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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
 
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
 
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
                    
 to 
                    
Commission File No. 001-40184
 
 
COLONNADE ACQUISITION CORP. II
(Exact name of registrant as specified in its charter)
 
 
 
Cayman Islands
 
N/A
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
1400 Centrepark Blvd, Ste 810
West Palm Beach, FL 33401
(Address of Principal Executive Offices, including zip code)
(561) 712-7860
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Units, each consisting of one Class A ordinary share, $0.0001 par value, and
one-fifth
of one redeemable warrant
 
CLAA.U
 
The New York Stock Exchange
Class A ordinary shares, par value $0.0001 par value
 
CLAA
 
The New York Stock Exchange
Redeemable warrants, each warrant exercisable for one Class A ordinary share, each at an exercise price of $11.50 per share
 
CLAA WS
 
The New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”
in Rule 12b-2 of the
Exchange Act.
 
Large accelerated filer   ☐    Accelerated filer   ☐
       
Non-accelerated
filer 		  ☒    Smaller reporting company   ☒
       
         Emerging growth company   ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the
Exchange Act):    Yes  ☒    No  ☐
As of
November 22, 2021
, 33,000,000 Class A ordinary shares, par value $0.0001 per share, and 8,250,000 Class B ordinary shares, par value $0.0001 per share, were issued and outstanding, respectively.
 
 
 
COLONNADE ACQUISITION CORP. II
FORM 10-Q FOR
THE QUARTER ENDED SEPTEMBER 30, 2021
TABLE OF CONTENTS
 
 
  
 
  
Page
 
  
Item 1.
  
  
  
  
 
3
 
  
  
 
4
 
  
  
 
5
 
  
  
 
6
 
  
  
 
7
 
Item 2.
  
  
 
23
 
Item 3.
  
  
 
26
 
Item 4.
  
  
 
26
 
  
Item 1.
  
  
 
27
 
Item 1A.
  
  
 
27
 
Item 2.
  
  
 
27
 
Item 3.
  
  
 
28
 
Item 4.
  
  
 
28
 
Item 5.
  
  
 
28
 
Item 6.
  
  
 
28
 
  
 
29
 
 
PART 1 – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COLONNADE ACQUISITION CORP. II
CONDENSED BALANCE SHEETS
 
 
  
September 30,
 
 
 
 
 
  
2021
 
 
December 31,
 
 
  
(Unaudited)
 
 
2020
 
Assets
  
     
 
     
Current assets:
  
     
 
     
Cash
   $ 415,801     $ 25,000  
Prepaid expenses
     687,018       —    
Deferred offering costs associated with IPO
     —         61,814  
    
 
 
   
 
 
 
Total current assets
     1,102,819       86,814  
    
 
 
   
 
 
 
Prepaid expenses –
non-current
portion
     295,913       —    
Cash
 and marketable securities held in trust account
     330,054,458       —    
    
 
 
   
 
 
 
Total assets
   $ 331,453,190     $ 86,814  
    
 
 
   
 
 
 
Liabilities and Shareholders’ Equity
                
Current liabilities:
                
Accounts payable and accrued expenses
   $ 73,520     $ 35,000  
Promissory Note – related party
     —         30,000  
    
 
 
   
 
 
 
Total current liabilities
     73,520       65,000  
Warrant Liabilities
     9,990,000          
Deferred underwriters’ discount
     10,657,500       —    
    
 
 
   
 
 
 
Total liabilities
     20,721,020       65,000  
    
 
 
   
 
 
 
Commitments
            
Class A ordinary shares subject to possible redemption 33,000,000 and 0 shares at redemption value at September 30, 2021 and December 31, 2020, respectively
     330,000,000       —    
Shareholders’ equity (deficit):
                
Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding
     —         —    
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; no shares (excluding 33,000,0000 and 0 shares subject to possible redemption) issued and outstanding at September 30, 2021 and December 31, 2020, respectively
     —         —    
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 8,250,000 and 8,625,000 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
     825       863  
Additional paid-in capital
     —         24,137  
Accumulated earnings (deficit)
     (19,268,655 )      (3,186 ) 
    
 
 
   
 
 
 
Total shareholders’ equity (deficit)
     (19,267,830 )      21,814  
    
 
 
   
 
 
 
Total liabilities and shareholders’ equity (deficit)
   $ 331,453,190     $ 86,814  
    
 
 
   
 
 
 
See accompanying notes to the financial statements.
 
