ITEM
1. FINANCIAL STATEMENTS
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
CONDENSED
BALANCE SHEET
APRIL
30, 2021
(Unaudited)
ASSETS
|
|
|
|
Current assets
|
|
|
|
|
Cash
|
|
$
|
751,925
|
|
Prepaid expenses
|
|
|
327,327
|
|
Total Current Assets
|
|
|
1,079,252
|
|
|
|
|
|
|
Cash and marketable securities
held in Trust Account
|
|
|
143,763,697
|
|
Total Assets
|
|
$
|
144,842,949
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ DEFICIT
|
|
|
|
|
Current Liabilities
|
|
|
|
|
Accrued expenses
|
|
$
|
102,760
|
|
Accrued offering costs
|
|
|
25,000
|
|
Total Current Liabilities
|
|
|
127,760
|
|
|
|
|
|
|
Warrant liability
|
|
|
2,668,750
|
|
Total Liabilities
|
|
|
2,796,510
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
Class A ordinary shares subject to possible redemption; 14,375,000 shares at redemption value
|
|
|
143,763,697
|
|
|
|
|
|
|
Shareholders’
Deficit
|
|
|
|
|
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
—
|
|
Class A ordinary shares, $0.0001 par value; 100,000,000 shares authorized; 60,000 issued and outstanding (excluding 14,375,000 shares subject to possible redemption)
|
|
|
6
|
|
Class B ordinary shares, $0.0001 par value; 10,000,000 shares authorized; 3,593,750 issued and outstanding
|
|
|
359
|
|
Additional paid-in capital
|
|
|
—
|
|
Accumulated deficit
|
|
|
(1,717,623
|
)
|
Total Shareholders’
Deficit
|
|
|
(1,717,258
|
)
|
Total Liabilities
and Shareholders’ Deficit
|
|
$
|
144,842,949
|
|
The
accompanying notes are an integral part of the unaudited condensed financial statements.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
CONDENSED
STATEMENTS OF OPERATIONS
|
|
Three Months Ended
April 30,
|
|
|
For the
Period from
November 10,
2020
(Inception) Through
April 30,
|
|
|
|
2021
|
|
|
2021
|
|
Formation and operational
costs
|
|
$
|
199,420
|
|
|
$
|
213,499
|
|
Loss from operations
|
|
|
(199,420
|
)
|
|
|
(213,499
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Change in fair value of warrant
liability
|
|
|
743,750
|
|
|
|
743,750
|
|
Transaction costs allocable to
warrant liability
|
|
|
|
|
|
|
(23,219
|
)
|
Interest earned on marketable securities
held in Trust Account
|
|
|
13,496
|
|
|
|
13,697
|
|
Unrealized loss on marketable securities
held in Trust Account
|
|
|
(920
|
)
|
|
|
—
|
|
Other income, net
|
|
|
756,326
|
|
|
|
734,228
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
556,906
|
|
|
$
|
520,729
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average
shares outstanding, Class A ordinary shares
|
|
|
14,435,000
|
|
|
|
8,212,212
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
net income per share, Class A ordinary shares
|
|
$
|
0.03
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average
shares outstanding, Class B ordinary shares
|
|
|
3,593,750
|
|
|
|
3,389,205
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
net income per share, Class B ordinary shares
|
|
$
|
0.03
|
|
|
$
|
0.04
|
|
The
accompanying notes are an integral part of the unaudited condensed financial statements.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
CONDENSED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR
THE PERIOD FROM NOVEMBER 10, 2020 (INCEPTION) THROUGH APRIL 30, 2021
(Unaudited)
|
|
Class A
Ordinary Shares
|
|
|
Class B
Ordinary Shares
|
|
|
Additional
Paid-in
|
|
|
(Accumulated Deficit) Retained
|
|
|
Total
Shareholder’s
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Deficit
|
|
Balance —
November 10, 2020 (inception)
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Class
B ordinary shares to Sponsor
|
|
|
—
|
|
|
|
—
|
|
|
|
3,593,750
|
|
|
|
359
|
|
|
|
24,641
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurement adjustment for Class A ordinary shares to redemption
amount
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,587,135
|
)
|
|
|
(2,224,655
|
)
|
|
|
(3,811,790
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds received in excess of
fair value of Private Placement Warrants, net of warrant liability
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
962,500
|
|
|
|
—
|
|
|
|
962,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Representative Shares
|
|
|
60,000
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
599,994
|
|
|
|
—
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Remeasurement for Class A ordinary shares to redemption amount
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,121
|
)
|
|
|
(1,121
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(36,177
|
)
|
|
|
(36,177
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance —
January 31, 2021
|
|
|
60,000
|
|
|
$
|
6
|
|
|
|
3,593,750
|
|
|
$
|
359
|
|
|
$
|
—
|
|
|
$
|
(2,261,953
|
)
|
|
$
|
(2,261,588
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Remeasurement for Class A ordinary shares to redemption amount
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,576
|
)
|
|
|
(12,576
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
556,906
|
|
|
|
556,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance —
April 30, 2021
|
|
|
60,000
|
|
|
$
|
6
|
|
|
|
3,593,750
|
|
|
$
|
359
|
|
|
$
|
—
|
|
|
$
|
(1,717,623
|
)
|
|
$
|
(1,717,258
|
)
|
The
accompanying notes are an integral part of the unaudited condensed financial statements.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
CONDENSED
STATEMENT OF CASH FLOWS
FOR
THE PERIOD FROM NOVEMBER 10, 2020 (INCEPTION) THROUGH APRIL 30, 2021
(Unaudited)
Cash Flows
from Operating Activities:
|
|
|
|
Net income
|
|
$
|
520,729
|
|
Adjustments to reconcile net income
to net cash used in operating activities:
|
|
|
|
|
Payment of formation costs through
issuance of Class B ordinary shares
|
|
|
5,000
|
|
Interest earned on marketable securities
held in Trust Account
|
|
|
(13,697
|
)
|
Change in fair value of warrant
liability
|
|
|
(743,750
|
)
|
Transaction costs allocable to
warrant liability
|
|
|
23,219
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
Prepaid expenses
|
|
|
(302,327
|
)
|
Accrued
expenses
|
|
|
102,760
|
|
Net
cash used in operating activities
|
|
|
(408,066
|
)
|
|
|
|
|
|
Cash Flows
from Investing Activities:
|
|
|
|
|
Investment
of cash into Trust Account
|
|
|
(143,750,000
|
)
|
Net
cash used in investing activities
|
|
|
(143,750,000
|
)
|
|
|
|
|
|
Cash Flows
from Financing Activities:
|
|
|
|
|
Proceeds from sale of Units, net
of underwriting discounts paid
|
|
|
140,875,000
|
|
Proceeds from sale of Private
Placement Warrants
|
|
|
4,375,000
|
|
Proceeds from promissory note
