Form 10-Q LDH Growth Corp I For: Jun 30
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2022
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(Commission File Number)
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(I.R.S. Employer Identification Number)
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(Address of principal executive offices)
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(Zip Code)
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(786 ) 524-1028
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading
Symbol(s)
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Name of each exchange
on which registered
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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, 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 Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Smaller reporting company
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Emerging growth company
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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 ☐
As of August 11, 2022, 23,000,000 Class A ordinary shares, par value $0.0001, and 5,750,000
Class B ordinary shares, par value $0.0001, were issued and outstanding.
LDH GROWTH CORP I
Quarterly Report on Form 10-Q
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Page No.
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PART I. FINANCIAL INFORMATION
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Item 1.
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1
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1
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2
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3
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4
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5
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Item 2.
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21
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Item 3.
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25
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Item 4.
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25
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PART II. OTHER INFORMATION
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Item 1.
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26
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Item 1A.
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26
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Item 2.
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26
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Item 3.
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26
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Item 4.
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27
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Item 5.
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27
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Item 6.
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27
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28
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PART I - FINANCIAL
INFORMATION
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June 30, 2022
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December 31, 2021
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||||||
| (Unaudited) | ||||||||
| Assets |
||||||||
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Current assets:
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||||||||
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Cash
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$
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$
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Prepaid expenses
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||||||
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Total current assets
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Investments held in Trust Account
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Total Assets
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$
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$
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||||
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Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit
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||||||||
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Current liabilities:
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||||||||
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Accounts payable
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$
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$
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Accrued expenses
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||||||
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Due to related party
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Total current liabilities
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Deferred underwriting commissions
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Derivative liabilities
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Total liabilities
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||||||
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Commitments and Contingencies
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|||||||
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Class A ordinary shares subject to possible redemption, $
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Shareholders’ Deficit:
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||||||||
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Preference shares, $
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||||||
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Class A ordinary shares, $
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||||||
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Class B ordinary shares, $
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||||||
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Accumulated deficit
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(
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)
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(
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)
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||||
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Total shareholders’ deficit
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(
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)
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(
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)
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||||
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Total Liabilities, Class A ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit
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$
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$
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||||
The
accompanying notes are an integral part of these unaudited condensed financial statements.
LDH GROWTH CORP I
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Three Months Ended June 30,
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Six Months Ended June 30,
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|||||||||||||||
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2022
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2021
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2022 |
2021
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|||||||||||||
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General and administrative expenses
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$
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$
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$
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$
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||||||||
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Loss from operations
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(
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)
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(
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)
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(
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)
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(
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)
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||||||||
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Other income (expenses)
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||||||||||||||||
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Change in fair value of derivative liabilities
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(
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)
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(
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)
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||||||||||
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Offering costs - derivative liabilities
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(
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)
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Income from investments held in Trust Account
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Total other income (expenses), net
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(
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)
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(
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)
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||||||||||
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Net income (loss)
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$
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$
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(
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)
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$
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$
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(
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)
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||||||
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Weighted average number of Class A ordinary shares - basic and diluted
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||||||||||||
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Basic and diluted net income (loss) per share, Class A ordinary shares
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$
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$
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(
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)
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$
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$
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(
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)
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||||||
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Weighted average number of Class B ordinary shares - basic and diluted
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||||||||||||
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Basic and diluted net income (loss) per share, Class B ordinary shares
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$
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$
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(
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)
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$
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$
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(
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)
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||||||
The
accompanying notes are an integral part of these unaudited condensed financial statements.
LDH GROWTH CORP I
For the Three and Six
Months Ended June 30, 2022
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Ordinary Shares
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||||||||||||||||||||||||||||
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Class A
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Class B
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Additional Paid-in Capital
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Accumulated Deficit
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Total Shareholders’ Deficit
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||||||||||||||||||||||||
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Shares
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Amount
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Shares
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Amount
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|||||||||||||||||||||||||
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Balance - December 31, 2021
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$
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$
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$
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$
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(
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)
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$
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(
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Net income
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-
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-
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Balance - March 31, 2022
(Unaudited)
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$
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$
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$
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$
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(
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)
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$
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(
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)
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||||||||||||||
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Increase in redemption value of Class A ordinary shares subject to possible redemption
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-
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-
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(
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)
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(
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Net income
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-
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-
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|||||||||||||||||||||
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Balance - June 30, 2022
(Unaudited)
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$
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|
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$
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$
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$
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(
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)
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$
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(
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)
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||||||||||||||
For the Three and Six Months Ended June 30, 2021
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Ordinary Shares
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||||||||||||||||||||||||||||
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Class A
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Class B
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Additional Paid-in Capital
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Accumulated Deficit
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Total Shareholders’ Deficit
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||||||||||||||||||||||||
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Shares
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Amount
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Shares
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Amount
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|||||||||||||||||||||||||
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Balance - December 31, 2020
|
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$
|
|
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$
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$
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$
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(
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)
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$
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(
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)
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||||||||||||||
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Cancellation of ordinary share
|
|
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(
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)
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|
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||||||||||||||||||||
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Issuance of Class B ordinary shares to Sponsor
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|
|
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|
|||||||||||||||||||||
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Excess of cash received over fair value of private placement warrants
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-
|
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-
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|
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|
|||||||||||||||||||||
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Accretion of Class A ordinary shares to redemption amount
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-
|
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-
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(
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)
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(
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)
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(
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)
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||||||||||||||||||
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Net loss
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-
|
|
-
|
|
|
(
|
)
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(
|
)
|
|||||||||||||||||||
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Balance - March 31, 2021
(Unaudited)
|
|
|
|
|
|
(
|
)
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(
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)
|
|||||||||||||||||||
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Net loss
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-
|
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-
|
|
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(
|
)
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(
|
)
|
|||||||||||||||||||
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Balance - June 30, 2021(Unaudited)
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||||||||||
The accompanying
notes are an integral part of these unaudited condensed financial statements.