3
COLONNADE ACQUISITION CORP. II
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
(UNAUDITED)
 
    
For the Three
Months Ended
September 30, 2021
   
For the Nine
Months Ended
September 30, 2021
 
Formation and operating costs
   $ 303,083     $ 742,033  
    
 
 
   
 
 
 
Loss from operations
     (303,083 )      (742,033 ) 
    
 
 
   
 
 
 
Other Income (Expense)
                
Interest income
     24,766       54,458  
Change in fair value of warrant liabilities
     3,378,666       7,431,333  
Offering expenses related to warrant issuance
     —         (475,053 ) 
    
 
 
   
 
 
 
Total other income
     3,403,432       7,010,738  
    
 
 
   
 
 
 
Net income
   $ 3,100,349     $ 6,268,705  
    
 
 
   
 
 
 
Weighted average shares outstanding, Class A ordinary shares subject to possible redemption
     33,000,000       33,000,000  
    
 
 
   
 
 
 
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption
   $ 0.08     $ 0.15  
    
 
 
   
 
 
 
Weighted average shares outstanding,
Non-redeemable
ordinary shares
     8,250,000       8,057,692  
    
 
 
   
 
 
 
Basic and diluted net income per share,
Non-redeemable
ordinary shares
   $ 0.08     $ 0.15  
    
 
 
   
 
 
 
See accompanying notes to the financial statements.
 
4
COLONNADE ACQUISITION CORP. II
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
(UNAUDITED)
 
 
  
Ordinary Shares
 
 
Additional
 
 
 
 
 
Total
 
 
  
Class A
 
  
Class B
 
 
Paid-In
 
 
Accumulated
 
 
Shareholders’
 
 
  
Shares
 
  
Amount
 
  
Shares
 
 
Amount
 
 
Capital
 
 
Deficit
 
 
Deficit
 
Balance as of December 31, 2020
  
 
—  
 
 
$
—  
 
 
 
8,625,000
 
 
$
863
 
 
$
24,137
 
 
$
(3,186
) 
 
$
21,814
 
Sale of private placement
     —         —         —         —         8,600,000       —         8,600,000  
Initial fair value of
 private
warrants accounted for as liabilities
     —         —         —         —         (8,313,333 )      —         (8,313,333 ) 
Sponsor forfeiture of shares
     —         —         (375,000 )      (38 )      38       —         —    
Accretion for Class A ordinary shares subject to redemption
     —       —       —         —         (310,842 )      (25,534,174 )      (25,845,016 ) 
Net income
     —         —         —         —         —         34,901       34,901  
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of March 31, 2021
 (Restated)
  
 
—  
 
 
$
—  
 
 
 
8,250,000
 
 
$
825
 
 
$
—  
 
 
$
(25,502,459
) 
 
$
(25,501,634
) 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Net income
     —         —         —         —         —       3,133,455       3,133,455  
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2021
 (Restated)
  
 
—  
 
 
$
—  
 
 
 
8,250,000
 
 
$
825
 
 
$
—  
 
 
$
(22,369,004
) 
 
$
(22,368,179
) 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Net income
     —         —         —         —         —       3,100,349       3,100,349  
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of September 30, 2021
  
 
—  
 
 
$
—  
 
 
 
8,250,000
 
 
$
825
 
 
$
—  
 
 
$
(19,268,655
) 
 
$
(19,267,830
) 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
See accompanying notes to the financial statements.
 
5
COLONNADE ACQUISITION CORP. II
CONDENSED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(UNAUDITED)
 
Cash Flows from Operating Activities:
  
     
Net income
   $ 6,268,705  
Adjustments to reconcile net income to net cash used in operating activities:
        
Interest earned on trust account
     (54,458 ) 
Change in fair value of warrant liabilities
     (7,431,333 ) 
Offering costs allocated to warrants
     475,053  
Changes in current assets and current liabilities:
        
Prepaid assets
     (982,931 ) 
Accounts payable
     73,520  
    
 
 
 
Net cash used in operating activities
     (1,651,444 ) 
    
 
 
 
Cash Flows from Investing Activities:
        
Investment of cash into trust account
     (330,000,000 ) 
    
 
 
 
Net cash used in investing activities
     (330,000,000 ) 
    
 
 
 
Cash Flows from Financing Activities:
        
Proceeds from Initial Public Offering, net of underwriters’ discount
     323,910,000  
Proceeds from issuance of Private Placement Warrants
     8,600,000  
Proceeds from issuance of promissory note to related party
     115,824  
Repayment of promissory note to related party
     (145,824 ) 
Payments of offering costs
     (437,755 ) 
    
 
 
 
Net cash provided by financing activities
     332,042,245  
    
 
 
 
Net Change in Cash
     390,801  
Cash - Beginning
     25,000  
    
 
 
 
Cash - Ending
   $ 415,801  
    
 
 
 
Supplemental Disclosure of
Non-cash
Financing Activities:
        
Accretion for Class A ordinary shares subject to redemption

 
$
25,845,016
 
 
 
 
 
 
    
 
 
 
Initial value of warrant liabilities
   $ 17,421,333  
    
 
 
 
Deferred underwriting commissions payable charged to additional paid in capital
   $ 10,657,500  
    
 
 
 
 
See accompanying notes to the financial statements.
 
