NOTES TO CONDENSED FINANCIAL STATEMENTS
JULY 31, 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 July 31, 2021, the
Company had not commenced any operations. All activity for the period from November 10, 2020 (inception) through July 31, 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 5.
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 6.
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
JULY 31, 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
JULY 31, 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.
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.
Going Concern Consideration
As of July 31, 2021, the
Company had $553,931 in its operating bank accounts and working capital deficit of $489,995.
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). As of July 31, 2021, there were no amounts
outstanding under any Working Capital Loan.
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.
NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In connection with the preparation
of the Company’s financial statements as of July 31, 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
JULY 31, 2021
(Unaudited)
The impact of the restatement
on the Company’s financial statements is reflected in the following table:
Balance Sheet as of July 31, 2021 (unaudited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Class A ordinary shares subject to possible redemption
|
|
$
|
132,446,190
|
|
|
$
|
11,321,131
|
|
|
$
|
143,767,321
|
|
Class A ordinary shares
|
|
$
|
119
|
|
|
$
|
(113
|
)
|
|
$
|
6
|
|
Additional paid-in capital
|
|
$
|
9,079,042
|
|
|
$
|
(9,079,042
|
)
|
|
$
|
—
|
|
Accumulated deficit
|
|
$
|
(4,079,519
|
)
|
|
$
|
(2,241,976
|
)
|
|
$
|
(6,321,495
|
)
|
Total shareholders’ equity (deficit)
|
|
$
|
5,000,001
|
|
|
$
|
(11,321,131
|
)
|
|
$
|
(6,321,130
|
)
|
Number of shares subject to redemption
|
|
|
13,243,023
|
|
|
|
1,131,977
|
|
|
|
14,375,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of Changes in Shareholders’ Equity (Deficit) as of July 31, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of Class A ordinary shares subject to redemption
|
|
$
|
(4,600,247
|
)
|
|
$
|
4,600,247
|
|
|
$
|
—
|
|
Change in Remeasurement adjustment for Class A ordinary shares to redemption amount
|
|
$
|
—
|
|
|
$
|
(3,624
|
)
|
|
$
|
(3,624
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Cash Flows for The Period from November 10, 2020 (Inception) Through July 31, 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
|
|
$
|
(4,051,300
|
)
|
|
$
|
4,068,621
|
|
|
$
|
17,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations for the three months ended July 31, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, Class A ordinary shares
|
|
|
13,703,338
|
|
|
|
731,662
|
|
|
|
14,435,000
|
|
Basic and diluted net income per share, Class A ordinary shares
|
|
$
|
—
|
|
|
$
|
(0.26
|
)
|
|
$
|
(0.26
|
)
|
Weighted average shares outstanding, Class B ordinary shares
|
|
|
4,325,412
|
|
|
|
(731,662
|
)
|
|
|
3,593,750
|
|
Basic and diluted net loss per share, Class B ordinary shares
|
|
$
|
(1.06
|
)
|
|
$
|
0.80
|
|
|
$
|
(0.26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operation for The Period from November 10, 2020 (Inception) Through July 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, Class A ordinary shares
|
|
|
13,665,900
|
|
|
|
(3,226,075
|
)
|
|
|
10,439,825
|
|
Basic and diluted net income per share, Class A ordinary shares
|
|
$
|
—
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.29
|
)
|
Weighted average shares outstanding, Class B ordinary shares
|
|
|
4,026,464
|
|
|
|
(564,037
|
)
|
|
|
3,462,427
|
|
Basic and diluted net loss per share, Class B ordinary shares
|
|
$
|
(1.02
|
)
|
|
$
|
0.73
|
|
|
$
|
(0.29
|
)
|
EUROPEAN
SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JULY 31, 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 three months ended July 31, 2021 and for the period from November 10, 2020
(inception) through July 31, 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. One of the more significant accounting estimates included in these financial statements is the determination of
the fair value of the warrant liability. Such estimates may be subject to change as more current information becomes available and, accordingly,
the actual results could differ significantly from those estimates.
EUROPEAN SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JULY 31, 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 July 31, 2021.