| Six Months Ended June 30, |
||||||||
| 2022 |
2021 |
|||||||
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Cash Flows from Operating Activities:
|
||||||||
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Net income (loss)
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$
|
|
$ | ( |
) | |||
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Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
||||||||
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General and administrative expenses paid by related party in exchange for issuance of Class B ordinary shares
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|
|||||||
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Change in fair value of derivative liabilities
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(
|
)
|
||||||
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Offering costs - derivative liabilities
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|
|||||||
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Income from investments held in Trust Account
|
( |
) | ( |
) | ||||
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Changes in operating assets and liabilities:
|
||||||||
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Prepaid expenses
|
|
( |
) | |||||
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Accounts payable
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(
|
)
|
||||||
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Accrued expenses
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|
|||||||
| Due to related party |
||||||||
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Net cash used in operating activities
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(
|
)
|
( |
) | ||||
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Cash Flows from Investing Activities:
|
||||||||
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Cash deposited in Trust Account
|
|
( |
) | |||||
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Net cash used in investing activities
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|
( |
) | |||||
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Cash Flows from Financing Activities:
|
||||||||
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Proceeds from promissory note issued to related party
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|
|||||||
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Repayment of promissory note to related party
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|
( |
) | |||||
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Proceeds received from initial public offering, gross
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|
|||||||
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Proceeds received from private placement
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|
|||||||
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Offering costs paid
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(
|
)
|
( |
) | ||||
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Net cash provided by (used in) financing activities
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(
|
)
|
||||||
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Net change in cash
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(
|
)
|
||||||
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Cash - beginning of the period
|
|
|||||||
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Cash - end of the period
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$
|
|
$ | |||||
|
Supplemental disclosure of noncash investing and financing activities:
|
||||||||
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Offering costs included in accounts payable
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$
|
|
$ | |||||
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Offering costs included in accrued expenses
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$
|
|
$ | ( |
) | |||
|
Deferred underwriting commissions
|
$
|
|
$ | |||||
The
accompanying notes are an integral part of these unaudited condensed financial statements.
Note 1-Description of Organization and Business Operations
LDH Growth Corp I (the “Company”) is a
blank check company incorporated as a Cayman Islands exempted company on October 7, 2020 (inception). 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 and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of June 30, 2022, the Company had not commenced any
operations. All activity for the period from October 7, 2020 (inception) through June 30, 2022, relates to the Company’s formation and the initial public offering (the “Initial Public Offering”) described below and, subsequent to the Initial
Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates
non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The Company’s sponsor is LDH Sponsor LLC, a Delaware
limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on March 18, 2021. On March 23, 2021, the Company consummated its Initial Public Offering of 23,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”),
including 3,000,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 230.0
million, and incurring offering costs of approximately $13.3 million, of which approximately $8.1 million was for deferred underwriting commissions (see Note 5).
Simultaneously with the closing of the Initial Public
Offering, the Company consummated the private placement (“Private Placement”) of 5,266,667 warrants (each, a “Private Placement
Warrant” and collectively, the “Private Placement Warrants”), at a price of $1.50 per Private Placement Warrant with the Sponsor,
generating gross proceeds of $7.9 million (see Note 4).
Upon the closing of the Initial Public Offering and the
Private Placement, $230.0 million ($10.00
per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement were placed in a trust account (“Trust Account”), located in the United States with Continental Stock Transfer & Trust
Company acting as trustee, and will be invested only 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 selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by
the Company, until the earlier of (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
The Company’s management has broad discretion with
respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a
Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one
or more initial Business Combinations having an aggregate fair market value of at least 80 % of the assets held in the Trust
Account (excluding the amount of any deferred underwriting discount held in trust) at the time of the signing of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if
the post-transaction company owns or acquires 50 % or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
The Company will provide its holders of its Public
Shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a 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 for a pro rata portion of the amount then in the Trust Account (initially at $10.00 per
Public Share). The per-share amount to be distributed to Public Shareholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). These
Public Shares were classified as temporary equity in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”). In such case,
the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such
consummation of a Business Combination and a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law 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 (the “Amended and Restated Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender offer rules
of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, shareholder approval of the transactions is required by law, or the Company decides
to obtain shareholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public
Shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks shareholder approval in connection with a Business Combination, the initial shareholders (as
defined below) agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. Subsequent to the consummation of the Initial
Public Offering, the Company will adopt an insider trading policy which will require insiders to (i) refrain from purchasing shares during certain blackout periods and when they are in possession of any material non-public information and
(ii) to clear all trades with the Company’s legal counsel prior to execution. In addition, the initial shareholders agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the
completion of a Business Combination.
Notwithstanding the foregoing, the Amended and Restated
Memorandum and Articles of Association provide that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 20 % or more of the Class A ordinary shares sold in the Initial Public Offering, without the prior consent of the Company.
The Company’s Sponsor, officers and directors (the
“initial shareholders”) agreed not to propose an amendment to the Amended and Restated Memorandum and Articles of Association that would modify the substance or timing of the Company’s obligation to redeem 100 % of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the Public Shareholders with the
opportunity to redeem their Class A ordinary shares in conjunction with any such amendment.
If the Company is unable to complete a Business
Combination within 24 months from the closing of the Initial Public Offering, or March 23, 2023 (the “Combination Period”), the
Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than
business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account (less taxes
payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which
redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to
the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject, in the case of clauses (ii) and (iii), to the Company’s obligations under Cayman Islands law to provide for claims of creditors and in all
cases subject to the other requirements of applicable law. There will be no redemption rights or liquidating distributions with respect to the warrants, which will expire worthless if the Company fails to complete its initial Business
Combination within the Combination Period.
The Sponsor agreed to waive their liquidation rights
with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor or members of the Company’s management team acquire Public Shares in or after the Initial Public
Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters agreed to waive
their rights to their deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included
with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. 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 only $10.00 per share initially held in the Trust Account. In order to
protect the amounts held in the Trust Account, the Sponsor agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the
Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or
claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of
1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The
Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, except the independent registered public accounting firm,
prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity and Going Concern
As of June 30, 2022, the Company had approximately $733 ,000 in cash and working capital of approximately $1.1
million.
The Company’s liquidity needs to date have been
satisfied through a contribution of $25,000 from Sponsor to cover for certain expenses in exchange for the issuance of the Founder
Shares (as defined in Note 4), a loan of $300,000 (which was repaid in full on March 25, 2021) pursuant to the Note (as defined in
Note 4), and advances of approximately $321,000 no
Based on the foregoing, management believes that the
Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of an Initial Business Combination or one year from this filing. However, in connection with the Company’s assessment of going concern
considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements - Going Concern,” management has determined that the mandatory liquidation on March 23, 2023 and subsequent dissolution raises substantial doubt
about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after March 23, 2023. Management intends to consummate a
merger prior to March 23, 2023.
