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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-40328

 

TPG PACE BENEFICIAL II CORP.

(Exact Name of Registrant as Specified in its Charter)

 

 

Cayman Islands

 

98-1574707

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

301 Commerce Street, Suite 3300

Fort Worth, TX

 

76102

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (212) 405-8458

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A ordinary shares, par value $0.0001 per share

 

YTPG

 

The New York Stock Exchange

 

 

 

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 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 (§ 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-accelerated filer, 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 Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

At October 28, 2022, there were 41,000,000 Class A ordinary shares, $0.0001 par value per share, 4,444,444 Class F ordinary, shares, $0.0001 par value, and 8,888,889 Class G ordinary shares, $0.0001 par value per share, issued and outstanding.

 

 


 

Table of Contents

 

 

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

2

Item 1.

 

Financial Statements

 

2

 

 

Condensed Balance Sheets (unaudited)

 

2

 

 

Condensed Statements of Operations (unaudited)

 

3

 

 

Condensed Statements of Changes in Shareholders’ Deficit (unaudited)

 

4

 

 

Condensed Statements of Cash Flows (unaudited)

 

5

 

 

Notes to Condensed Financial Statements (unaudited)

 

6

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

16

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

19

Item 4.

 

Controls and Procedures

 

19

PART II.

 

OTHER INFORMATION

 

20

Item 1.

 

Legal Proceedings

 

20

Item 1A.

 

Risk Factors

 

20

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

22

Item 3.

 

Defaults Upon Senior Securities

 

22

Item 4.

 

Mine Safety Disclosures

 

22

Item 5.

 

Other Information

 

22

Item 6.

 

Exhibits

 

23

Signatures

 

24

 

1


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

TPG Pace Beneficial II Corp.

Condensed Balance Sheet

(unaudited)

 

 

September 30, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash

$

1,183,791

 

 

$

2,141,060

 

Prepaid expenses

 

206,006

 

 

 

382,120

 

Total current assets

 

1,389,797

 

 

 

2,523,180

 

Cash held in Trust Account

 

400,000,000

 

 

 

400,000,000

 

Total assets

$

401,389,797

 

 

$

402,523,180

 

Liabilities and shareholders' deficit

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accrued expenses, formation and offering costs

$

154,814

 

 

$

303,288

 

Note payable to Sponsor

 

2,000,000

 

 

 

2,000,000

 

Deferred underwriting compensation, current portion

 

14,000,000

 

 

 

 

Total current liabilities

 

16,154,814

 

 

 

2,303,288

 

Deferred underwriting compensation

 

 

 

 

14,000,000

 

Total liabilities

 

16,154,814

 

 

 

16,303,288

 

Commitments and contingencies

 

 

 

 

 

Class A ordinary shares subject to possible redemption: 40,000,000 shares at
   September 30, 2022 and December 31, 2021 at a redemption value of $
10.00 per share

 

400,000,000

 

 

 

400,000,000

 

Shareholders' deficit:

 

 

 

 

 

Preferred shares, $0.0001 par value; 5,000,000 shares authorized, none issued or
   outstanding at September 30, 2022 and December 31, 2021

 

 

 

 

 

Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized, 1,000,000
   shares issued and outstanding (excluding
40,000,000 shares subject to possible
   redemption) at September 30, 2022 and December 31, 2021

 

100

 

 

 

100

 

Class F ordinary shares, $0.0001 par value; 30,000,000 shares authorized, 4,444,444
   shares issued and outstanding at September 30, 2022 and December 31, 2021

 

444

 

 

 

444

 

Class G ordinary shares, $0.0001 par value; 30,000,000 shares authorized, 8,888,889
   shares issued and outstanding at September 30, 2022 and December 31, 2021

 

889

 

 

 

889

 

Additional paid-in capital

 

 

 

 

 

Accumulated deficit

 

(14,766,450

)

 

 

(13,781,541

)

Total shareholders' deficit

 

(14,765,017

)

 

 

(13,780,108

)

Total liabilities and shareholders' deficit

$

401,389,797

 

 

$

402,523,180

 

 

The accompanying notes are an integral part of these condensed financial statements.