Marketable Securities Held in Trust Account
At July 31, 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 July 31, 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 July 31, 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
|
|
|
17,321
|
|
Class A ordinary shares subject to possible redemption
|
|
$
|
143,767,321
|
|
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.
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.
EUROPEAN SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JULY 31, 2021
(Unaudited)
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 July 31, 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 Income (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 July 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.
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
July 31, 2021
|
|
|
Nine Months Ended
July 31, 2021
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
Basic and diluted net loss per ordinary share
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net loss
|
|
$
|
(3,683,260
|
)
|
|
$
|
(916,988
|
)
|
|
$
|
(3,063,494
|
)
|
|
$
|
(1,016,025
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
|
14,435,000
|
|
|
|
3,593,750
|
|
|
|
10,439,825
|
|
|
|
3,462,427
|
|
Basic and diluted net loss per ordinary share
|
|
$
|
(0.26
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.29
|
)
|
EUROPEAN SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JULY 31, 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 10). 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
JULY 31, 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”). In December 2020, the Sponsor directly transferred 70,000 founder shares to an entity controlled
by a Company’s director nominee, up to 35,000 of which are subject to repurchase by our sponsor based on the achievement of certain
milestones. In December 2020, the Sponsor allocated 100,000 Founder Shares to seven of the Company’s director nominees. The total
consideration paid for these shares was $695.67. 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.
In July 2021, the Company
added a new member to the sponsorship and the Sponsor allocated 45,000 Founder Shares, The total consideration paid for these shares was
$313.05.
The sale or allocation of
the Founders Shares to the Company’s director nominees and affiliates of its sponsor group, as described above, is within the scope
of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation
associated with equity-classified awards is measured at fair value upon the grant date. The fair value of the 170,000 shares
transferred or allocated to the Company’s director nominees and affiliates of its sponsor group in December 2020 was $1,048,900 or
$6.17 per share. The fair value of the 45,000 shares allocated to the Company’s director nominee in July 2021 was $323,550
or $7.19 per share. The Founders Shares were effectively sold subject to a performance condition (i.e., the occurrence of a Business Combination).
Compensation expense related to the Founders Shares is recognized only when the performance condition is probable of occurrence under
the applicable accounting literature in this circumstance. Stock-based compensation would be recognized at the date a Business Combination
is considered probable in an amount equal to the number of Founders Shares times the grant date fair value per share (unless subsequently
modified) less the amount initially received for the purchase of the Founders Shares. As of July 31, 2021, the Company determined
that a Business Combination is not considered probable, and, therefore, no stock-based compensation expense has been recognized.
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 July 31, 2021 and for the period from November 11, 2020 (inception) through July 31, 2021, the Company incurred $60,000,
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
JULY 31, 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
JULY 31, 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 July 31,
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 July 31, 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 July 31, 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
JULY 31, 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.
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.
EUROPEAN SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JULY 31, 2021
(Unaudited)
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 July 31, 2021, and
indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
|
July 31,
2021
|
|
Assets:
|
|
|
|
|
|
|
Cash and marketable securities held in Trust Account
|
|
|
1
|
|
|
$
|
143,767,321
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Warrant Liability – Private Placement Warrants
|
|
|
3
|
|
|
|
5,906,250
|
|
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
JULY 31, 2021
(Unaudited)
The following table presents
the quantitative information regarding Level 3 fair value measurements:
|
|
January 26,
2021
(Initial
Measurement)
|
|
|
April
30,
2021
|
|
|
July
31,
2021
|
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Stock price
|
|
$
|
9.62
|
|
|
$
|
9.74
|
|
|
$
|
9.75
|
|
Volatility
|
|
|
15.0
|
%
|
|
|
12.1
|
%
|
|
|
21.6
|
%
|
Term
|
|
|
5.00
|
|
|
|
5.00
|
|
|
|
5.00
|
|
Risk-free rate
|
|
|
0.48
|
%
|
|
|
0.88
|
%
|
|
|
0.67
|
%
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
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 at April 30, 2021
|
|
|
(743,750
|
)
|
Fair value as of April 30, 2021
|
|
$
|
2,668,750
|
|
Change in fair value at July 31, 2021
|
|
|
3,237,500
|
|
Fair value as of July 31, 2021
|
|
$
|
5,906,250
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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
July 31, 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 financial statements were issued. Based upon
this review and other than as described below, the Company did not identify any subsequent events that would have required adjustment
or disclosure in the financial statements.