6
COLONNADE ACQUISITION CORP. II
NOTES TO FINANCIAL STATEMENTS
Note 1 — Organization and Business Operations
Organization and General
Colonnade Acquisition Corp. II (the “Company”) was incorporated in Cayman Islands on November 24, 2020. The Company was formed for the purpose of entering into a merger, capital share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company is not limited to a particular industry or geographic region for purposes of consummating 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. The Company has selected December 31 as its fiscal year end.
As of September 30, 2021, the Company had not yet commenced any operations. All activity through September 30, 2021, relates to the Company’s formation and the Initial Public Offering (“IPO”) described below. The Company will not generate any operating revenues until after the completion of its initial business combination, at the earliest. The Company
will generate non-operating income in
the form of interest income on cash and cash equivalents from the proceeds derived from the IPO.
Financing
The registration statement for the Company’s IPO was declared effective on March 9, 2021 (the “Effective Date”). On March 12, 2021, the Company consummated the IPO of 33,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “public shares”), at $10.00 per Unit, generating gross proceeds of $330,000,000, which is discussed in Note 4.
Simultaneously with the closing of the IPO, the Company consummated the sale of 5,733,333 warrants (the “Private Placement Warrants”), at a price of $1.50 per Private Placement Warrant, which is discussed in Note 5.
Transaction costs amounted to $17,212,069 consisting of $6,090,000 of underwriting fee, $10,657,500 of deferred underwriting fee and $464,569 of other offering costs. Of the total transaction cost $475,053 was
expensed as non-operating expenses in
that statement of operations with the rest of the offering cost charged to shareholders’ equity. The transaction costs were allocated based on the relative fair value basis, compared to the total offering proceeds, between the fair value of the Public Warrant (as defined in Note 4) liabilities and the Class A ordinary shares.
Trust Account
Following the closing of the IPO on March 15, 2021, an amount of $330,000,000 from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) which is invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions
of Rule 2a-7 of the
Investment Company Act, as determined by the Company. Except with respect to interest earned on the funds held in the trust account that may be released to the Company to pay its tax obligations, the proceeds from the IPO and the sale of the Private Placement Warrants will not be released from the trust account until the earliest of (a) the completion of the Company’s initial business combination, (b) the redemption of any public shares properly submitted in connection with a shareholder vote to amend the Company’s amended and restated certificate of incorporation, and (c) the redemption of the Company’s public shares if the Company is unable to complete the initial business combination within 24 months from the closing of the IPO, subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public
shareholders.
7
Initial Business Combination
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO, although substantially all the net proceeds are intended to be generally applied toward consummating a business combination.
The Company’s business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (net of taxes payable) at the time of the signing an agreement to enter into a business combination. However, the Company will only complete a business combination if the post-business combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a business combination.
The Company will provide its public shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial business combination either (i) in connection with a shareholder meeting called to approve the initial business combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed initial business combination or conduct a tender offer will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust Account (initially $10.00 per share, plus 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).
The ordinary shares subject to redemption were recorded at a redemption value and classified as temporary equity upon the completion of the IPO, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a business combination if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon consummation of a business combination and, if the Company seeks shareholder approval, a majority of the issued and outstanding shares voted are voted in favor of the business combination.
The Company will have until March 12, 2023 (with the ability to extend with shareholder approval) to consummate a business combination (the “Combination Period”). However, if the Company is unable to complete a business combination within the Combination Period, the Company will redeem 100% of the outstanding public shares for a pro rata portion of the funds held in the Trust Account, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to the Company, divided by the number of then outstanding public shares, subject to applicable law and as further described in the registration statement, and then seek to dissolve and liquidate.
The Company’s sponsor, Colonnade Sponsor II LLC (the “Sponsor”), officers and directors have agreed to (i) waive their redemption rights with respect to the 7,187,500 Class B ordinary shares issued to the Sponsor for an aggregate purchase price of $25,000 on December 31, 2020 (the “Founder Shares”) and public shares in connection with the completion of the initial business combination, (ii) waive their redemption rights with respect to their Founder Shares and public shares in connection with a shareholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation, and (iii) waive their rights to liquidating distributions from the trust account with respect to their Founder Shares if the Company fails to complete the initial business combination within the Combination Period.
The Company’s 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 a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. However, the Company has not asked its Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether its Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure that its Sponsor would be able to satisfy those obligations.
 