— related party
|
|
|
134,914
|
|
Repayment of promissory note —
related party
|
|
|
(159,914
|
)
|
Payment
of offering costs
|
|
|
(315,009
|
)
|
Net
cash provided by financing activities
|
|
|
144,909,991
|
|
|
|
|
|
|
Net Change
in Cash
|
|
|
751,925
|
|
Cash –
Beginning
|
|
|
—
|
|
Cash
– Ending
|
|
$
|
751,925
|
|
|
|
|
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
Offering
costs included in accrued offering costs
|
|
$
|
25,000
|
|
Issuance
of Representative Shares
|
|
$
|
600,000
|
|
Remeasurement
adjustment of Class A ordinary shares subject to possible redemption
|
|
$
|
143,750,000
|
|
Accretion
of Class A ordinary shares subject to possible redemption
|
|
$
|
13,697
|
|
Offering
costs paid by Sponsor in exchange for the issuance of Class B ordinary shares
|
|
$
|
20,000
|
|
The
accompanying notes are an integral part of the unaudited condensed financial statements.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
NOTE
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
European
Sustainable Growth Acquisition Corp. (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company
on November 10, 2020. 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 (“Business Combination”).
The
Company is not limited to a particular industry or geographic region for purposes of completing a Business Combination. The Company is
an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging
growth companies.
As
of April 30, 2021, the Company had not commenced any operations. All activity for the period from November 10, 2020 (inception) through
April 30, 2021 relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is
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 a Business Combination, at the earliest. The Company will generate
non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The
registration statement for the Company’s Initial Public Offering became effective on January 21, 2021. On January 26, 2021, the
Company consummated the Initial Public Offering of 12,500,000 units (the “Units” and, with respect to the Class A ordinary
shares included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $125,000,000 which
is described in Note 4.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of an aggregate of 4,000,000 warrants (the “Private
Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to LRT Capital1 LLC (the “Sponsor”)
and the underwriters of the Initial Public Offering, generating gross proceeds of $4,000,000, which is described in Note 5.
Following
the closing of the Initial Public Offering on January 26, 2021, an amount of $125,000,000 ($10.00 per Unit) from the net proceeds of
the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the
“Trust Account”) and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in
money market funds investing solely in U.S. Treasuries meeting certain conditions 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 funds in the Trust Account to the Company’s shareholders, as described below.
On
January 27, 2021, the underwriters fully exercised their over-allotment option, resulting in an additional 1,875,000 Units issued for
an aggregate amount of $18,750,000. In connection with the underwriters’ full exercise of their over-allotment option, the Company
also consummated the sale of an additional 375,000 Private Placement Warrants at $1.00 per Private Placement Warrant, generating total
proceeds of $375,000. A total of $18,750,000 was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust
Account to $143,750,000.
Transaction
costs amounted to $3,835,009, consisting of $2,875,000 of underwriting fees and $960,009 of other offering costs.
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 the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward
completing a Business Combination. The Company must complete its initial Business Combination with one or more target businesses that
together have a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding taxes payable on the income
earned on the Trust Account) at the time of the agreement to enter into a Business Combination. The Company will only complete a Business
Combination if the post-Business Combination company owns or acquires 50% or more of the issued and outstanding voting securities of
the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an
investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business
Combination.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
The
Company will provide its 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. The shareholders will be entitled to redeem their Public Shares for a pro rata portion of the
amount held in the Trust Account (initially $10.00 per share), calculated as of two business days prior to the completion of a Business
Combination, including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company
to pay its tax obligations. There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s
warrants.
The
Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either immediately
prior to or upon such Business Combination and, if the Company seeks shareholder approval in connection with a Business Combination,
it receives an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of
a majority of the shareholders who vote at a general meeting of the Company. If a shareholder vote is not required under applicable law
or stock exchange listing requirements and the Company does not decide to hold a shareholder vote for business or other reasons, the
Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions pursuant to the tender
offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the
same information as would be included in a proxy statement with the SEC prior to completing a Business Combination. If the Company seeks
shareholder approval in connection with a Business Combination, the Sponsor and the Company’s directors and officers have agreed
to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased in or after the Initial Public Offering in favor
of approving a Business Combination and to waive their redemption rights with respect to any such shares in connection with a shareholder
vote to approve a Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause
its net tangible assets of at least $5,000,001 either immediately prior to or upon such Business Combination. Additionally, each public
shareholder may elect to redeem its Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against
a proposed Business Combination.