2


 

TPG Pace Beneficial II Corp.

Condensed Statement of Operations

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three

 

 

For the Three

 

 

For the Nine

 

 

For the Period from

 

 

Months Ended

 

 

Months Ended

 

 

Months Ended

 

 

January 4, 2021 (inception)

 

 

September 30, 2022

 

 

September 30, 2021

 

 

September 30, 2022

 

 

to September 30, 2021

 

Revenue

$

 

 

$

 

 

$

 

 

$

 

Professional expenses and formation costs

 

296,652

 

 

 

314,334

 

 

 

984,909

 

 

 

674,017

 

Loss from operations

 

(296,652

)

 

 

(314,334

)

 

 

(984,909

)

 

 

(674,017

)

Net loss attributable to ordinary shares

$

(296,652

)

 

$

(314,334

)

 

$

(984,909

)

 

$

(674,017

)

Net loss per ordinary share:

 

 

 

 

 

 

 

 

 

 

 

Class A ordinary shares subject to possible redemption - basic and diluted

$

(0.01

)

 

$

(0.01

)

 

$

(0.02

)

 

$

(0.02

)

Founder Shares and Private Placement Shares - basic and diluted

$

(0.01

)

 

$

(0.01

)

 

$

(0.02

)

 

$

(1.50

)

Weighted average ordinary shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Class A ordinary shares subject to possible redemption - basic and diluted

 

40,000,000

 

 

 

40,000,000

 

 

 

40,000,000

 

 

 

24,888,889

 

Founder Shares and Private Placement Shares - basic and diluted

 

14,333,333

 

 

 

14,333,333

 

 

 

14,333,333

 

 

 

15,282,716

 

 

The accompanying notes are an integral part of these condensed financial statements.

3


 

TPG Pace Beneficial II Corp.

Condensed Statement of Changes in Shareholders’ Deficit

(unaudited)

 

 

Preferred Shares

 

 

Class A
Ordinary Shares

 

 

Class F
Ordinary Shares

 

 

Class G
Ordinary Shares

 

 

Additional

 

 

Accumulated

 

 

Shareholders'

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid-In Capital

 

 

Deficit

 

 

Deficit

 

Balance at January 4, 2021
   (inception)

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

Sale of Class F ordinary shares to
   Sponsor on January 8, 2021 at
   $
0.001 per share

 

 

 

 

 

 

 

 

 

 

 

 

 

20,000,000

 

 

 

2,000

 

 

 

 

 

 

 

 

 

23,000

 

 

 

 

 

 

25,000

 

Forfeiture of Class F ordinary
   shares on March 18, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,111,111

)

 

 

(1,611

)

 

 

 

 

 

 

 

 

1,611

 

 

 

 

 

 

 

Issuance of Class G ordinary
   shares on March 18, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,777,778

 

 

 

778

 

 

 

(778

)

 

 

 

 

 

 

Net loss attributable to ordinary
   shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(51,396

)

 

 

(51,396

)

Balance at March 31, 2021

 

 

 

$

 

 

 

 

 

$

 

 

 

3,888,889

 

 

$

389

 

 

 

7,777,778

 

 

$

778

 

 

$

23,833

 

 

$

(51,396

)

 

$

(26,396

)

Sale of Private Placement Shares to
   Sponsor on April 16, 2021 at $
10.00
   per share

 

 

 

 

 

 

 

1,000,000

 

 

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,999,900

 

 

 

 

 

 

10,000,000

 

Founder Share dividend of $0.16
   issued to Sponsor on April 16, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

555,555

 

 

 

55

 

 

 

1,111,111

 

 

 

111

 

 

 

(166

)

 

 

 

 

 

 

Adjustments to increase Class A ordinary
   shares subject to possible redemption
   to maximum redemption value as of
   June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,023,567