8
Going Concern
As of September 30, 2021, the Company had cash outside the Trust Account of $415,801 and working capital of $1,029,299. All remaining cash held in the Trust Account are generally unavailable for the Company’s use, prior to an initial business combination, and is restricted for use either in a Business Combination or to redeem ordinary shares. As of September 30, 2021, none of the amount in the Trust Account was withdrawn as described above.
Through September 30, 2021, the Company’s liquidity needs were satisfied through receipt of $25,000 from the sale of the Founder Shares and the remaining net proceeds from the IPO and the sale of Private Placement Warrants.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required. If the Company completes a Business Combination, it would repay such loaned amounts. In the event that a Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from the 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 $1.50 per warrant unit at the option of the lender. The warrants would be identical to the Private Placement Warrants.
Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination. The Company may need to raise additional capital through loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties. The Company’s Sponsor, officers and directors may, but are not obligated to, loan the Company funds from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses.
The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of the Business Combination or the date the Company is required to liquidate. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Risks and Uncertainties
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of
coronavirus (the “COVID-19 outbreak”). In March
2020, the
WHO classified the COVID-19 outbreak as a
pandemic, based on the rapid increase in exposure globally. The full
impact of the COVID-19 outbreak continues to
evolve. The
impact of the COVID-19 outbreak on the
Company’s financial position will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the
impact of the COVID-19 outbreak on the
financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s financial position may be materially adversely affected. Additionally, the Company’s ability to complete an initial business combination may be materially adversely affected due to significant governmental measures being implemented
to contain the COVID-19 outbreak or treat
its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an initial business combination in a timely manner. The Company’s ability to consummate an initial business combination may also be dependent on the ability to raise additional equity and debt financing, which may be
impacted by the COVID-19 outbreak and the
resulting market downturn.
 
9
Note 2 -
Restatement
of Previously Issued Financial Statements
In the Company’s previously issued financial statements, a portion of the public shares were classified as permanent equity to maintain net tangible assets greater than $5,000,000 on the basis that the Company will consummate its initial business combination only if the Company has net tangible assets of at least $5,000,001. Thus, the Company has historically classified a portion of Class A ordinary shares in permanent equity to satisfy the $5,000,000 net tangible asset requirement.
However, in light of recent comment letters issued by the Securities & Exchange Commission (“SEC”) to several special purpose acquisition companies, management
re-evaluated
the Company’s application of ASC
480-10-S99-3A
to its accounting classification of public shares. Upon
re-evaluation,
management determined that the public shares include certain provisions that require classification of the public shares as temporary equity regardless of the minimum net tangible asset required by the Company to complete its initial business combination.
In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements;” the Company evaluated the changes and has determined that the related impacts were material to the previously presented financial statements. Therefore, the Company, in consultation with its Audit Committee, concluded that its previously issued financial statements impacted should be restated to report all public shares as temporary equity. As such the Company is restating those periods in this Quarterly Report.
Impact of the
Restatement
There has been no change in the Company’s total assets, liabilities or operating results. The impact to the balance sheet as of March 12, 2021, the balance sheet, statement of operations and statement of changes in shareholders’ equity as of March 31, 2021 and the balance sheet, statement of operations and statement of changes in shareholders’ equity as of June 30, 2021 is presented below:
 
 
  
As Previously
 
  
Restatement
 
  
 
 
  
Reported
 
  
Adjustment
 
  
As Restated
 
Balance Sheet as of March 12, 2021 (per Prospectus filed on March 18, 2021)
  
     
  
     
  
     
Class A ordinary shares, $0.0001 par value; shares subject to possible redemption at redemption value ($)
   $ 298,977,980      $ 31,022,020      $ 330,000,000  
Shareholders’ equity (deficit)
                          
Class A ordinary shares - $0.0001 par value
     310        (310 )       —    
Additional
paid-in
capital
     5,487,535        (5,487,535 )       —    
Retained Earnings (Accumulated Deficit)
     (633,242 )       (25,534,175 )       (26,167,417 ) 
    
 
 
    
 
 
    
 
 
 
Total shareholders’ equity (deficit)
   $ 5,000,009      $ (31,022,020 )     $ (26,166,592 ) 
    
 
 
    
 
 
    
 
 
 
Shares subject to possible redemption
     29,897,798        3,102,202        33,000,000  
    
 
 
    
 
 
    
 
 
 
 
10
Financial Statements as of March 31, 2021 (per Form
10-Q
filed on May 27, 2021)
                          
Balance Sheet
                          
Class A ordinary shares, $0.0001 par value; shares subject to possible redemption at redemption value ($)
   $ 299,498,363      $ 30,501,637      $ 330,000,000  
Shareholders’ equity (deficit)
                          
Class A ordinary shares - $0.0001 par value
     305        (305 )       —    
Additional
paid-in
capital
     4,967,158        (4,967,158 )       —    
Retained Earnings (Accumulated Deficit)
     31,715        (25,534,174 )       (25,502,459 ) 
    
 
 
    
 
 
    