Business Combination Agreement
On August 10, 2021, the
Company, ads-tec Energy plc, an Irish public limited company duly incorporated under the laws of Ireland and a wholly owned subsidiary
of the Company (“Irish Holdco”), EUSG II Corporation, an exempted company incorporated in the Cayman Islands with limited
liability under company number 379118 and a wholly subsidiary of Irish Holdco (“New SPAC”), Bosch Thermotechnik GmbH, based
in Wetzlar and entered in the commercial register of the Wetzlar Local Court under HRB 13 (“Bosch”), ads-tec Holding GmbH,
based in Nürtingen and entered in the commercial register of the Stuttgart Local Court under HRB 224527 (“ADSH”, together
with Bosch, the “Sellers” and each individually, a “Seller”), and ads-tec Energy GmbH, based in Nürtingen
and entered in the commercial register of the Stuttgart Local Court under HRB 762810 (“ADSE”), entered into a Business Combination
Agreement (the “Business Combination Agreement,” and the transactions contemplated thereby, the “Business Combination”),
pursuant to which, among other things and subject to the terms and conditions contained therein, (i) the Company will merge with and
into New SPAC, with New SPAC being the surviving company in such merger (the “SPAC Merger”), (ii) following the SPAC Merger,
Bosch will transfer to Irish Holdco, and Irish Holdco will acquire from Bosch certain Company Shares in exchange for the Cash Consideration
(the “Bosch Acquisition”), and (iii) concurrently with the Bosch Acquisition, the Sellers will transfer as contribution to
Irish Holdco, and Irish Holdco shall assume from the Sellers, certain Company Shares in exchange for the Share Consideration (the “Share-for-Share
Exchange” and, together with the SPAC Merger, the Bosch Acquisition and the other transactions contemplated by the Business Combination
Agreement and the Transaction Documents, the “Transactions”).
To effectuate the Bosch
Acquisition, Irish Holdco and Bosch will enter into the Cash Consideration Transfer Agreement (the “Cash Consideration Transfer
Agreement”), pursuant to which, and subject to the condition precedent within the meaning of §158 para. 1 of the German Civil
Code, the Cash Consideration will be credited to an account or accounts designated by Bosch in accordance with the Business Combination
Agreement (such payment the “Cash Consideration Closing”), Bosch will transfer and assign to Irish Holdco, and Irish Holdco
will accept such transfer and assignment from Bosch the Acquired Shares and all rights attaching to them at the Cash Consideration Closing.
To effectuate the Share-for-Share Exchange, Irish Holdco and the Sellers will enter into the Share Consideration and Loan Transfer Agreement
(the “Share and Loan Consideration Transfer Agreement”), pursuant to which, and subject to the condition precedent within
the meaning of Section 158 para. 1 of the German Civil Code, the Bosch Share Consideration has been delivered to Bosch and the ADSH Share
Consideration has been delivered to ADSH, respectively in accordance with the Business Combination (such delivery of the Share Consideration
the “Share Consideration Closing”), and in accordance with the Business Combination Agreement, (a) Bosch shall transfer to
Irish Holdco, and Irish Holdco shall accept from Bosch the Bosch Contributed Shares (as defined in the Share and Loan Consideration Transfer
Agreement) and all rights attaching to them at the Share Consideration Closing and (b) ADSH shall transfer to Irish Holdco, and Irish
Holdco shall accept from ADSH the ADSH Contributed Shares (as defined in the Share and Loan Consideration Transfer Agreement) and all
rights attaching to them at the Share Consideration Closing.