Notwithstanding
the foregoing, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the
tender offer rules, the Company’s Amended and Restated Memorandum and Articles of Association provides 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 15% of the Public Shares without the Company’s prior written
consent.
The
Sponsor and EarlyBirdCapital have agreed (a) to waive their redemption rights with respect to any Founder Shares, Representative
Shares and Public Shares held by them in connection with the completion of a Business Combination (b) to waive their rights to liquidating
distributions from the Trust Account with respect to the Founder Shares and Representative Shares if the Company fails to consummate
a Business Combination within the Combination Period (as defined below) and (c) not to propose an amendment to the Amended and Restated
Memorandum and Articles of Association (i) to modify the substance or timing of the Company’s obligation to redeem 100% of
the Public Shares if the Company does not complete a Business Combination within the Combination Period or (ii) with respect to
any other provision relating to shareholders’ rights or pre-initial business combination activity, unless the Company provides
the public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment. However, if the Sponsor
acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from
the Trust Account if the Company fails to complete a Business Combination within the Combination Period. In the event of such distribution,
it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering
price per Unit ($10.00).
The
Company will have until January 26, 2023 (the “Combination Period”) to complete a Business Combination. If the Company is
unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but no more than 10 business days thereafter, redeem 100% of the
outstanding 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 (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public
Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive
further liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the
approval of the remaining shareholders and the Company’s board of directors, dissolve and liquidate, subject in each case to its
obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
In
order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to the Company, if and to the extent
any claims by a third party for services rendered or products sold to the Company, or by a prospective target business with which the
Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.00
per Public Share or (2) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust
Account due to reductions in the value of trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes.
This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access
to the Trust Account nor will it apply 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 (other than the Company’s independent
auditors), 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.
Going Concern
Consideration
Prior to the completion
of the Initial Public Offering, the Company’s liquidity needs had been satisfied through a contribution of $25,000 from Sponsor
to cover for certain formation and offering costs in exchange for the issuance of the Founder Shares, the loan of up to $300,000 from
the Sponsor pursuant to the Note (see Note 6). The Note was repaid on January 5, 2021. 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, provide the Company Working Capital Loans (see Note 6).
The Company will need to raise additional
capital through loans or additional investments from our initial stockholders, officers or directors. If the Company is unable to raise
additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be
limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot
provide any assurance that new financing will be available to the company on commercially acceptable terms, if at all. These conditions
raise substantial doubt about the Company’s ability to continue as a going concern through one year and one day from the issuance
of these financial statements.
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could
have a negative effect on the 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 the condensed financial statements. The condensed financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
NOTE
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In
connection with the preparation of the Company’s financial statements as of April 30, 2021, management identified errors made in
its historical financial statements where, at the closing of the Company’s Initial Public Offering, the Company improperly valued
its Class A ordinary shares subject to possible redemption. The Company previously determined the Class A ordinary shares subject to
possible redemption to be equal to the redemption value of $10.00 per Class A ordinary share while also taking into consideration a redemption
cannot result in net tangible assets being less than $5,000,001. Management determined that the Class A ordinary shares issued during
the Initial Public Offering can be redeemed or become redeemable subject to the occurrence of future events considered outside the Company’s
control. Therefore, management concluded that the redemption value should include all Class A ordinary shares subject to possible redemption,
resulting in the Class A ordinary shares subject to possible redemption being equal to their redemption value. As a result, management
has noted a reclassification error related to temporary equity and permanent equity. This resulted in a restatement of the initial carrying
value of the Class A ordinary shares subject to possible redemption with the offset recorded to additional paid-in capital (to the extent
available), accumulated deficit and Class A ordinary shares.
In
connection with the change in presentation for the Class A ordinary shares subject to redemption, the Company also restated its income
(loss) per ordinary share calculated to allocate net income (loss) pro rata to Class A and Class B ordinary shares. This presentation
contemplates a Business Combination as the most likely outcome, in which case, both classes of ordinary shares share pro rata in the
income (loss) of the Company. There is no impact to the reported amounts for total assets, total liabilities, cash flows, or net income
(loss).