 
 
 
Total shareholders’ equity (deficit)
   $ 5,000,003      $ (30,501,637 )     $ (25,501,634 ) 
    
 
 
    
 
 
    
 
 
 
Shares subject to possible redemption
     29,949,836        3,050,164        33,000,000  
    
 
 
    
 
 
    
 
 
 
Statement of Operations
                          
Weighted average shares outstanding, Class A ordinary shares subject to possible redemption
     29,900,400        3,099,600        33,000,000  
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption
   $ 0.00      $ —        $ 0.00  
Weighted average shares outstanding,
non-redeemable
ordinary shares
     9,230,467        (1,570,355 )       7,660,112  
Basic and diluted net income per share,
non-redeemable
ordinary shares
   $ 0.00      $ —        $ 0.00  
Statement of Changes in Shareholders’ Equity
(1)
 
 
 
 
 
 
 
 
 
 
 
 
Ordinary Class A - Shares
 
 
3,050,164
 
 
 
(3,050,164
)
 
 
 
—
 
Sale of Units in Initial Public Offering, net of underwriter fee
 
$
330,000,000
 
 
$
(330,000,000
)
 
 
$
—
 
Initial fair value of warrants accounted for as liabilities
 
$
(17,421,333
)
 
 
$
9,108,000
 
 
$
(8,313,333
)
 
Underwriter discount
 
$
(6,090,000
)
 
$
6,090,000
 
 
$
—
 
Deferred underwriter discount
 
$
(10,657,500
)
 
 
$
10,657,500
 
 
$
—
 
Other offering cost charged to shareholders’ equity
 
$
(464,569
)
 
 
$
464,569
 
 
$
—
 
Reclassification of offering cost related to warrant issuance
 
$
475,053
 
 
$
(475,053
)
 
 
$
—
 
Class A ordinary shares subject to possible redemption
 
$
(299,498,363
)
 
 
$
299,498,363
 
 
$
—
 
Accretion for Class A ordinary shares subject to redemption
 
$
—
 
 
 
$
(25,845,016
)
 
 
$
(25,845,016
)
 
Financial Statements as of June 30, 2021 (per Form
10-Q
filed on August 23, 2021)
                          
Balance Sheet
                          
Class A ordinary shares, $0.0001 par value; shares subject to possible redemption at redemption value ($)
   $ 302,631,817      $ 27,368,183      $ 330,000,000  
Shareholders’ equity (deficit)
                          
Class A ordinary shares - $0.0001 par value
     274        (274 )       —    
Additional
paid-in-capital
     1,833,735        (1,833,735 )       —    
Retained Earnings (Accumulated Deficit)
     3,165,170        (25,534,174 )       (22,369,004 ) 
    
 
 
    
 
 
    
 
 
 
Total shareholders’ equity (deficit)
   $ 5,000,004      $ (27,368,183 )     $ (22,368,179 ) 
    
 
 
    
 
 
    
 
 
 
Shares subject to possible redemption
     30,263,182        2,736,818        33,000,000  
    
 
 
    
 
 
    
 
 
 
 
11
Statement of Operations
                          
Three Months ended June 30, 2021
                          
Weighted average shares outstanding, Class A ordinary shares subject to possible redemption
     30,263,182        2,736,818        33,000,000  
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption
   $ 0.00      $ 0.08      $ 0.08  
Weighted average shares outstanding,
non-redeemable
ordinary shares
     10,986,818        (2,736,818 )       8,250,000  
Basic and diluted net income per share,
non-redeemable
ordinary shares
   $ 0.28      $ (0.20 )     $ 0.08  
Six Months ended June 30, 2021
                          
Weighted average shares outstanding, Class A ordinary shares subject to possible redemption
     29,943,752        3,056,248        33,000,000  
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption
   $ 0.00      $ 0.08      $ 0.08  
Weighted average shares outstanding,
non-redeemable
ordinary shares
     10,268,210        (2,608,098 )       7,660,112  
Basic and diluted net income per share,
non-redeemable
ordinary shares
   $ 0.31      $ (0.23 )     $ 0.08  
Statement of Changes in Shareholders’ Equity
(1)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months ended June 30, 2021
 
 
 
 
 
 
 
 
 
 
 
 
Ordinary Class A - Shares
 
 
2,736,818
 
 
 
 (2,736,818
)
 
 
 
—
 
Class A ordinary shares subject to possible redemption
  
$
(3,133,454
)
  
$
3,133,454
 
  
$
—  
 
 
(1)
The changes to the Ordinary Class A - Amount, Additional Paid-in Capital, Accumulated Deficit and Total Shareholders’ Equity (Deficit) line items shown in the Balance Sheet are also included in the restatement to the Statement of Changes in Shareholders’ Equity
Note 3— 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 th
e
 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 compl
e
te 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 IPO as filed with the SEC on March 10, 2021, as well as the Company’s Current Reports
on Form 8-K. The interim
results for the three months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (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
 
12
standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s 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 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 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. One of the more significant accounting estimates included in these condensed consolidated financial statements is the determination of the fair value of the warrant liabilities. Such estimates may be subject to change as more current information becomes available and accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. As of September 30, 2021 and December 31, 2020, the Company had $415,801 and $25,000 in cash, respectively. The Company had no cash equivalents as of September 30, 2021 and December 31, 2020.
Marketable Securities Held in Trust Account
As of September 30, 2021, the Trust Account had $330,054,458 held in primarily U.S. Treasury bills. During the period January 1, 2021 to September 30, 2021, the Company did not withdraw any of interest income from the Trust Account to pay its tax obligations.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. As of September 30, 2021, the Company has not experienced losses on this account.
Ordinary shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) 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 ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of September 30, 2021, 33,000,000
 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 balance sheet. 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.
 
Gross Proceeds
  
$
330,000,000
 
Less:
  
Proceeds allocated to public warrants
  
 
(9,108,000
) 
Issuance costs related to Class A ordinary shares
  
 
(16,737,016
) 
Plus:
  
Accretion of carrying value to redemption value
  
 
25,845,016
 
  
 
 
 
Contingently redeemable Class A ordinary shares
  
$
330,000,000
 
Net Income per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, Earnings Per Share. The Company applies the
two-class
method in calculating earnings per share. The contractual formula utilized to calculate the redemption amount approximates fair value. The Class feature to redeem at fair value means that there is effectively only one class of stock. Changes in fair value are not considered a dividend of the purposes of the numerator in the earnings per share calculation. Net loss per ordinary share is computed by dividing the pro rata net loss between the Class A ordinary shares and the Class B ordinary shares by the weighted average number of ordinary shares outstanding for each of the periods. The calculation of diluted loss per ordinary share does not consider the effect of the warrants issued in connection with the IPO since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be
anti-dilutive.
13
    
For the
Three Months
ended
September 30,
2021
    
For the
Nine Months
ended
September 30,
2021
 
Ordinary shares subject to possible redemption
                 
Numerator:
                 
Net loss allocable to Class A ordinary shares subject to possible redemption
   $ 2,480,279      $ 5,038,453  
Denominator:
                 
Weighted Average Redeemable Class A Ordinary shares, Basic and Diluted
     33,000,000        33,000,000  
    
 
 
    
 
 
 
Basic and Diluted net loss per share, Redeemable Class A Ordinary shares
   $ 0.08      $ 0.15  
    
 
 
    
 
 
 
Non-Redeemable
Ordinary shares
                 
Numerator:
                 
Net loss allocable to Class B ordinary shares not subject to redemption
   $ 620,070      $ 1,230,252  
Denominator:
                 
Weighted Average
Non-Redeemable
Ordinary shares, Basic and Diluted
     8,250,000        8,057,692  
    
 
 
    
 
 
 
Basic and diluted net loss per share, ordinary shares
   $ 0.08      $ 0.15  
    
 
 
    
 
 
 
Offering Costs
The Company complies with the requirements of
the ASC 340-10-S99-1 and SEC
Staff Accounting Bulletin (“SAB”) Topic 5A—“Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Public Offering and that were charged to shareholders’ equity upon the completion of the IPO. Accordingly, on June 30, 2021, offering costs totaling $17,212,069 have been charged to shareholders’ equity (consisting of $6,090,000 of underwriting fee, $10,657,500 of deferred underwriting fee and $464,569 of other offering costs). Of the total transaction cost $475,053 was reclassed to expense
as a non-operating expense in
the statement of operations with the rest of the offering cost charged to shareholders’ equity. The transaction costs were allocated based on the relative fair value basis, compared to the total offering proceeds, between the fair value of the Public Warrant (as defined in Note 4) liabilities and the Class A ordinary shares.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet.
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued share purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and Accounting
Standards Codification 815-40, Derivatives and
Hedging; Contracts in Entity’s Own Equity (“ASC 815”), the Company concluded that a provision in the Warrant Agreement related to certain tender or exchange offers precludes the warrants from being accounted for as components of equity. As the warrants meet the definition of a derivative as contemplated in ASC 815, the warrants should be recorded as derivative liabilities on the balance sheet and measured at fair value at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the statement of operations in the period of change.
The Company accounts for its 12,333,333 warrants issued in connection with its IPO (6,600,000) and private placement (5,733,333) as derivative warrant liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are
subject to re-measurement at each
balance sheet date until exercised or modified, and any change in fair value is recognized in the Company’s statement of operations. The fair value of warrants issued by the Company in connection with the IPO and private placement has been estimated using Monte-Carlo simulations at each measurement date.
 
14
Income Taxes
The Company accounts for income taxes under FASB 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
.
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September 30, 2021. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of September 30, 2021, there were no unrecognized tax benefits and no amounts were accrued for the payment of interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Recent Accounting Standards
In August 2020, 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, if any, that ASU
2020-06
would have on its financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
Note 4 — Initial Public Offering
Pursuant to the IPO, the Company sold 33,000,000 Units, (at a price of $10.00 per Unit. Each Unit consists of one share of Class A ordinary shares, par value $0.0001 per share
one-fifth
of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A ordinary shares at a price of $11.50 per share.
Note 5 — Private Placement Warrants
Simultaneously
with the closing of the IPO, the Sponsor purchased an aggregate of 5,733,333 Private Placement Warrants at a price of $1.50 per warrant ($8,600,000 in the aggregate), each Private Placement Warrant is exercisable to purchase one share of Class A ordinary shares at a price of $11.50 per share. A portion of the purchase price of the Private Placement Warrants was added to the proceeds from this offering to be held in the Trust Account.
 
15
The Private Placement Warrants will be identical to the warrants sold in the IPO except that the Private Placement Warrants, so long as they are held by the Sponsor or its permitted transferees, (i) will not be redeemable by the Company, (ii) may not (including the Class A ordinary shares issuable upon exercise of these Private Placement Warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of the Company’s initial Business Combination, (iii) may be exercised by the holders on a cashless basis and (iv) will be entitled to certain registration rights.
If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the warrants included in the units being sold in the IPO.
The Sponsor has agreed to (i) waive its redemption rights with respect to its Founder Shares and public shares in connection with the completion of the initial Business Combination, (ii) waive its redemption rights with respect to its Founder Shares and public shares in connection with a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and articles of association (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the initial Business Combination or to redeem 100% of the Company’s public shares if the Company has not consummated an initial Business Combination within the Combination Period or (B) with respect to any other material provisions relating to shareholders’
rights or pre-initial Business Combination
activity, (iii) waive its rights to liquidating distributions from the Trust Account with respect to its Founder Shares if the Company fails to complete the initial Business Combination within the Combination Period, and (iv) vote any Founder Shares held by the Sponsor and any public shares purchased during or after the IPO (including in open market and privately-negotiated transactions) in favor of the initial Business Combination.
Note 6 — Related Party Transactions
Founder Shares
On December 31, 2020, the Company issued 7,187,500 Class B ordinary shares to the Sponsor for an aggregate purchase price of $25,000. On February 24, 2021, the Company effected a share capitalization of 1,437,500 shares, resulting in 8,625,000 shares of Class B ordinary shares being issued and outstanding. Up to 1,125,000 Founder Shares are subject to forfeiture by the Sponsor depending on the extent to which the underwriters’ over-allotment option is exercised. On March 12, 2021, the underwriter partially exercised the over-allotment option and therefore 375,000 Founder Shares were forfeited, and 750,000 Founder Shares are no longer subject to forfeiture, resulting in 8,250,000 Founder Shares outstanding at September 30, 2021.
The initial shareholders have agreed not to transfer, assign or sell any of their Founder Shares and any Class A ordinary shares issuable upon conversion thereof until the earlier to occur of: (i) one year after the completion of the initial Business Combination, or (ii) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction after the initial Business Combination that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property; except to certain permitted transferees and under certain
circumstances (the “lock-up”).
Notwithstanding the foregoing, if the closing price of Class A ordinary shares equals or exceeds $12.00 per share (as adjusted
for share sub-divisions, share capitalizations,
reorganizations, recapitalizations and the like) for any 20 trading days
within any 30-trading day period
commencing at least 150 days after the initial Business Combination or (2) if the Company consummates a transaction after the initial Business Combination which results in the Company’s shareholders having the right to exchange their shares for cash, securities or other property, the Founder Shares will be
released from the lock-up.
Promissory Note — Related Party
On December 17, 2020, the Sponsor agreed to loan the Company up to $300,000 to be used for a portion of the expenses of the IPO. These
loans are non-interest bearing, unsecured
and are due at the earlier of December 31, 2021 or the closing of the IPO. The loan will be repaid upon the closing of the IPO out of the offering proceeds that has been allocated to the payment of offering expenses. As of September 30, 2021, there was no outstanding balance under the promissory note.
 