Note 2-Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial
statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three and six months
ended June 30, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or any future period.
The accompanying unaudited condensed financial
statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form 10-K filed by the Company with the SEC on March 31, 2022.
Emerging Growth Company
The Company is an “emerging growth company,” as defined
in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public
companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding
executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a
class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth 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.
This may make comparison of the Company’s unaudited
condensed financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
Use of Estimates
The preparation of unaudited condensed financial statements in conformity
with 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 unaudited condensed financial
statements and the reported amounts of revenues and expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a
condition, situation or set of circumstances that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future
confirming events. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.
One of the more significant accounting estimates included in these unaudited condensed financial statements is the determination of the fair
value of the derivative liabilities. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an
original maturity of three months or less when purchased to be cash equivalents. As of June 30, 2022, and December 31, 2021, there were no
Investments Held in the Trust Account
The Company’s portfolio of investments is comprised of 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 investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in
the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are
recognized at fair value. Trading securities and investments in money market funds are presented on the unaudited condensed balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair
value of these securities are included in income from investments held in the Trust Account in the accompanying unaudited condensed statements of operations. The estimated fair values of investments held in the Trust Account are determined
using available market information.
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 and
investments held in Trust Account. As of June 30, 2022, and December 31, 2021, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements,”
equal or approximate the carrying amounts represented in the unaudited condensed balance sheets, primarily due to their short-term nature, other than the derivative warrant liabilities (see Note 9).
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market
participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of:
| ● |
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
| ● |
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as
quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
| ● |
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own
assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Derivative Liabilities
The Company does not use derivative instruments to
hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued share purchase warrants and forward purchase agreements, to determine if such instruments are
derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded
as liabilities or as equity, is reassessed at the end of each reporting period.
The warrants issued in connection with the Initial
Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and
adjusts the instruments to fair value at each reporting period until they are exercised. The fair value of the Public Warrants issued in connection with the Public Offering and Private Placement Warrants have initially been measured at fair
value using a Monte Carlo simulation model. The fair value of the Public Warrants as of June 30, 2022 and December 31, 2021, is based on observable listed prices for such warrants. The fair value of the Private Placement Warrants as of June
30, 2022 and December 31, 2021, is measured based on a Monte Carlo simulation model.
The
forward purchase agreement between the Company and the Sponsor, providing for the investor to purchase $50,000,000 of units, with each unit consisting of one Class A ordinary share and of one warrant to purchase
one Class A ordinary share, at a purchase price of $10.00 per unit in a private placement concurrently with the closing of the initial Business Combination, is recognized as a derivative liability
in accordance with ASC 815. Accordingly, the Company recognizes the instrument as a liability at fair value and with changes in fair value recognized in the Company’s unaudited condensed statements of operations. The fair value of the forward purchase agreement is determined as the estimated unit value less the net present value of the forward purchase agreement.
The determination of the fair value of the derivative liabilities may be subject to change as more current information becomes available and accordingly the
actual results could differ significantly. Derivative liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Offering Costs Associated with the Initial Public
Offering
Offering costs consisted of legal, accounting,
underwriting fees and other costs incurred that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value
basis, compared to total proceeds received. Offering costs associated with derivative liabilities are expensed as incurred, presented as non-operating expenses in the unaudited condensed statements of operations. Offering costs associated
with the Class A ordinary shares issued were charged against their carrying value upon the completion of the Initial Public Offering. Of the total offering costs of the Initial Public Offering, approximately $0.3 million was included in offering cost - derivative liabilities in the unaudited condensed statements of operations and $13.0 million was allocated to the redeemable Class A ordinary shares reducing their carrying amount. Of the $13.3 million of offering costs, approximately $8.1
million is deferred underwriting commissions. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of
current liabilities.
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares
subject to possible redemption in accordance with the guidance in ASC Topic 480. Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable
Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s
control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the
Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of June 30, 2022, and December 31, 2021, 23,000,000
Under ASC 480-10-S99, the Company has elected to recognize changes in the redemption value
immediately as they occur and adjust the carrying value of the security to equal the redemption value at the end of the reporting period. This method would view the end of the reporting period as if it were also the redemption date of the
security. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of redeemable Class A ordinary shares
resulted in charges against additional paid-in capital to the extent available and accumulated deficit. Subsequently, the Company recognized changes in the redemption value as a deemed dividend as reflected on the accompanying
unaudited condensed statements of changes in shareholders’ deficit.
Income Taxes
The Company complies with the accounting and reporting
requirements of ASC Topic 740, “Income Taxes.”
ASC Topic 740 prescribes a recognition threshold and a
measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained
upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as
income tax expense. There were no no
Net Income Per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB
ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. Net income
per ordinary share is calculated by dividing the net income by the weighted average shares of ordinary shares outstanding for the respective period.
The calculation of diluted net income (loss) does not consider the effect
of the warrants underlying the Units sold in the Initial Public Offering (including the consummation of the Over-allotment) and the private placement warrants to purchase an aggregate of 9,866,667 shares of Class A ordinary shares in the calculation of diluted income (loss) per share, because their exercise is contingent
upon future events. Accretion associated with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
The table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share for each class of
ordinary shares:
|
|
For the Three Months Ended June 30,
|
For the Six
Months Ended June 30,
|
||||||||||||||||||||||||||||||
|
|
2022
|
2021
|
2022
|
2021
|
||||||||||||||||||||||||||||
|
|
Class A
|
Class B
|
Class A
|
Class B
|
Class A
|
Class B
|
Class A
|
Class B
|
||||||||||||||||||||||||
|
Basic and diluted net income (loss)
per ordinary share:
|
||||||||||||||||||||||||||||||||
|
Numerator:
|
||||||||||||||||||||||||||||||||
|
Allocation of net income (loss) -
basic and diluted
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Denominator:
|
||||||||||||||||||||||||||||||||
|
Basic and diluted weighted average
ordinary shares outstanding
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Basic and diluted net income (loss) per
ordinary share
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||||||||
Recent Accounting Pronouncements
In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The ASU amends ASC 820 to clarify that a contractual sales restriction is not considered in measuring an equity security at fair value and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The ASU applies to both holders and issuers of equity and equity-linked securities measured at fair value. The amendments in this ASU are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is considering the impact of this pronouncement on the financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting pronouncement if currently adopted would have a material effect on
the Company’s unaudited condensed financial statements.