EUROPEAN SUSTAINABLE GROWTH ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JULY 31, 2021
(Unaudited)
The Business Combination
Agreement may be terminated at any time prior to the Closing (i) by mutual written consent of the Company and the Sellers; (ii) by the
Company or the Sellers upon the occurrence of any of the following: (a) if the Closing of the Business Combination Agreement has not occurred
prior to February 11, 2022, the date that is six (6) months days after the date of the Business Combination Agreement (the “Outside
Date”) unless extended pursuant to the Business Combination Agreement, provided however, that the Business Combination Agreement
may not be terminated by or on behalf of any party that is either directly or indirectly through its affiliates in breach or violation
of any representation, warranty, covenant, agreement or obligation contained in the Business Combination Agreement and such breach is
the cause of the failure of a condition to the parties’ obligation to close; (b) if any Governmental Authority has enacted, issued,
promulgated, enforced or entered any injunction, order decree ruling which has become final and non appealable and has the effect of making
consummation of the Transactions illegal or otherwise preventing or prohibiting the consummation of the Transactions; and (c) if at the
final adjournment of the extraordinary general meeting of the stockholders, any of the Transaction Proposals fails to receive the requisite
vote for approval; (iii) by the Company in the event any representation, warranty, covenant or agreement by the Sellers or ADSE has been
breached or has become untrue such that the conditions to Closing would not be satisfied, provided however, that the Company has not waived
such breach and that the Company, Irish Holdco and New SPAC are not then in material breach of their representations, warranties, covenants
or agreements under the Business Combination Agreement; provided, further, that if such breach is curable by the Sellers or ADSE, the
Company may not terminate for so long as the Sellers and ADSE continue to exercise their reasonable efforts to cure such breach, unless
such breach is not cured by the earlier of 30 days after notice of such breach and the Outside Date or (iv) by either Seller in the event
any representation, warrant, covenant or agreement by the Company, Irish Holdco or New SPAC has been breached or has become untrue such
that the conditions to Closing would not be satisfied, provided however, that such Seller has not waived such breach and that the Sellers
and ADSE are not then in material breach of their representations, warranties, covenants or agreements under the Business Combination
Agreement; provided, further, that if such breach is curable by the Company, Irish Holdco or New SPAC, the Sellers may not terminate for
so long as the Company, Irish Holdco and New SPAC continue to exercise their reasonable efforts to cure such breach, unless such breach
is not cured by the earlier of 30 days after notice of such breach and the Outside Date.
The Transactions will be
consummated subject to the deliverables and provision as further described in the Business Combination Agreement. The Transactions were
approved by the boards of directors of each of the Company and ADSE.
In advance of the entry
into the Business Combination Agreement, the Company and Irish Holdco entered into the Subscription Agreements (the “Subscription
Agreements”) dated August 10, 2021, with certain qualified institutional buyers and accredited investors (collectively, the “Investors”),
pursuant to which, among other things, the Investors agreed to subscribe for and purchase, and the Company agreed to issue and sell to
the Investors, 15.6 million newly issued ordinary shares of the Company (the “Private Placement”) for gross proceeds of approximately
$156 million. The proceeds from the Private Placement will be used to fund a portion of the cash consideration required to effect the
Business Combination. The Private Placement is expected to be consummated at least one (1) Business Day prior to the SPAC Merger Effective
Time (as defined in the Business Combination Agreement), and the Business Combination is contingent upon, among other things, the closing
of the Private Placement.
The Subscription Agreements
for the PIPE Investors provide for certain registration rights. In particular, Irish Holdco within 30 calendar days following the closing
of the Transaction, submit to or file with the Commission a registration statement registering the resale of such shares. Additionally,
Irish Holdco will be required to use its commercially reasonable efforts to have the registration statement declared effective as soon
as practicable after the filing thereof, but no later than the earlier of (i) the 60th calendar day following the filing date thereof,
(ii) the 90th calendar day following the filing date thereof if the Commission notifies Irish Holdco that it will “review”
the registration statement and (iii) the 10th business day after the date Irish Holdco is notified in writing by the Commission that the
registration statement will not be “reviewed” or will not be subject to further review.
On August 9, 2021 a Sponsor
Support Agreement was entered into. Under this agreement each Sponsor Party agrees to vote in favor of the approval and adoption of the
Business Combination Agreement. Each Sponsor agrees to waive all rights to redemption, to note sell, assign or transfer any of their Sponsor
shares and to execute the Business Combination agreement with no conflict or violation of any laws, ethics, or regulations.