)

 

 

(12,776,362

)

 

 

(22,799,929

)

Net loss attributable to ordinary
   shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(308,287

)

 

 

(308,287

)

Balance at June 30, 2021

 

 

 

$

 

 

 

1,000,000

 

 

$

100

 

 

 

4,444,444

 

 

$

444

 

 

 

8,888,889

 

 

$

889

 

 

$

 

 

$

(13,136,045

)

 

$

(13,134,612

)

Net loss attributable to ordinary
   shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(314,334

)

 

 

(314,334

)

Balance at September 30, 2021

 

 

 

$

 

 

 

1,000,000

 

 

$

100

 

 

 

4,444,444

 

 

$

444

 

 

 

8,888,889

 

 

$

889

 

 

$

 

 

$

(13,450,379

)

 

$

(13,448,946

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

 

 

 

 

 

1,000,000

 

 

 

100

 

 

 

4,444,444

 

 

 

444

 

 

 

8,888,889

 

 

 

889

 

 

 

 

 

 

(13,781,541

)

 

 

(13,780,108

)

Net loss attributable to ordinary
   shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(406,875

)

 

 

(406,875

)

Balance at March 31, 2022

 

 

 

$

 

 

 

1,000,000

 

 

$

100

 

 

 

4,444,444

 

 

$

444

 

 

 

8,888,889

 

 

$

889

 

 

$

 

 

$

(14,188,416

)

 

$

(14,186,983

)

Net loss attributable to ordinary
   shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(281,382

)

 

 

(281,382

)

Balance at June 30, 2022

 

 

 

$

 

 

 

1,000,000

 

 

$

100

 

 

 

4,444,444

 

 

$

444

 

 

 

8,888,889

 

 

$

889

 

 

$

 

 

$

(14,469,798

)

 

$

(14,468,365

)

Net loss attributable to ordinary
   shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(296,652

)

 

 

(296,652

)

Balance at September 30, 2022

 

 

 

$

 

 

 

1,000,000

 

 

$

100

 

 

 

4,444,444

 

 

$

444

 

 

 

8,888,889

 

 

$

889

 

 

$

 

 

$

(14,766,450

)

 

$

(14,765,017

)

 

The accompanying notes are an integral part of these condensed financial statements.

4


 

TPG Pace Beneficial II Corp.

Condensed Statement of Cash Flows

(unaudited)

 

 

 

 

 

 

 

 

For the Nine

 

 

For the Period from

 

 

Months Ended

 

 

January 4, 2021 (inception)

 

 

September 30, 2022

 

 

to September 30, 2021

 

Cash flows from operating activities:

 

 

 

 

 

Net loss attributable to ordinary shares

$

(984,909

)

 

$

(674,017

)

Changes in operating assets and liabilities:

 

 

 

 

 

Prepaid expenses

 

176,114

 

 

 

(463,232

)

Accrued expenses, formation and offering costs

 

(24,422

)

 

 

(389,012

)

Net cash used in operating activities

 

(833,217

)

 

 

(1,526,261

)

Cash flows from investing activities:

 

 

 

 

 

Proceeds deposited into Trust Account

 

 

 

 

(400,000,000

)

Net cash used in investing activities

 

 

 

 

(400,000,000

)

Cash flows from financing activities:

 

 

 

 

 

Proceeds from sale of Class F ordinary shares to Sponsor

 

 

 

 

25,000

 

Proceeds from sale of Class A ordinary shares in initial public offering

 

 

 

 

400,000,000

 

Proceeds from sale of Private Placement Shares to Sponsor

 

 

 

 

10,000,000

 

Proceeds of notes payable from Sponsor

 

 

 

 

750,000

 

Payment of underwriters discounts

 

 

 

 

(8,000,000

)

Payment of accrued offering costs

 

(124,052

)

 

 

(318,570

)

Repayment of notes payable to Sponsor

 

 

 

 

(750,000

)

Net cash provided by (used in) financing activities

 

(124,052

)

 

 

401,706,430

 

Net change in cash

 

(957,269

)

 

 

180,169

 

Cash at beginning of period

 

2,141,060

 

 

 

 

Cash at end of period

$

1,183,791

 

 

$

180,169

 

Supplemental disclosure of non-cash financing activities:

 

 

 

 

 

Accrued offering costs

$

 

 

$

463,389

 

Deferred underwriting compensation

$

 

 

$

14,000,000

 

 

The accompanying notes are an integral part of these condensed financial statements.