Note 3-Initial Public Offering
On March 23, 2021, the Company consummated its Initial Public Offering of 23,000,000 Units, including 3,000,000
Over-Allotment Units, at $10.00 230.0 million, and incurring offering costs of approximately $13.3
million, of which approximately $8.1 million was for deferred underwriting commissions.
Each Unit consists of one Class A ordinary share, and of one
redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to purchase one Class A ordinary share at a
price of $11.50 per share, subject to adjustment (see Note 6).
Note 4-Related Party Transactions
Founder Shares
On January 15, 2021, the Sponsor paid $25,000 to cover certain expenses of the Company in consideration for the issuance of 7,187,500 Class B ordinary shares, par value $0.0001 (the
“Founder Shares”). On January 21, 2021, the Sponsor irrevocably surrendered to the Company for cancellation and for
consideration 1,437,500 Class B ordinary shares, resulting in an aggregate of 5,750,000 Class B ordinary shares outstanding. All shares and associated amounts have been retroactively restated to reflect the surrender of the shares. The Sponsor agreed
to forfeit up to 750,000 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters,
so that the Founder Shares would represent 20 % of the Company’s issued and outstanding shares after the Initial Public Offering. On
March 23, 2021, the underwriter fully exercised its over-allotment option; thus, these 750,000 Founder Shares were no longer subject
to forfeiture.
The initial shareholders agreed, subject to limited exceptions, not to
transfer, assign or sell any of their Founder Shares until the earlier to occur of (i) one year after the completion of the initial
Business Combination or (ii) the date following the completion of the initial Business Combination on which the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of the shareholders having
the right to exchange their ordinary shares for cash, securities or other property. Notwithstanding the foregoing, if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 -trading
day period commencing at least 150 days after the initial Business Combination, the Founder Shares will be released from the lockup.
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, the Company
consummated the Private Placement of 5,266,667 Private Placement Warrants, at a price of $1.50 per Private Placement Warrant with the Sponsor, generating gross proceeds of $7.9 million.
Each whole Private Placement Warrant is exercisable for one whole Class A ordinary share at a price of $11.50
per share. A portion of the proceeds from the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination
Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable except as described below in Note 6 and exercisable on a cashless basis so long as they are held by the Sponsor or its
permitted transferees.
The Sponsor and the Company’s officers and directors agreed, subject to
limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of
the initial Business Combination.
Forward Purchase Agreement
On March 18, 2021, the Sponsor entered into a forward purchase agreement
(the “Forward Purchase Agreement”) with the Company that provided for the purchase of an aggregate of 5,000,000 forward purchase
units (the “Forward Purchase Units”), consisting of one Class A ordinary share, or a Forward Purchase Share, and of one warrant to purchase one
Class A ordinary share, or a Forward Purchase Warrant, for $10.00 per Unit, for an aggregate purchase price of $50.0 million at the election of the Sponsor, in a private placement to close substantially concurrently with the closing of the initial Business
Combination. The obligations under the Forward Purchase Agreement will not depend on whether any Class A ordinary shares are redeemed by the Public Shareholders. The terms of the Forward Purchase Shares will generally be identical to the
Class A ordinary shares included in the Units sold in the Initial Public Offering, except that they will have registration rights and be subject to certain transfer restrictions. The terms of the Forward Purchase Warrants will generally be
identical to the Private Placement Warrants, including for the purposes of redemption.
Related Party Loans
On January 15, 2021, the Sponsor agreed to loan the Company an aggregate of
up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”). This Note was
non-interest bearing and payable upon the completion of the Initial Public Offering. The Company borrowed $300,000 under the Note.
The Company repaid the Note balance of $300,000 in full on March 25, 2021. This facility is no longer available to be withdrawn.
In addition, the Sponsor advanced approximately $321,000
In addition, in order to finance transaction costs in connection with a
Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes
a Business Combination, the Company will 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 that a Business Combination does not close, the Company may use a portion of the 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. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. 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. As of June 30, 2022 and December 31, 2021, the Company had no
Due to Related Party
In the three and six months
ended June 30, 2022, an affiliate of the Sponsor paid certain expenses on behalf of the Company. As of June 30, 2022 and December 31, 2021, outstanding balance for such advances were approximately $55,000 and -0 -, respectively, included in due to related
party in current liabilities, on the accompanying condensed balance sheets.
Administrative Services Agreement
Commencing on the effective date of the prospectus through the earlier of
consummation of the initial Business Combination and the Company’s liquidation, the Company agreed to pay the Sponsor a total of $10,000
per month for office space, secretarial and administrative services provided to members of the Company’s management team. The Company has not incurred
administrative expenses under the agreement, as the monthly fee has been waived by the Sponsor.
The Company’s officers or directors will be reimbursed for any out-of-pocket
expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. The Company’s audit committee will review on a quarterly
basis all payments, if any, that were made to the Sponsor, officers or directors, or the Company’s or their affiliates. Any such payments prior to an initial Business Combination will be made using funds held outside the Trust Account. Other
than quarterly audit committee review of such payments, the Company does not expect to have any additional controls in place governing the reimbursement payments to the Company’s directors and officers for their out-of-pocket expenses
incurred in connection with identifying and consummating an initial Business Combination.