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
The
impact of the restatement on the Company’s financial statements is reflected in the following table:
Balance Sheet as of April 30, 2021 (unaudited)
|
|
As
Previously
Reported
|
|
|
Adjustment
|
|
|
As
Restated
|
|
Class A ordinary shares subject to possible
redemption
|
|
$
|
137,046,436
|
|
|
$
|
6,717,261
|
|
|
$
|
143,763,697
|
|
Class A ordinary shares
|
|
$
|
73
|
|
|
$
|
(67
|
)
|
|
$
|
6
|
|
Additional paid-in capital
|
|
$
|
4,478,842
|
|
|
$
|
(4,478,842
|
)
|
|
$
|
—
|
|
Accumulated deficit
|
|
$
|
520,729
|
|
|
$
|
(2,238,352
|
)
|
|
$
|
(1,717,623
|
)
|
Total shareholders’ equity (deficit)
|
|
$
|
5,000,003
|
|
|
$
|
(6,717,261
|
)
|
|
$
|
(1,717,258
|
)
|
Number of shares subject to redemption
|
|
|
13,703,338
|
|
|
|
671,662
|
|
|
|
14,375,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement
of Changes in Shareholders’ Equity (Deficit) as of April 30, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of Class A ordinary shares subject
to redemption
|
|
$
|
(556,906
|
)
|
|
$
|
556,906
|
|
|
$
|
—
|
|
Change in Remeasurement adjustment for Class A ordinary
shares to redemption amount
|
|
$
|
—
|
|
|
$
|
(12,576
|
)
|
|
$
|
(12,576
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows for The
Period from November 10, 2020 (Inception) Through April 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial classification of Class A ordinary shares
subject to possible redemption
|
|
$
|
136,497,490
|
|
|
$
|
7,252,510
|
|
|
$
|
143,750,000
|
|
Change in Remeasurement adjustment for Class A ordinary
shares to redemption amount
|
|
$
|
548,946
|
|
|
$
|
(535,249
|
)
|
|
$
|
13,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the three months ended
April 30, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, Class A ordinary shares
|
|
|
13,648,847
|
|
|
|
786,153
|
|
|
|
14,435,000
|
|
Basic and diluted net income per share, Class A
ordinary shares
|
|
$
|
—
|
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
Weighted average shares outstanding, Class B ordinary shares
|
|
|
4,379,903
|
|
|
|
(786,153
|
)
|
|
|
3,593,750
|
|
Basic and diluted net loss per share, Class B
ordinary shares
|
|
$
|
0.12
|
|
|
$
|
(0.09
|
)
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operation for The Period from November
10, 2020 (Inception) Through April 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, Class A ordinary shares
|
|
|
13,629,259
|
|
|
|
(5,417,047
|
)
|
|
|
8,212,212
|
|
Basic and diluted net income per share, Class A
ordinary shares
|
|
$
|
—
|
|
|
$
|
0.04
|
|
|
$
|
0.04
|
|
Weighted average shares outstanding, Class B ordinary shares
|
|
|
3,859,778
|
|
|
|
(470,573
|
)
|
|
|
3,389,205
|
|
Basic and diluted net loss per share, Class B
ordinary shares
|
|
$
|
0.13
|
|
|
$
|
(0.09
|
)
|
|
$
|
0.04
|
|
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
NOTE
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form
10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information or footnote
disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the
rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes
necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the
accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary
for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s prospectus for its Initial
Public Offering as filed with the SEC on January 22, 2021. The interim results for the period from November 10, 2020 (inception) through
April 30, 2021 are not necessarily indicative of the results to be expected for the period ending October 31, 2021 or for any future
interim periods.
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, reduced disclosure
obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding
a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective
or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of
such extended transition period which means that when a standard is issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s condensed financial statements with another public
company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition
period difficult or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of the condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting period.
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 financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ
significantly from those estimates.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of April 30, 2021.
Marketable
Securities Held in Trust Account
At
April 30, 2021, substantially all of the assets held in the Trust Account were held in money market funds, which primarily invest in
U.S Treasury securities.
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 Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory
redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including
ordinary shares that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence
of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, ordinary shares
are classified as shareholders’ equity. The Company’s ordinary shares features certain redemption rights that are considered
to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at April 30, 2021, Class
A ordinary shares subject to possible redemption is presented as temporary equity, outside of the shareholders’ equity section
of the Company’s unaudited condensed balance sheets.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares
to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary
shares are affected by charges against additional paid-in capital and accumulated deficit.
At
April 30, 2021, the Class A ordinary shares subject to possible redemption reflected in the condensed balance sheet is reconciled in
the following table:
Gross Proceeds
|
|
$
|
143,750,000
|
|
Less:
|
|
|
|
|
Class A ordinary shares issuance costs
|
|
|
(3,811,790
|
)
|
Add:
|
|
|
|
|
Remeasurement of carrying value to redemption value
|
|
|
3,811,790
|
|
Current interest in excess of
Initial Public Offering proceeds
|
|
|
13,697
|
|
Class A ordinary shares subject
to possible redemption
|
|
$
|
143,763,697
|
|
Warrant
Liability
The
Company accounts for the Private Placement Warrants in accordance with the guidance contained in ASC 815-40, under which the Private
Placement Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies
the Private Placement Warrants as liabilities at their fair value and adjusts the Private Placement Warrants to fair value at each reporting
period. These liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized
in the statement of operations.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
Income
Taxes
The
Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition
of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets
and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally
requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not
be realized.
ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes
a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination
by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of April 30, 2021. The Company is currently
not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The
Company is considered an exempted Cayman Islands Company and is presently not subject to income taxes or income tax filing requirements
in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the period presented.
Net
Loss 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 (loss) per ordinary share is computed by dividing net income (loss) by the weighted
average number of ordinary shares outstanding for the period.. Accretion associated with the redeemable shares of Class A ordinary shares
is excluded from earnings per share as the redemption value approximates fair value.
The
calculation of diluted income (loss) per ordinary share does not consider the effect of the warrants issued in connection with the Initial
Public Offering, and the private placement since the exercise of the warrants is contingent upon the occurrence of future events. The
warrants are exercisable to purchase 11,562,500 ordinary shares in the aggregate. As of April 30, 2021, the Company did not have any
other dilutive securities or other contracts that could, potentially, be exercised or converted into ordinary shares and then share in
the earnings of the Company. As a result, diluted net loss per ordinary share is the same as basic net loss per ordinary share for the
periods presented.