5


 

TPG Pace Beneficial II Corp.

Notes to Condensed Financial Statements

(unaudited)

1. Organization and Business Operations

Organization and General

TPG Pace VI Holdings Corp. (the “Company”) was incorporated as a Cayman Islands exempted company on January 4, 2021 (“Inception”). On January 13, 2021, the Company filed with the Registrar of Companies of the Cayman Islands to amend and restate the Memorandum and Articles of Association to change the name of the Company to TPG Pace Beneficial II Corp. On January 14, 2021, the Company filed with the Registrar of Companies of the Cayman Islands to amend and restate the Memorandum and Articles of Association to rename Class B ordinary shares as Class F ordinary shares. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

On January 8, 2021, the Company was funded with $25,000 for which it issued Class F Founder Shares (as defined below). All activity for the period from Inception through September 30, 2022 relates to the Company’s formation, its initial public offering (“Public Offering”) described below, and the identification and evaluation of potential acquisition targets for a Business Combination. The Company will not generate operating revenues prior to the completion of the Business Combination and will generate non-operating income in the form of interest income on Permitted Investments (as defined below) from the proceeds derived from the Public Offering. The Company has selected December 31st as its fiscal year end.

Going Concern

If the Company does not complete an initial Business Combination within 24 months from April 16, 2021 (the “Close Date”), the Company will (i) cease all operations except for the purposes of winding up, (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem all of the Class A ordinary shares issued in the Public Offering at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account with Continental Stock Transfer and Trust Company acting as trustee (the “Trust Account”), including interest, net of taxes (less up to $100,000 of such net interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish the shareholder rights of owners of Class A ordinary shares (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In the event of such distribution, 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 in the Public Offering. This mandatory liquidation and subsequent dissolution requirement raises substantial doubt about the Company’s ability to continue as a going concern.

The accompanying condensed financial statements have been prepared on a going concern basis and do not include any adjustments that might arise as a result of uncertainties about the Company’s ability to continue as a going concern.

Sponsor

The Company’s sponsor is TPG Pace Beneficial II Sponsor, Series LLC, a Delaware Series limited liability company (the “Sponsor”). On January 8, 2021, the Sponsor purchased an aggregate of 20,000,000 Class F ordinary shares (“Class F Founder Shares”) for an aggregate purchase price of $25,000, or approximately $0.001 per share. Prior to the Sponsor’s initial investment in the Company of $25,000, the Company had no assets. The purchase price of the Class F Founder Shares was determined by dividing the amount of cash contributed to the Company by the number of Class F Founder Shares issued by the Company. On March 18, 2021, the Company’s board of directors approved a recapitalization whereby the Sponsor forfeited 16,111,111 Class F Founder Shares for no consideration and received 7,777,778 Class G ordinary shares at par value $0.0001 per share (“Class G Founder Shares” and, together with Class F Founder Shares, “Founder Shares”).

Financing

The registration statement for the Company’s Public Offering was declared effective by the United States Securities and Exchange Commission (the “SEC”) on April 13, 2021. The Public Offering closed on the Close Date. The Sponsor purchased an aggregate of 1,000,000 Class A ordinary shares (“Private Placement Shares”) at $10.00 per share, or $10,000,000 in the aggregate, in a private placement on the Close Date (the “Private Placement”).

6


 

The Company intends to finance a Business Combination with proceeds from its $400,000,000 Public Offering (see Note 3 – Public Offering) and $10,000,000 Private Placement.