Note 5-Commitments and Contingencies
Registration and Shareholder Rights
The holders of Founder Shares, Private Placement Warrants and warrants that
may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) were entitled to
registration rights pursuant to a registration and shareholder rights agreement signed upon consummation of the Initial Public Offering. These holders were entitled to certain demand and “piggyback” registration rights. However, the
registration and shareholder rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to
be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Pursuant to the Forward Purchase Agreement, the Company agreed that it will
use its commercially reasonable efforts to (i) within 30 days after the closing of the initial Business Combination, file a
registration statement with the SEC for a secondary offering of (A) the forward purchase investor’s Forward Purchase Shares, (B) the Class A ordinary shares issuable upon exercise of the forward purchase investor’s Forward Purchase Warrants
and (C) any other Class A ordinary shares acquired by the forward purchase investor, including any acquisitions after the Company completes its initial Business Combination, (ii) cause such registration statement to be declared effective
promptly thereafter, but in no event later than 90 days after the closing of the initial Business Combination and (iii) maintain
the effectiveness of such registration statement and to ensure the registration statement does not contain a material omission or misstatement, including by way of amendment or other update, as required, until the earlier of (A) the date on
which the forward purchase investor ceases to hold the securities covered thereby and (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act, and
without the requirement to be in compliance with Rule 144(c)(1) under the Securities Act, subject to certain conditions and limitations set forth in the Forward Purchase Agreement. The Company will bear the cost of registering these
securities.
Underwriting Agreement
The Company granted the underwriters a 45 -day option from the final prospectus relating to the Initial Public Offering to purchase up to 3,000,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On March 23, 2021, the
underwriter fully exercised its over-allotment option.
The underwriters were entitled to an underwriting discount of $0.20 per unit, or $4.6 million in
the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or approximately $8.1 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. 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.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic on the
industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily
determinable as of the date of these unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In February
2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation
and Belarus. Further, the impact of this action and related sanctions on the world economy is not determinable as of the date of these financial statements. The specific impact on the Company’s financial condition, results of operations,
and cash flows is also not determinable as of the date of these unaudited condensed financial statements.
Note
6-Warrants
As of June 30, 2022 and December 31, 2021, the Company
had 4,600,000 5,266,667
Public Warrants may only be exercised for a whole
number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12
months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the Public Warrants
and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company agreed
that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, the Company
will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the Public Warrants. If the shares issuable upon exercise of the
warrants are not registered under the Securities Act, the Company will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and the Company will
not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an
exemption from registration is available. Notwithstanding the above, if the Company’s Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a
“covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the
Securities Act and, in the event the Company elects, the Company will not be required to file or maintain in effect a registration statement, 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.
The warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for
capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20
per Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the initial shareholders or their affiliates, without taking into
account any Founder Shares held by the initial shareholders or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60 % of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the
consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of Class A ordinary shares during the 10 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115 % of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described under “Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00 ” and “Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00 ” will be adjusted (to the nearest cent) to be equal to 180 %
of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described under
“Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00 ” will be adjusted (to the nearest cent)
to be equal to the higher of the Market Value and the Newly Issued Price. The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants
and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30
days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, except as described below, the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchasers or
such purchasers’ permitted transferees. If the Private Placement Warrants are held by someone other than the Initial Shareholders or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable
by such holders on the same basis as the Public Warrants.
Redemption
of warrants when the price per Class A ordinary share equals or exceeds $18.00 : Once the warrants become exercisable, the
Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):
|
•
|
in whole and not in part;
|
|
•
|
at a price of $
|
|
•
|
upon a minimum of
|
|
•
|
if, and only if, the last reported sale
price (the “closing price”) of Class A ordinary shares equals or exceeds $
|
The
Company will not redeem the warrants as described above unless an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants is effective and a current prospectus
relating to those Class A ordinary shares is available throughout the 30 -day redemption period. If and when the warrants
become redeemable by the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of warrants when the price per Class A ordinary share equals or
exceeds $10.00 : Once the warrants become exercisable, the Company may redeem the outstanding warrants:
|
•
|
in whole and not in part;
|
|
•
|
at a price of $
|
|
•
|
if, and only if, the closing price of
Class A ordinary shares equals or exceeds $
|
The “fair market value” of Class A ordinary shares
for the above purpose shall mean the volume weighted average price of Class A ordinary shares during the 10 trading days
immediately following the date on which the notice of redemption is sent to the holders of warrants. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 Class A ordinary shares per warrant (subject to adjustment).
In no event will the Company be required to net cash
settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with
respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
Note 7-Temporary Equity - Class A Ordinary Shares Subject To Possible Redemption
The Company’s Class A ordinary shares feature certain redemption rights that are
considered to be outside of the Company’s control and subject to the occurrence of future events. As of June 30, 2022 and December 31, 2021, there were 23,000,000
As of June 30, 2022 and December 31, 2021, Class A ordinary shares subject to
possible redemption reflected on the unaudited condensed balance sheets are reconciled on the following table:
|
Gross proceeds
|
$
|
|
||
|
Less:
|
||||
|
Proceeds allocated to public warrants
|
(
|
)
|
||
|
Class A ordinary share issuance costs
|
(
|
)
|
||
|
Plus:
|
||||
|
Accretion of Class A ordinary shares to redemption amount
|
|
|||
|
Class A ordinary share subject to possible redemption, December 31, 2021
|
|
|
||
|
Increase in redemption value of Class A ordinary shares subject to possible redemption
|
||||
| Class A ordinary share subject to possible redemption, June 30, 2022 |
$ |
Note 8-Shareholders’ Deficit
Preference Shares-The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share. As of
June 30, 2022, and December 31, 2021, there were no
Class A Ordinary Shares- The Company is authorized to issue 200,000,000 Class A ordinary shares with a par value of $0.0001 per
share. Holders of the Company’s Class A ordinary shares are entitled to one vote for each share. As of June 30, 2022 and December
31, 2021, there were 23,000,000
Class B Ordinary Shares- The Company is authorized to issue 20,000,000 Class B ordinary shares with a par value of $0.0001 per share.
As of June 30, 2022 and December 31, 2021, there were 5,750,000
Ordinary shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders. Holders of the Class A ordinary shares and holders of the Class B
ordinary shares will vote together as a single class on all matters submitted to a vote of shareholders, except as required by law.
The Class B ordinary shares will automatically convert
into Class A ordinary shares concurrently with or immediately following the consummation of the initial Business Combination on a one -for-one
basis, subject to adjustment for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares or
equity-linked securities are issued or deemed issued in connection with the initial Business Combination, the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the aggregate, 20 % of the total number of Class A ordinary shares outstanding after such conversion (after giving effect to any redemptions of Class A ordinary
shares by Public Shareholders), including the total number of Class A ordinary shares issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in
connection with or in relation to the consummation of the initial Business Combination, excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, or to be issued, to
any seller in the initial Business Combination and any private placement warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans; provided that such conversion of Class B ordinary shares will never occur
on a less than one -for-one basis.