The
following table reflects the calculation of basic and diluted net income (loss) per ordinary share (in dollars, except per share amounts):
|
|
Three
Months Ended
|
|
|
For
the Period from November 10, 2020
|
|
|
|
April 30, 2021
|
|
|
(Inception)
Through April 30, 2021
|
|
|
|
Class
A
|
|
|
Class
B
|
|
|
Class
A
|
|
|
Class
B
|
|
Basic
and diluted net loss per ordinary share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation
of net loss
|
|
$
|
445,895
|
|
|
$
|
111,011
|
|
|
$
|
368,605
|
|
|
$
|
152,124
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted weighted average shares outstanding
|
|
|
14,435,000
|
|
|
|
3,593,750
|
|
|
|
8,212,212
|
|
|
|
3,389,205
|
|
Basic
and diluted net loss per ordinary share
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
0.04
|
|
|
$
|
0.04
|
|
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
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 Depository Insurance Corporation coverage of $250,000. The Company has not experienced losses
on these accounts and management believes the Company is not exposed to significant risks on such account.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value
Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheet, primarily due to their
short-term nature, except for the Private Placement Warrants (see Note 10).
Recently
Issued Accounting Standards
In
August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06,
Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s
Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies
the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard
also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for
all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis,
with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact of the adoption of ASU 2020-06,
but does not believe it will have a material impact on the Company’s financial statements.
Management
does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on the Company’s condensed financial statements.
NOTE
4. INITIAL PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company sold 14,375,000 Units, inclusive of 1,875,000 Units sold to the underwriters on January 27,
2021 upon the underwriters’ election to fully exercise their over-allotment option, at a purchase price of $10.00 per Unit. Each
Unit consists of one Class A ordinary share and one-half of one redeemable warrant (“Public Warrant”). Each whole Public
Warrant entitles the holder to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment
(see Note 9).
NOTE
5. PRIVATE PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, the Sponsor and the underwriters of the Initial Public Offering purchased an aggregate
of 4,000,000 Private Placement Warrants, of which 3,800,000 Private Placement Warrants purchased by the Sponsor and 200,000 Private Placement
Warrants purchased by the underwriters at a price of $1.00 per Private Placement Warrant (for an aggregate purchase price of $4,000,000,)
from the Company in a private placement. On January 27, 2021, in connection with the underwriters’ election to fully exercise their
over-allotment option, the Company sold an additional 375,000 Private Placement Warrants to the Sponsor and the underwriters, of which
the Sponsor purchased 356,250 Private Placement Warrants and the underwriters purchased 18,750 Private Placement Warrants, at a price
of $1.00 per Private Placement Warrant, generating gross proceeds of $375,000. Each Private Placement Warrant is exercisable for one
Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 9). The proceeds from the sale of the Private
Placement Warrants were added to the net 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 proceeds from the sale of the Private Placement Warrants held in the
Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private
Placement Warrants will expire worthless.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
NOTE
6. RELATED PARTY TRANSACTIONS
Founder
Shares
On
November 16, 2020, the Sponsor paid $25,000 to cover certain offering and formation costs of the Company in consideration for 3,593,750
Class B ordinary shares (the “Founder Shares”). The Founder Shares include an aggregate of up to 468,750 shares subject
to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the
number of Founder Shares will collectively represent 20% of the Company’s issued and outstanding shares upon the completion of
the Initial Public Offering (assuming the Sponsor does not purchase any Public Shares in the Initial Public Offering and excluding the
Representative Shares). As a result of the underwriters’ election to fully exercise their over-allotment option on January 27,
2021, no Founder Shares are currently subject to forfeiture.
The
Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until 180 days after
the completion of a Business Combination.
Administrative
Support Agreement
The
Company entered into an agreement commencing on January 26, 2021 through the earlier of the Company’s consummation of a Business
Combination and its liquidation, to pay the Sponsor a total of up to $10,000 per month for office space, administrative and support services.
For the three months ended April 30, 2021 and for the period from November 11, 2020 (inception) through April 30, 2021, the Company incurred
$30,000, of which such amount is included in accrued expenses in the accompanying condensed balance sheet.
Promissory
Note — Related Party
On
November 16, 2020, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which
the Company may borrow up to an aggregate principal amount of $300,000. The Promissory Note is non-interest bearing and was payable on
the earlier of (i) December 31, 2021 or (i) the consummation of the Initial Public Offering. The outstanding balance under
the Promissory Note of $159,914 was repaid at the closing of the Initial Public Offering on January 26, 2021.
Related
Party Loans
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 directors and officers may, but are not obligated to, loan the Company funds as may be required (“Working Capital
Loans”). If the Company completes a Business Combination, the Company would 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 proceeds held outside the Trust
Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with
respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest,
or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post-Business
Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
NOTE
7. COMMITMENTS AND CONTINGENCIES
Registration
Rights
Pursuant
to a registration rights agreement entered into on January 21, 2021, the holders of the Founder Shares, Representative Shares, Private
Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans (and all underlying securities) will
be entitled to registration rights. The holders of a majority of these securities are entitled to make up to three demands that the Company
register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time
commencing three months prior to the date on which these Class B ordinary shares are to be released from their transfer restrictions.
The holders of a majority of the Representative Shares, Private Warrants and warrants issued to the Sponsor, officers, directors or their
affiliates in payment of Working Capital Loans made to the Company (or underlying securities) can elect to exercise these registration
rights at any time after the Company consummates a Business Combination. Notwithstanding anything to the contrary, EarlyBirdCapital may
only make a demand on one occasion and only during the five-year period beginning on the effective date of the Propose Public Offering.
In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent
to the consummation of a Business Combination; provided, however, that EarlyBirdCapital may participate in a “piggy-back”
registration only during the seven-year period beginning on the effective date of the Propose Public Offering. The registration rights
agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering the Company’s
securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
The
underwriters were paid a cash underwriting discount of $0.20 per Unit, or $2,875,000 in the aggregate payable upon the closing of the
Initial Public Offering.