The Trust Account

Of the $410,000,000 proceeds from the Public Offering and the sale of the Private Placement Shares, $400,000,000 were deposited into the Trust Account. Starting January 2022, the funds in the Trust Account may be invested only in specified U.S. government treasury bills with a maturity of 180 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 (collectively “Permitted Investments”).

Funds will remain in the Trust Account except for the withdrawal of interest earned on the funds that may be released to the Company to pay taxes and up to $100,000 of any dissolution expenses. The proceeds from the Public Offering and the sale of the Private Placement Shares will not be released from the Trust Account until the earliest of (i) the completion of the Business Combination, (ii) the redemption of any Public Shares properly submitted in connection with a shareholder vote to amend the Amended and Restated Memorandum and Articles of Association to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete the Business Combination within 24 months from the Close Date and (iii) the redemption of all of the Company’s Public Shares if it is unable to complete the Business Combination within 24 months from the Close Date.

The remaining proceeds outside the Trust Account may be used to pay business, legal and accounting due diligence on prospective acquisitions, listing fees and continuing general and administrative expenses.

Business Combination

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating a Business Combination with (or acquisition of) a target business. The business combination must be with one or more target businesses that together have an aggregate fair market value equal to at least 80% of the balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the Company signing a definitive agreement.

After signing a definitive agreement for a Business Combination, the Company will provide the public shareholders with the opportunity to redeem all or a portion of their Public Shares either (i) in connection with a shareholder meeting to approve the Business Combination or (ii) by means of a tender offer. Each public shareholder may elect to redeem their shares irrespective of whether they vote for or against the Business Combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination including interest earned on the funds held in the Trust Account and not previously released to the Company to pay taxes, divided by the number of then outstanding Public Shares, subject to the limitations described herein. The amount in the Trust Account is initially anticipated to be approximately $10.00 per Public Share. The per-share amount the Company will distribute to investors who properly redeem their shares will not be reduced by any deferred underwriting commissions payable to underwriters. The decision as to whether the Company will seek shareholder approval of the Business Combination or will allow shareholders to sell their shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek shareholder approval under applicable law or stock exchange listing requirements. If the Company seeks shareholder approval, it will complete its Business Combination only if a majority of the outstanding Class A ordinary shares voted are voted in favor of the Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001, after payment of the deferred underwriting commission. In such an instance, the Company would not proceed with the redemption of its Public Shares and the related Business Combination, and instead may search for an alternate Business Combination.

The Company has 24 months from the Close Date to complete its Business Combination. If the Company does not complete a Business Combination within this period, it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds in the Trust Account and not previously released to the Company to pay its taxes (less up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. The Sponsor and external directors (“Initial Shareholders”) and the Company’s officers and internal directors have entered into a letter agreement with the Company, pursuant to which they have waived their rights to liquidating distributions from the

7


 

Trust Account with respect to the Founder Shares and Private Placement Shares if the Company fails to complete the Business Combination within 24 months from the Close Date. However, if the Initial Shareholders acquire Public Shares after the Close Date, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete the Business Combination within the allotted 24-month time period.

The underwriters have agreed to waive their rights to any deferred underwriting commission held in the Trust Account in the event the Company does not complete the Business Combination and those amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Company’s Public Shares.

If the Company fails to complete the Business Combination, the redemption of the Company’s Public Shares will reduce the book value of the shares held by the initial shareholders, who will be the only remaining shareholders after such redemptions.

If the Company holds a shareholder vote or there is a tender offer for shares in connection with a Business Combination, a public shareholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay taxes. As a result, such ordinary shares are recorded at their redemption amount and classified as temporary equity in accordance with Accounting Standards Codification ("ASC") 480, “Distinguishing Liabilities from Equity.”

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the SEC, and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position at September 30, 2022 and December 31, 2021, and the results of operations and cash flows for the periods presented. Certain reclassifications of prior period financial statements have been made to conform to current reporting practices.