Note 9-Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities that are measured at fair
value on a recurring basis as of June 30, 2022 and December 31, 2021,
by level within the fair value hierarchy:
| June 30, 2022 |
||||||||||||||||
|
Description
|
Quoted Prices in
Active Markets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant Other
Unobservable Inputs
(Level 3)
|
Total
|
||||||||||||
|
Assets:
|
||||||||||||||||
|
Investments held in the Trust Account:
|
||||||||||||||||
| Money Market Funds |
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Liabilities:
|
||||||||||||||||
|
Derivative liabilities - Public Warrants
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Derivative liabilities - Private Warrants
|
|
|
|
|
||||||||||||
|
Forward purchase agreement
|
|
|
|
|
|
|
|
|
||||||||
|
Total derivative liabilities
|
$
|
|
||||||||||||||
|
December 31, 2021
|
||||||||||||||||
|
Description
|
Quoted Prices in
Active Markets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant Other
Unobservable Inputs
(Level 3)
|
Total
|
||||||||||||
|
Assets:
|
||||||||||||||||
|
Investments held in the Trust Account:
|
||||||||||||||||
|
Money Market Funds
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Liabilities:
|
||||||||||||||||
|
Derivative liabilities - Public Warrants
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Derivative liabilities - Private Warrants
|
|
|
|
|
||||||||||||
|
Forward purchase agreement
|
|
|
|
|
||||||||||||
|
Total derivative liabilities
|
$
|
|
||||||||||||||
Transfers to/from Levels 1, 2, and 3 are
recognized at the beginning of the reporting period. The estimated fair value of Public Warrants was transferred from a Level 3 fair value measurement to a Level 1 measurement, when the Public Warrants were separately listed and traded in May
2021. As of June 30, 2022, due to a significant decrease in the trading volume of the Public Warrants in relation to the normal volume of market activity the last week in June, the estimated fair value of Public Warrants was transferred from a
Level 1 fair value measurement to a Level 2 measurement. There were no
Level 1 assets include investments in money market funds that invest solely in U.S. government securities. The Company
uses inputs such as actual trade data, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.
Initially, the fair value of the Public Warrants and Private Placement Warrants were measured at fair value
using a Monte Carlo simulation. The fair value of the forward purchase agreement is determined as the estimated unit value less the net present value of the forward purchase agreement.
For the three months ended June 30, 2022 and 2021, the Company recognized a gain/(charge) in the unaudited condensed statements of operations resulting from a
decrease/(increase) in the fair value of liabilities of approximately $1.3 million and approximately ($1.9 million), respectively, presented as change in fair value of derivative liabilities in the accompanying unaudited condensed statements of
operations.
For the six months ended June 30, 2022 and 2021, the Company recognized a gain/(charge) in the unaudited condensed statements of operations resulting from a
decrease/(increase) in the fair value of liabilities of approximately $5.1 million and approximately ($2.0 million), respectively, presented as change in fair value of derivative liabilities in the accompanying unaudited condensed statements of
operations.
For periods subsequent to the detachment of the Public
Warrants from the Units, the fair value of the Public Warrants is based on the observable listed price for such warrants (a Level 1 measurement). The estimated fair value of the Private Placement Warrants, and the Public Warrants prior to being
separately listed and traded, is determined using Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates
the volatility of its ordinary share warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer company’s ordinary shares that matches the expected remaining life of the warrants.
Significant increases (decreases) in the expected volatility in isolation would result in a significantly higher (lower) fair value measurement. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date
for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company
anticipates remaining at zero.
The
following table provides quantitative information regarding Level 3 fair value measurements inputs at the measurement date:
|
As of June 30, 2022
|
As of December 31, 2021
|
|||||||
|
Volatility
|
||||||||
|
Stock price
|
$ |
$ |
||||||
|
Probability of De-SPAC
|
|
|
|
|
||||
|
Risk-free rate
|
||||||||
|
Dividend yield
|
||||||||
The change in the fair value of the
derivative liabilities, measured using Level 3 inputs, for the three and six months ended June 30, 2022 and 2021 is summarized as follows:
|
Derivative liabilities at December 31, 2021
|
$
|
|
||
|
Change in fair value of derivative liabilities
|
(
|
)
|
||
|
Derivative liabilities at March 31, 2022
|
|
|||
|
Change in fair value of derivative liabilities
|
(
|
)
|
||
|
Derivative liabilities at June 30, 2022
|
$
|
|
||
|
Derivative liabilities at December 31, 2020
|
$
|
|
||
|
Issuance of Public and Private Warrants
|
|
|||
|
Change in fair value of derivative liabilities
|
|
|||
|
Derivative liabilities at March 31, 2021
|
|
|||
|
Transfer of Public Warrants to Level 1 measurement
|
(
|
)
|
||
|
Change in fair value of derivative liabilities
|
|
|||
|
Derivative liabilities at June 30, 2021
|
$
|
|
Note 10-Subsequent Events
The Company evaluated subsequent events and transactions that occurred up to the date the unaudited
condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
References to the “Company,” “our,” “us” or “we” refer to LDH Growth Corp I. The following discussion and analysis of the Company’s financial condition and results of operations should be read in
conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve
risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown
risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or
implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of
such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact
included in this Form 10-Q. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company on October 7, 2020, effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar
business combination with one or more businesses, referred to herein as an “initial business combination.” Our sponsor is LDH Sponsor LLC, a Delaware limited liability company (“sponsor”).
The registration statement for our IPO was declared effective on March 18, 2021. On March 23, 2021, we consummated the IPO of 23,000,000 units (the “units” and, with respect to the Class A ordinary
shares included in the units being offered, the “public shares”), including 3,000,000 additional units to cover over-allotments, at $10.00 per unit, generating gross proceeds of $230.0 million, and incurring offering costs of approximately $13.3
million, of which approximately $8.1 million was for deferred underwriting commissions.
Simultaneously with the closing of the IPO, we consummated the private placement (“private placement”) of 5,266,667 warrants (each, a “private placement warrant” and collectively, the “private
placement warrants”), at a price of $1.50 per private placement warrant with our sponsor, generating gross proceeds of $7.9 million.
Upon the closing of the IPO and the private placement, $230.0 million ($10.00 per unit) of the net proceeds of the IPO and certain of the proceeds of the private placement was placed in a trust
account (the “Trust Account”) in the United States, with Continental Stock Transfer & Trust Company acting as trustee, and will be 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 money market funds meeting certain conditions of Rule 2a-7 of the Investment Company Act, which invest only in direct U.S. government treasury obligations until the earlier of: (i) the
consummation of an initial business combination or (ii) the distribution of the funds in the Trust Account to our shareholders, as described below.
If we are unable to complete an initial business combination within 24 months from the closing of the IPO, or March 23, 2023 (the “Combination Period”), we will (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
including interest earned on the funds held in the Trust Account (less taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish
our public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders
and the board of directors, liquidate and dissolve, subject, in the case of clauses (ii) and (iii), to the Company’s obligations under Cayman Islands law to provide for claims of creditors and in all cases subject to the other requirements of
applicable law. There will be no redemption rights or liquidating distributions with respect to the warrants, which will expire worthless if the Company fails to complete its initial business combination within the Combination Period.
Results of Operations
Our entire activity from October 7, 2020 (inception) through March 23, 2021, was in preparation for our IPO, and since our IPO, our activity has been limited to the search for a prospective initial
business combination. We will not generate any operating revenues until the closing and completion of our initial business combination. We generate non-operating income in the form of investment income from our investments held in the Trust
Account. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended June 30, 2022, we had a net income of approximately $1.3 million, which consisted of a non-cash income of approximately $1.3 million for a change in fair value of derivative
liabilities, and approximately $311,000 of income from investments held in the Trust Account, partly offset by approximately $324,000 in general and administrative expenses.
For the three months ended June 30, 2021, we had a net loss of approximately $2.2 million, which consisted of a non-cash loss of approximately $1.9 million for a change in fair value of derivative
liabilities, and approximately $306,000 in general and administrative expenses, partly offset by approximately $9,000 of income from investments held in the Trust Account.
For the six months ended June 30, 2022, we had a net income of approximately $4.7 million, which consisted of a non-cash income of approximately $5.1 million for a change in fair value of derivative
liabilities, and approximately $334,000 of income from investments held in the Trust Account, partly offset by approximately $699,000 in general and administrative expenses.
For the six months ended June 30, 2021, we had a net loss of approximately $2.6 million, which consisted approximately $259,000 of financing costs - derivative liabilities, a non-cash loss of
approximately $2.0 million for a change in fair value of derivative liabilities, and approximately $362,000 in general and administrative expenses, partly offset by approximately $9,000 of income from investments held in the Trust Account.
Liquidity and Going Concern
As of June 30, 2022, we had approximately $733,000 in cash and working capital of approximately $1.1 million.
Our liquidity needs to date have been satisfied through a cash payment of $25,000 from our sponsor in exchange for the issuance of Class B ordinary shares initially issued to our sponsor in a private
placement prior to the IPO (and the Class A ordinary shares that will be issued upon the automatic conversion of the Class B ordinary shares upon our initial business combination or earlier at the option of the holders thereof) (the “founder
shares”), a loan of $300,000 (which was repaid on March 25, 2021) under a promissory note from our sponsor, an advance of approximately $321,000 from the sponsor (which was repaid in full in December 2021), and the net proceeds from the
consummation of the private placement not held in the Trust Account. In addition, in order to finance transaction costs in connection with an initial business combination, our officers, directors and initial shareholders may, but are not obligated
to, provide us working capital loans. As of June 30, 2022 and December 31, 2021, there were no amounts outstanding under any working capital loans.
Based on the foregoing, management believes that we will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of an initial business
combination or one year from this filing. However, in connection with our assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements - Going Concern,” management has determined that
the mandatory liquidation on March 23, 2023 and subsequent dissolution raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required
to liquidate after March 23, 2023.
Contractual Obligations
As of June 30, 2022 and December 31, 2021, we did not have any lease obligations or purchase obligations.
Registration and Shareholder Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the
Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) are entitled to registration rights pursuant to a registration and shareholder rights agreement signed upon consummation of the Initial Public
Offering. These holders are entitled to certain demand and “piggyback” registration rights. However, the registration and shareholder rights agreement provides that the Company will not permit any registration statement filed under the Securities
Act to become effective until the termination of the applicable lock-up period for the securities to be registered. We will bear the expenses incurred in connection with the filing of any such registration statements.
Pursuant to the Forward Purchase Agreement, we agreed that we will use our commercially reasonable efforts to (i) within 30 days after the closing of the initial Business Combination, file a
registration statement with the SEC for a secondary offering of (A) the forward purchase investor’s Forward Purchase Shares, (B) the Class A ordinary shares issuable upon exercise of the forward purchase investor’s Forward Purchase Warrants and (C)
any other Class A ordinary shares acquired by the forward purchase investor, including any acquisitions after we complete the initial Business Combination, (ii) cause such registration statement to be declared effective promptly thereafter, but in
no event later than 90 days after the closing of the initial Business Combination and (iii) maintain the effectiveness of such registration statement and to ensure the registration statement does not contain a material omission or misstatement,
including by way of amendment or other update, as required, until the earlier of (A) the date on which the forward purchase investor ceases to hold the securities covered thereby and (B) the date all of the securities covered thereby can be sold
publicly without restriction or limitation under Rule 144 under the Securities Act, and without the requirement to be in compliance with Rule 144(c)(1) under the Securities Act, subject to certain conditions and limitations set forth in the Forward
Purchase Agreement. We will bear the cost of registering these securities.
Underwriting Agreement
The underwriters are entitled to an underwriting discount of $0.20 per unit, or $4.6 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or
approximately $8.1 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we
complete a Business Combination, subject to the terms of the underwriting agreement.
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 America requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the 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:
Derivative Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued share purchase warrants and
forward purchase agreements, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative
instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.