Business
Combination Marketing Agreement
The
Company engaged the underwriters in the Initial Public Offering as advisors in connection with its Business Combination to assist in
holding meetings with the Company’s shareholders to discuss the potential Business Combination and the target business’ attributes,
introduce the Company to potential investors that are interested in purchasing its securities in connection with its initial Business
Combination, assist in obtaining shareholder approval for the Business Combination and assist with press releases and public filings
in connection with the Business Combination. The Company will pay the underwriters a cash fee for such services upon the consummation
of its initial Business Combination in an amount equal to 3.5% of the gross proceeds of the Initial Public Offering (exclusive of any
applicable finders’ fees which might become payable). In addition, the Company will pay the underwriters a cash fee in an amount
equal to 1.0% of the total consideration payable in the initial business combination if either introduces us to the target business with
whom we complete our initial business combination; provided that the foregoing fee will not be paid prior to the date that is 60 days
from the effective date of the registration statement of which this prospectus forms a part, unless the Financial Industry Regulatory
Authority (“FINRA”) determines that such payment would not be deemed underwriters’ compensation in connection with
this offering pursuant to FINRA Rule 5110.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
NOTE
8. SHAREHOLDERS’ EQUITY
Preference
Shares — The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share, with such
designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.
As of April 30, 2021, there were no preference shares issued or outstanding.
Class A Ordinary
Shares — The Company is authorized to issue 100,000,000 Class A ordinary shares, with a par value of $0.0001 per share.
Holders of Class A ordinary shares are entitled to one vote for each share. At April 30, 2021, there were 60,000 Class A ordinary
shares issued and outstanding, excluding 14,375,000 Class A ordinary shares subject to possible redemption.
Class B
Ordinary Shares — The Company is authorized to issue 10,000,000 Class B ordinary shares, with a par value of $0.0001
per share. Holders of the Class B ordinary shares are entitled to one vote for each share. At April 30, 2021, there were 3,593,750
Class B ordinary shares issued and outstanding.
Only
holders of the Class B ordinary shares will have the right to vote on the election of directors prior to the Business Combination.
Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all other
matters submitted to a vote of the Company’s shareholders except as otherwise required by law.
The
Class B ordinary shares will automatically convert into Class A ordinary shares on the first business day following the completion
of a Business Combination on a one-for-one basis, subject to adjustment. In the case that additional Class A ordinary shares, or
equity-linked securities convertible or exercisable for Class A ordinary shares, are issued or deemed issued in excess of the amounts
issued in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which Founder Shares will convert
into Class A ordinary shares will be adjusted (subject to waiver by holders of a majority of the Class B ordinary shares then
in issue) so that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal,
in the aggregate, on an as-converted basis, 20% of the sum of the ordinary shares issued and outstanding upon the completion of the Initial
Public Offering plus the number of Class A ordinary shares and equity-linked securities issued or deemed issued in connection with
a Business Combination (net of redemptions), excluding the Representative Shares and any Class A ordinary shares or equity-linked
securities issued, or to be issued, to any seller in a Business Combination and any Private Placement Warrants issued to the Sponsor,
the underwriters, or any of their respective officers, directors, or other affiliates.
Representative
Shares
In
January 2021, the Company issued to the designees of EarlyBirdCapital 60,000 Class A ordinary shares (the “Representative Shares”).
The Company accounted for the Representative Shares as an offering cost of the Initial Public Offering, with a corresponding credit to
shareholders’ equity. The Company estimated the fair value of Representative Shares to be $600,000 based upon offering price of
the Units of $10.00 per Unit. The holders of the Representative Shares have agreed not to transfer, assign or sell any such shares until
the completion of a Business Combination. In addition, the holders have agreed (i) to waive their conversion rights (or right to
participate in any tender offer) with respect to such shares in connection with the completion of a Business Combination and (ii) to
waive their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete a
Business Combination within the Combination Period.
The
Representative Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately
following the effective date of the registration statement related to the Initial Public Offering pursuant to Rule 5110(g)(1) of
FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short
sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period
of 180 days immediately following the effective date of the registration statements related to the Initial Public Offering, nor
may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the effective date
of the registration statements related to the Initial Public Offering except to any underwriter and selected dealer participating in
the Initial Public Offering and their bona fide officers or partners.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
NOTE
9. WARRANTS
Public
Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants.
The Public Warrants will become exercisable 30 days after the completion of a Business Combination. The Public Warrants will expire
five years from the completion of a Business Combination or earlier upon redemption or liquidation.
No
warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the offer and sale
of Class A ordinary shares issuable upon exercise of the warrants and a current prospectus relating to such Class A ordinary
shares. Notwithstanding the foregoing, if a registration statement covering the offer and sale of Class A ordinary shares issuable
upon exercise of the Public Warrants is not effective within 60 business days following the consummation of a Business Combination, warrant
holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed
to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9)
of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders
will not be able to exercise their warrants on a cashless basis.
Once
the warrants become exercisable, the Company may redeem the outstanding Public Warrants:
|
●
|
in whole and
not in part;
|
|
●
|
at a price
of $0.01 per Public Warrant;
|
|
●
|
at any time
after the warrants become exercisable;
|
|
●
|
upon not less
than 30 days’ prior written notice of redemption to each warrant holder;
|
|
●
|
if, and only
if, the reported last sale price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for share sub-divisions,
share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on
the third business day prior to the notice of redemption to the warrant holders; and
|
|
●
|
if, and only if, there is a current registration statement in effect with respect to the offer and sale of the Class A ordinary shares underlying such warrants.
|
The
exercise price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including
in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except
as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally,
in no event will the Company be required to net cash settle the Public Warrants. 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 Public Warrants will not receive
any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held
outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
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 a 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 Company’s board of directors
and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor
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 a Business
Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average
trading price of its Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which
the Company consummates its Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise
price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of the Market Value and the Newly Issued
Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the greater of
the Market Value and the Newly Issued Price.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
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 the 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, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described
above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held
by someone other than the initial purchasers 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.