Emerging Growth Company

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 Securities Exchange Act of 1934, as amended (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 an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

Cash

Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less. The Company did not have any cash equivalents as of September 30, 2022 or December 31, 2021.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed balance sheet due to their short-term nature.

8


 

Fair Value Measurement

ASC 820 establishes a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to measure investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment, characteristics specific to the investment, market conditions and other factors. 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).

Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets will typically have a higher degree of input observability and a lesser degree of judgment applied in determining fair value.

The three levels of the fair value hierarchy under ASC 820 are as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical investments at the measurement date are used.

Level 2 - Pricing inputs are other than quoted prices included within Level 1 that are observable for the investment, either directly or indirectly. Level 2 pricing inputs include quoted prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active, inputs other than quoted prices that are observable for the investment, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

Level 3 - Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs used in determination of fair value require significant judgment and estimation.

In some cases, the inputs used to measure fair value might fall within different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the investment is categorized in its entirety is determined based on the lowest level input that is significant to the investment. Assessing the significance of a particular input to the valuation of an investment in its entirety requires judgment and considers factors specific to the investment. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the perceived risk of that investment.

Redeemable Ordinary Shares

All of the 40,000,000 Class A ordinary shares sold 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 Amended and Restated Memorandum and Articles of Association. 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 common stock 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.

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid-in capital and accumulated deficit.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Offering Costs

The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A “Expenses of Offering”. The Company incurred offering costs in connection with the Public Offering primarily consisting of accounting and legal services, securities registration expenses and exchange listing fees. Offering costs of $799,929, together with the underwriter discount and Deferred Discount (as defined below) totaling $22,000,000, were charged to temporary equity on the Close Date.

9


 

Stock-Based Compensation Expense

The Company accounts for stock-based compensation expense in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date and recognized over the requisite service period. To the extent a stock-based award is subject to a performance condition, the amount of expense recorded in a given period, if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized once the event is deemed probable to occur. The fair value of equity awards has been estimated using a market approach. Forfeitures are recognized as incurred.

The Company’s Class F ordinary shares and Class G ordinary shares were granted subject to a performance condition, namely the occurrence of a Business Combination. Compensation expense related to the Class F ordinary shares and Class G ordinary shares is recognized only when the performance condition is probable of occurrence, or more specifically when a Business Combination is consummated. Therefore, no stock-based compensation expense has been recognized during the period from Inception to September 30, 2022.

Net Loss per Ordinary Share

The Company complies with accounting and disclosure requirements of Financial Accounting Standards Board ASC Topic 260, “Earnings Per Share”. Net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period as calculated using the treasury stock method. At September 30, 2022, the Company had outstanding forward purchase contracts to purchase up to 17,500,000 Class A ordinary shares. The weighted average of these shares was excluded from the calculation of diluted net income per ordinary share since the exercise of the forward purchase contracts is contingent upon the occurrence of future events. As a result, diluted net loss per ordinary share is the same as basic net loss per ordinary share.

For the three and nine months ended September 30, 2022, the three months ended September 30, 2021 and for the period from Inception to September 30, 2021, earnings are shared pro rata between the two classes of ordinary shares as follows:

 

 

For the Three Months Ended
September 30, 2022

 

 

For the Three Months Ended
September 30, 2021

 

 

Class A ordinary
shares subject to
possible redemption

 

 

Founder Shares
and Private
Placement Shares

 

 

Class A ordinary
shares subject to
possible redemption

 

 

Founder Shares
and Private
Placement Shares

 

Basic and diluted net loss per ordinary share:

 

 

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

Allocation of net loss

$

(218,394

)

 

$

(78,258

)

 

$

(231,412

)

 

$

(82,922

)

Accretion on Class A ordinary shares subject to
   possible redemption

$

 

 

$

 

 

$

 

 

$

 

 

$

(218,394

)

 

$

(78,258

)

 

$

(231,412

)

 

$

(82,922

)

Denominator: