange Act, reportssuch as this Report, is recorded, processed, summarized, and reported within the time periodsperiod specified in the SEC’s rules and forms, andforms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our principalthe chief executive officer and principalchief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and Our management evaluated, with the participation of our management, including our principalcurrent chief executive officer and principalchief financial and accounting officer we conducted an evaluation of(our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) 2022, pursuant to Rule13a-15(b)under the Exchange Act. Based on thisupon that evaluation, our principal executive officer and principal financial and accounting officer haveCertifying Officers concluded that, during the period covered by this report,as of September 30, 2022, our disclosure controls and procedures were effective at aeffective.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, assurance level and, accordingly, provided reasonablenot absolute, assurance that the information requiredobjectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be disclosed by usno assurance that any design will succeed in reports filedachieving its stated goals under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.all potential future conditions.
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Changes in Internal Control over Financial Reporting
None.
There was no change in our internal control over financial reporting that occurred during the fiscal quarter of 2021 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - II—OTHER INFORMATION
Item 1. Legal Proceedings
To the knowledge of our management team, there is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our property.
None
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our final prospectus for its Initial Public Offering filed with the SEC. As of the date of this Report, other than as set forth below, there have been no material changes with respect to thethose risk factors previously disclosed in our (i) final prospectus dated October 18, 2021, (ii) Annual Report on Form 10-Kfor its Initial Public Offeringthe year ended December 31, 2021, as filed with the SEC on February 28, 2022 (iii) Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, as filed with the SEC on May 11, 2022, and (iv) Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, as filed with the SEC on August 8, 2022. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial Business Combination. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, we may, at any time, instruct the trustee to liquidate the securities held in the Trust Account and instead to hold the funds in the Trust Account in cash items until the earlier of the consummation of our Business Combination or our liquidation. As a result, following the liquidation of securities in the Trust Account, we would likely receive minimal interest, if any, on the funds held in the Trust Account, which would reduce the dollar amount our public shareholders would receive upon any redemption or liquidation of the Company.
The funds in the Trust Account have, since our IPO, been held only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the Investment Company Act. However, to mitigate the risk of us being deemed to be an unregistered investment company (including under the subjective test of Section 3(a)(1)(A) of the Investment Company Act) and thus subject to regulation under the Investment Company Act, we may, at any time, instruct Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account, to liquidate the U.S. government treasury obligations or money market funds held in the Trust Account and thereafter to hold all funds in the Trust Account as cash items until the earlier of the consummation of our Business Combination or the liquidation of the Company. Following such liquidation, we would likely receive minimal interest, if any, on the funds held in the Trust Account. However, interest previously earned on the funds held in the Trust Account still may be released to us to pay our taxes, if any, and certain other expenses as permitted. As a result, any decision to liquidate the investments held in the Trust Account and thereafter to hold all funds in the Trust Account in cash items would reduce the dollar amount our public shareholders would receive upon any redemption or liquidation of the Company.
In the event that we may be deemed to be an investment company, we may be required to liquidate the Company.
We may not be able to complete a Business Combination with certain potential target companies if a proposed transaction with the target company may be subject to review or approval by regulatory authorities pursuant to certain U.S. or foreign laws or regulations.
Certain acquisitions or business combinations may be subject to review or approval by regulatory authorities pursuant to certain U.S. or foreign laws or regulations. In the event that such regulatory approval or clearance is not obtained, or the review process is extended beyond the period of time that would permit a Business Combination to be consummated with us, we may not be able to consummate a Business Combination with such target.
Among other things, the U.S. Federal Communications Act prohibits foreign individuals, governments, and corporations from owning more a specified percentage of the capital stock of a broadcast, common carrier, or aeronautical radio station licensee. In addition, U.S. law currently restricts foreign ownership of U.S. airlines. In the United States, certain mergers that may affect competition may require certain filings and review by the Department of Justice and the Federal Trade Commission, and investments or acquisitions that may affect national security are subject to review by the Committee on Foreign Investment in the United States (“CFIUS”). CFIUS is an interagency committee authorized to review certain transactions involving foreign investment in the United States by foreign persons in order to determine the effect of such transactions on the national security of the United States. The scope of CFIUS was expanded by the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) to include certain non-controlling investments in sensitive U.S. businesses and certain acquisitions of real estate even with no underlying U.S. business. FIRRMA, and subsequent implementing regulations that are now in force, also subject certain categories of investments to mandatory filings. Because we are a Cayman Islands exempted company, we may be considered a “foreign person” under such rules. Additionally, our Sponsor, which is also a Cayman Islands limited liability company, has ties to non-US persons. Alex Vieux, who is an advisor to the Company and one of three managing members of our Sponsor, is a French citizen. Mr. Vieux is also one of two managing members of Founder Holdings LLC, which is the managing member of Explorer Parent LLC – a member of our Sponsor. Mr. Vieux is also a joint owner of an affiliate of the Sponsor that receives administrative fees from the Company. Except as disclosed herein, the Sponsor has no other substantial ties with a non-U.S. Person.
Outside the United States, laws or regulations may affect our ability to consummate a Business Combination with potential target companies incorporated or having business operations in jurisdiction where national security considerations, involvement in regulated industries (including telecommunications), or in businesses relating to a country’s culture or heritage may be implicated. We and our Sponsor are Cayman Island exempted companies that are subject to the laws of the Cayman Islands.
U.S. and foreign regulators generally have the power to deny the ability of the parties to consummate a transaction or to condition approval of a transaction on specified terms and conditions, which may not be acceptable to us or a target. In such event, we may not be able to consummate a transaction with that potential target.
As a result of these various restrictions, the pool of potential targets with which we could complete an initial Business Combination may be limited and we may be adversely affected in terms of competing with other SPACs that do not have similar ownership issues. Moreover, the process of government review, could be lengthy. Because we have only a limited time to complete our Business Combination, our failure to obtain any required approvals within the requisite time period may require us to liquidate. If we liquidate, our public shareholders may only receive $10.00 per share, and our warrants will expire worthless. This will also cause you to lose any potential investment opportunity in a target company and the chance of realizing future gains on your investment through any price appreciation in the combined company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On October 21, 2021, we consummated the Initial Public Offering of 30,000,000 Units. The Units were sold at an offering price of $10.00 per unit, generating total gross proceeds of $300,000,000. The securities in the offering were registered under the Securities Act on registration statement on Form S-1 (333-259773 and 333-260344). The Securities and Exchange Commission declared the registration statements effective on October 18, 2021.
Simultaneously with the closing of the IPO, pursuant to the Sponsor Unit Subscription Agreement and the unit subscription agreements entered into with the Underwriters, the Company completed the private sale of an aggregate of 700,000 Placement Units to the Sponsor and the representatives of the underwriters at $10.00 per Private Placement Unit, generating gross proceeds to the Company of $7,000,000. The Private Placement Units are identical to the Units sold in the Initial Public Offering, except as otherwise disclosed in the Registration Statement. No underwriting discounts or commissions were paid with respect to such sale. The issuance of the Placement Units was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
Simultaneously with the closing of the IPO, pursuant to the Sponsor Note, the Sponsor loaned $6,220,000 to the Company at no interest. A portion of the proceeds of the Sponsor Note was deposited into the trust account and will be repaid or converted into Units (the “Sponsor Loan Units”) at a conversion price of $10.00 per Sponsor Loan Unit, at the Sponsor’s discretion and at any time until the consummation of the Company’s initial business combination. The Sponsor Loan Units would be identical to the Placement Units. The Sponsor Note was issued in order to ensure that the amount deposited into the trust account at the closing of the IPO is $10.20 per Class A ordinary share (each a “Public Share”) offered as part of the units sold in the IPO. If the Company does not complete an initial business combination and the Sponsor Note has not been converted into Sponsor Loan Units prior to such time, the Company will not repay the Sponsor Loan and its proceeds will be distributed to the holders of the Public Shares. The Sponsor has waived any claims against the trust account in connection with the Sponsor Note. The Sponsor shall be entitled to certain registration rights relating to the Sponsor Loan Units. The issuance of the Sponsor Note was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
None. For a description of the use of the proceeds generated in our Initial Public Offering,initial public offering and private placement, see Part I,II, Item 2 of thisthe Company’s Quarterly Report on Form 10-Q.10-Q for the quarter ended March 31, 2022, as filed with the SEC on May 11, 2022. There has been no material change in the planned use of proceeds from the Company’s initial public offering and private placement as described in the Registration Statement.
Item 3. Defaults Upon Senior Securities
None.
None
Item 4. Mine Safety Disclosures
Not applicable.
None
Item 5. Other Information
None.
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None
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.Form10-Q.
* | Filed herewith. |
** | Furnished herewith. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ENTERPRISE 4.0 TECHNOLOGY ACQUISITION CORP. | ||||||
Date: November 7, 2022 | ||||||
By: | /s/ Eric Benhamou | |||||
Name: | Eric Benhamou | |||||
Title: | Chief Executive Officer |
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