NOTE
10. FAIR VALUE MEASUREMENTS
The
Company follows the guidance in ASC Topic 820 for its financial assets and liabilities that are re-measured and reported at fair value
at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company
seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is
used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and
liabilities:
|
Level 1:
|
Quoted
prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions
for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
|
|
Level 2:
|
Observable
inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets
or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
|
|
Level 3:
|
Unobservable
inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The
following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring
basis at April 30, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
|
April 30,
2021
|
|
Assets:
|
|
|
|
|
|
|
|
Cash and marketable securities held in Trust Account
|
|
1
|
|
|
$
|
143,763,697
|
|
Liabilities:
|
|
|
|
|
|
|
|
Warrant Liability – Private Placement Warrants
|
|
3
|
|
|
|
2,668,750
|
|
The
Private Placement Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities
in the accompanying condensed balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis,
with changes in fair value presented in the condensed statement of operations.
The
Private Placement Warrants were valued using a binomial lattice model, which is considered to be a Level 3 fair value measurement. The
binomial lattice model’s primary unobservable input utilized in determining the fair value of the Private Warrants is the expected
volatility of the ordinary shares. The expected volatility as of the Initial Public Offering date was derived from observable public
warrant pricing on comparable ‘blank-check’ companies without an identified target. The expected volatility as of subsequent
valuation dates was implied from the Company’s own Public Warrant pricing.
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
APRIL 30, 2021
(Unaudited)
The
following table presents the quantitative information regarding Level 3 fair value measurements:
|
|
January 26,
2021
(Initial Measurement)
|
|
|
April 30,
2021
|
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Stock price
|
|
$
|
9.62
|
|
|
$
|
9.74
|
|
Volatility
|
|
|
15.0
|
%
|
|
|
12.1
|
%
|
Term
|
|
|
5.00
|
|
|
|
5.00
|
|
Risk-free rate
|
|
|
0.48
|
%
|
|
|
0.88
|
%
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.00
|
%
|
The
following table presents the changes in the fair value of Level 3 warrant liabilities:
Fair value as of November 10, 2020 (inception)
|
|
$
|
—
|
|
Initial measurement on January 26, 2021 (inclusive of the over-allotment))
|
|
|
3,412,500
|
|
Change in fair value
|
|
|
(743,750
|
)
|
Fair value as of April 30, 2021
|
|
$
|
2,668,750
|
|
Transfers
to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs.
There were no transfers in or out of Level 3 from other levels in the fair value hierarchy during the period from November 10, 2020 (inception)
through April 30, 2021.
NOTE
11. SUBSEQUENT EVENTS
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the 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 condensed financial statements.
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References
in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to European
Sustainable Growth Acquisition Corp. References to our “management” or our “management team” refer to our officers
and directors, and references to the “Sponsor” refer to LRT Capital1 LLC. The following discussion and analysis of the Company’s
financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained
elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Special
Note Regarding Forward-Looking Statements
This
Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E
of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially
from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including,
without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations,
are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,”
“estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs,
based on information currently available. A number of factors could cause actual events, performance or results to differ materially
from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors
section of this Quarterly Report and the Risk Factors section of the Registration Statements on Form S-1 (Registration No. 333-251888)
filed with the SEC. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov.
Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events or otherwise.
This
Management’s Discussion and Analysis of Financial Condition and Results of Operations has been amended and restated to give effect
to the restatement of our financial statements as of January 31, 2021. Management identified errors made in its historical financial
statements where, at the closing of our Initial Public Offering, we improperly valued our Class A ordinary shares subject to possible
redemption. We previously determined the Class A ordinary shares subject to possible redemption to be equal to the redemption value of
$10.00 per Class A ordinary share while also taking into consideration a redemption cannot result in net tangible assets being less than
$5,000,001. Management determined that the Class A ordinary shares issued during the Initial Public Offering can be redeemed or become
redeemable subject to the occurrence of future events considered outside of the Company’s control. Therefore, management concluded
that the redemption value should include all Class A ordinary shares subject to possible redemption, resulting in the Class A ordinary
shares subject to possible redemption being equal to their redemption value. As a result, management has noted a reclassification error
related to temporary equity and permanent equity. This resulted in a restatement to the initial carrying value of the Class A ordinary
shares subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit
and Class A ordinary shares.
Overview
We
are a blank check company incorporated in the Cayman Islands on November 10, 2020 formed for the purpose of effecting a merger, amalgamation,
share exchange, asset acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses.
We intend to effectuate our Business Combination using cash derived from the proceeds of the Initial Public Offering and the sale of
the Private Placement Warrants, our shares, debt or a combination of cash, shares and debt.
We
expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete
a Business Combination will be successful.
Results
of Operations
We
have neither engaged in any operations nor generated any operating revenues to date. Our only activities from inception through April
30, 2021 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, subsequent
to the Initial Public Offering, identifying a target company for a Business Combination. We do not expect to generate any operating revenues
until after the completion of our initial Business Combination. We generate non-operating income in the form of interest income on marketable
securities held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting
and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a Business Combination.
For
the three months ended April 30, 2021, we had net income of $556,906, which consisted of a change in fair value of warrant liability
of $743,750 and interest earned on marketable securities held in Trust Account of $13,496, offset by formation and operational costs
of $199,420 and an unrealized loss on marketable securities held in Trust Account of $920.