The warrants issued in connection with the IPO (the “public warrants”) and the private placement warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, we recognize
the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period until they are exercised. The fair value of the public warrants and private placement warrants have initially been measured at
fair value using a Monte Carlo simulation model. The fair value of the public warrants as of June 30, 2022, is based on observable listed prices for such warrants. The fair value of the private placement warrants as of June 30, 2022, is measured
based on a Monte Carlo simulation model.
The forward purchase agreement between our Company and the sponsor, providing for the investor to purchase $50,000,000 of units, with each unit consisting of one Class A ordinary share and one-fifth
of one warrant to purchase one Class A ordinary share, at a purchase price of $10.00 per unit in a private placement concurrently with the closing of the initial business combination, is recognized as a derivative liability in accordance with ASC
815. Accordingly, we recognize the instrument as a liability at fair value and with changes in fair value recognized in our unaudited condensed statements of operations. The fair value of the forward purchase agreement is determined as the
estimated unit value less the net present value of the forward purchase agreement.
The determination of the fair value of the derivative liabilities may be subject to change as more current information becomes available and accordingly the actual results could differ significantly.
Derivative liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to
mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the
control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity.
The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of June 30, 2022 and December 31, 2021,
23,000,000 Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s unaudited condensed balance sheet.
Under ASC 480-10-S99, we have elected to recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the redemption value
at the end of the reporting period. This method would view the end of the reporting period as if it were also the redemption date of the security. Immediately upon the closing of the IPO, we recognized the accretion from initial book value to
redemption amount value. The change in the carrying value of redeemable Class A ordinary shares resulted in charges against additional paid-in capital and accumulated deficit. Subsequently, the Company
recognized changes in the redemption value as a deemed dividend as reflected on the accompanying unaudited condensed statements of changes in shareholders’ deficit.
Net Income (Loss) per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” We have two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary
shares. Income and losses are shared pro rata between the two classes of shares. Net income per ordinary share is calculated by dividing the net income by the weighted average shares of ordinary shares outstanding for the respective period.
The calculation of diluted net income (loss) does not consider the effect of the warrants underlying the units sold in the IPO (including the consummation of the over-allotment) and the private
placement warrants to purchase an aggregate of 9,866,667 shares of Class A ordinary shares in the calculation of diluted income (loss) per share, because their exercise is contingent upon future events. We have considered the effect of Class B
ordinary shares that were excluded from the basic weighted average number of shares outstanding as they were contingent on the exercise of over-allotment option by the underwriters. Since the contingency was satisfied, we included these shares in
the weighted average number as of the beginning of the interim period to determine the dilutive impact of these shares. Accretion associated with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value
approximates fair value.
Recent Accounting Pronouncements
In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The ASU amends ASC 820 to clarify that a contractual
sales restriction is not considered in measuring an equity security at fair value and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The ASU applies to both
holders and issuers of equity and equity-linked securities measured at fair value. The amendments in this ASU are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early
adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. We are considering the impact of this pronouncement on the financial statements.
We do not believe that any other recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on our unaudited condensed financial
statements.
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are
allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not
comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the unaudited condensed financial statements may not be comparable to companies
that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act,
if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section
404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the
PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation
related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our
IPO or until we are no longer an “emerging growth company,” whichever is earlier.
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
|
We are a smaller reporting 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 and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time
periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we carried out an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of the end
of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective.
We previously identified a material weakness in 2021 related to our control around the interpretation and accounting for certain complex financial instruments that was not effectively designed or
maintained. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements
will not be prevented or detected on a timely basis. We designed and implemented new controls to remediate the control. We have expanded and improved our processes to ensure that the nuances of such transactions were effectively evaluated in the
context of increasingly complex accounting standards. Based on the actions taken, as well as the evaluation of the design of the new controls and testing of the controls, we concluded that the controls were in place as of the December 31, 2021
reporting period and operating effectively as of June 30, 2022. As a result, management concluded the material weakness was remediated as of June 30, 2022.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on the evaluation we conducted, other than remediation of the material weakness identified and discussed above, our management
has concluded that no such changes have occurred.
PART II - OTHER INFORMATION
| Item 1. |
Legal Proceedings
|
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 Annual Report on Form 10-K filed with the SEC on March 31, 2022.
Any of those factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business
or results of operations. Except as set forth below, as of the date of this report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on March 31, 2022 and our Quarterly Report on
Form 10-Q filed with the SEC on May 13, 2022. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
|
None.
Use of Proceeds
There has been no material change in the planned use of the proceeds from the Initial Public Offering and Private Placement as is described in the Company’s final prospectus related to the Initial
Public Offering.
| Item 3. |
Defaults Upon Senior Securities
|
None.
| Item 4. |
Mine Safety Disclosures
|
Not applicable.
| Item 5. |
Other Information
|
None.
| Item 6. |
Exhibits.
|
|
Exhibit
Number
|
Description
|
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
|
|
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this 12th day of August 2022.
|
LDH GROWTH CORP I
|
|
|
By:
|
/s/ Christopher Cooper
|
|
Name:
|
Christopher Cooper
|
|
Title:
|
Chief Executive Officer and Chief Financial Officer
|
28
EXHIBIT 31.1
CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Christopher Cooper, certify that:
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022, of LDH Growth Corp I;
|
||
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
||
|
3.
|
Based on my knowledge, the condensed financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
||
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
for the registrant and have:
|
||
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||
|
b.
|
[Paragraph intentionally omitted in accordance with SEC Release Nos. 34-47986 and 34-54942];
|
||
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
|
||
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
||
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
||
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
|
||
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
|
||
|
Date: August 12, 2022
|
By:
|
/s/ Christopher Cooper
|
|
Christopher Cooper
|
||
|
Chief Executive Officer and Chief Financial Officer
|
||
|
(Principal Executive Officer and Principal Financial Officer)
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of LDH Growth Corp I (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2022, as filed with the Securities and Exchange Commission on the
date hereof (the “Report”), I, Christopher Cooper, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to
my knowledge:
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
||
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
||
|
Date: August 12, 2022
|
|||
|
/s/ Christopher Cooper
|
|||
|
Name:
|
Christopher Cooper
|
||
|
Title:
|
Chief Executive Officer and Chief Financial Officer
|
||
|
(Principal Executive Officer and Principal Financial Officer)
|
|||
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