For
the period from November 10, 2020 (inception) through April 30, 2021, we had net income of $520,729, which consisted of a change in fair
value of warrant liability of $743,750 and interest earned on marketable securities held in Trust Account of $13,697, offset by formation
and operational costs of $213,499 and transaction costs allocable to warrant liability of $23,219.
Liquidity
and Capital Resources
On
January 26, 2021, we consummated the Initial Public Offering of 12,500,000 Units, at a price of $10.00 per Unit, generating gross proceeds
of $125,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 4,000,000 Private Placement
Warrants to the Sponsor at a price of $1.00 per Private Placement Warrant generating gross proceeds of $4,000,000.
On
January 27, 2021, the Company sold an additional 1,875,000 Units for total gross proceeds of $18,750,000 in connection with the underwriters’
full exercise of their over-allotment option. Simultaneously with the closing of the over-allotment option, we also consummated the sale
of an additional 375,000 Private Placement Warrants at $1.00 per Private Placement Warrant, generating total proceeds of $375,000.
Following
the Initial Public Offering, the full exercise of the over-allotment option, and the sale of the Private Placement Warrants, a total
of $143,750,000 was placed in the Trust Account. We incurred $3,835,009 in transaction costs, including $2,875,000 of underwriting fees
and $960,009 of other offering costs.
For
the period from November 10, 2020 (inception) through April 30, 2021, net cash used in operating activities was $408,066. Net income
of $520,729 was impacted by formation costs paid by Sponsor in exchange for issuance of Founder Shares of $5,000, interest earned on
marketable securities held in Trust Account of $13,697, a change in fair value of warrant liability of $743,750, transaction costs associated
with the warrant liability of $23,219, and changes in operating assets and liabilities, which used $199,567 of cash from operating activities.
As
of April 30, 2021, we had cash and marketable securities held in the Trust Account of $143,763,697. We intend to use substantially all
of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, which interest shall
be net of taxes payable, to complete our Business Combination. We may withdraw interest from the Trust Account to pay taxes, if any.
To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a Business Combination, the remaining
proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make
other acquisitions and pursue our growth strategies.
As
of April 30, 2021, we had cash of $751,925. We intend to use the funds held outside the Trust Account primarily to identify and evaluate
target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar
locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of
prospective target businesses, structure, negotiate and complete a Business Combination.
In
order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor or an
affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If
we complete a Business Combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the
event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay
such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible
into warrants, at a price of $1.00 per warrant, at the option of the lender. The warrants would be identical to the Private Placement
Warrants.
The Company will need
to raise additional capital through loans or additional investments from our initial stockholders, officers or directors. If the Company
is unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but
not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses.
The Company cannot provide any assurance that new financing will be available to the company on commercially acceptable terms, if at
all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through one year and one
day from the issuance of this report.
Off-Balance
Sheet Financing Arrangements
We
have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of April 30, 2021. We do not
participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable
interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered
into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other
entities, or purchased any non-financial assets.
Contractual
Obligations
We
do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement
to pay the Sponsor a monthly fee of $10,000 for office space, administrative and support services. We began incurring these fees on January
26, 2021 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.
We
engaged the underwriters in the Initial Public Offering as advisors in connection with its Business Combination to assist in holding
meetings with our shareholders to discuss the potential Business Combination and the target business’ attributes, introduce us
to potential investors that are interested in purchasing its securities in connection with its initial Business Combination, assist in
obtaining shareholder approval for the Business Combination and assist with press releases and public filings in connection with the
Business Combination. We will pay the underwriters a cash fee for such services upon the consummation of its initial Business Combination
in an amount equal to 3.5% of the gross proceeds of the Initial Public Offering (exclusive of any applicable finders’ fees which
might become payable). In addition, we will pay the underwriters a cash fee in an amount equal to 1.0% of the total consideration payable
in the initial business combination if either introduces us to the target business with whom we complete our initial business combination;
provided that the foregoing fee will not be paid prior to the date that is 60 days from the effective date of the registration statement
of which this prospectus forms a part, unless FINRA determines that such payment would not be deemed underwriters’ compensation
in connection with this offering pursuant to FINRA Rule 5110.
Critical
Accounting Policies
The
preparation of 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 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:
Warrant
Liability
We
account for the Private Placement Warrants in accordance with the guidance contained in ASC 815-40, under which the Private Placement
Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the Private Placement
Warrants as liabilities at their fair value and adjust the Private Placement Warrants to fair value at each reporting period. These liabilities
are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the statement
of operations.
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 Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject
to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares
(including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon
the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times,
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 occurrence of uncertain future events. Accordingly,
Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’
equity section of the Company’s condensed balance sheet.
Net
Income (Loss) per Ordinary Share
The
Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss)
per ordinary share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding for the period.
Accretion associated with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates
fair value.
The
calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection with the Initial Public
Offering, and the private placement since the exercise of the warrants is contingent upon the occurrence of future events. As of April
31, 2021, the Company did not have any other dilutive securities or other contracts that could, potentially, be exercised or converted
into ordinary shares and then share in the earnings of the Company. As a result, diluted net loss per ordinary share is the same as basic
net loss per ordinary share for the periods presented.
Recent
Accounting Standards
In
August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06,
Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s
Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies
the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard
also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for
all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis,
with early adoption permitted beginning on January 1, 2021. We are currently assessing the impact of the adoption of ASU 2020-06, but
do not believe it will have a material impact on our financial statements.
Management
does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on our condensed financial statements.