16
Administrative Support Agreement
Commencing on the date of the IPO, the Company has agreed to pay the Sponsor a total of $30,000 per month for office space and administrative support services. Upon completion of the Initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the three and nine months ended September 30, 2021, the Company has incurred $90,000 and $201,290, respectively, in expense pursuant to this agreement. All outstanding fees owed are paid and thus nothing is accrued as of September 30, 2021.
Working Capital Loans
In addition, in order to finance transaction costs in connection with a Business Combination, the initial shareholders or an affiliate of the initial shareholders 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 $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. As of September 30, 2021, the Company had not outstanding borrowings under the Working Capital Loans.
Note 7 — Commitments & Contingencies
Registration Rights
The holders of the (i) Founder Shares, which were issued in a private placement prior to the closing of the IPO, (ii) Private Placement Warrants which will be issued in a private placement simultaneously with the closing of the IPO and the Class A ordinary shares underlying such Private Placement Warrants and (iii) Private Placement Warrants that may be issued upon conversion of Working Capital Loans have registration rights to require the Company to register a sale of any of its securities held by them pursuant to a registration rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s completion of the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriters Agreement
On March 12, 2021, the Company paid a fixed underwriting discount of $6,090,000. Additionally, a deferred underwriting discount of $10,657,500 will be payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes an initial Business Combination, subject to the terms of the underwriting agreement.
Note 8 — Shareholders’ Equity
Preference shares
 — The Company is authorized to issue a total of 5,000,000 preference shares at par value of $0.0001 each. As of September 30, 2021 and December 31, 2020, there were no preference shares issued or outstanding.
 
17
Class
 A ordinary shares
 — The Company is authorized to issue a total of 500,000,000 Class A ordinary shares at par value of $0.0001 each. As of September 30, 2021 and December 31, 2020, there were no shares issued and outstanding (excluding 33,000,000 and 0 shares subject to possible redemption, respectively).
Class
 B ordinary shares
 — The Company is authorized to issue a total of 50,000,000 Class B ordinary shares at par value of $0.0001 each. As of September 30, 2021 and December 31, 2020, there were 8,250,000 and 8,625,000 shares of Class B ordinary shares issued and outstanding, respectively.
Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders except as required by law. Unless specified in the Company’s amended and restated memorandum and articles of association, or as required by applicable provisions of the Companies Act or applicable stock exchange rules, the affirmative vote of a majority of the Company’s ordinary shares that are voted is required to approve any such matter voted on by its shareholders.
The Class B ordinary shares will automatically convert into Class A ordinary shares concurrently with or immediately following the consummation of the initial Business Combination
on a one-for-one basis, subject
to adjustment
for share sub-divisions, share capitalizations,
reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares or equity- linked securities are issued or deemed issued in connection with the initial Business Combination, the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, 20% of the total number of Class A ordinary shares outstanding after such conversion (after giving effect to any redemptions of Class A ordinary shares by public shareholders), including the total number of Class A ordinary shares issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, or to be issued, to any seller in the initial Business Combination and any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans; provided that such conversion of Founder Shares will never occur on a
less than 
one-for-one
basis.
Note 9 — Warrants
Each whole warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment as discussed herein. In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and in the case of any such issuance to the Sponsor or its affiliate, without taking into account any Founder Shares held by the Sponsor or such affiliate, as applicable, prior to such issuance (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A ordinary shares during the 10 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Market Value, the $18.00 per share redemption trigger prices described below under “Redemption of Warrants when the price per Class A ordinary share equals or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described below under “Redemption of Warrants when the price per Class A ordinary share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
The warrants will become exercisable 30 days after the completion of its initial Business Combination and will expire five years after the completion of the Company’s initial Business Combination, or earlier upon redemption or liquidation.
 
18
The Company has agreed that as soon as practicable, but in no event later than fifteen (15) business days after the closing of the initial Business Combination, it will use its commercially reasonable efforts to file with the SEC a post-effective amendment to the registration statement o, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the warrants. The Company will use its commercially reasonable efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration or redemption of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Company’s Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elect, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $18.00
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
 
  •  
in whole and not in part;
 
  •  
at a price of $0.01 per warrant;
 
  •  
upon not less than 30 days’ prior written notice of redemption to each warrant
holder (the “30-day redemption
period”); and
 
  •  
if, and only if, the reported sale price of the ordinary shares equals or exceeds $18.00 per share (as adjusted) for any 20 trading days
within a 30-trading day
period ending three business days before the Company sends to the notice of redemption to the warrant holders.
In no event will the Company be required to net cash settle any warrants.
Redemption of Warrants when the price per Class
 A Ordinary Share equals or exceeds $10.00.
 The Company may also redeem the outstanding Public Warrants once they become exercisable:
 
  •  
in whole and not in part;
 
  •  
at a price of $0.10 per warrant;
 
  •  
upon a minimum of 30 days’ prior written notice of redemption;
provided
that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the “fair market value” of the Company’s Class A ordinary shares; and
 
  •  
if, and only if, the last reported sale price of the Class A ordinary shares equals or exceeds $10.00 per share (as adjusted) for any 20 trading days
within a 30-trading day
period ending three trading days before the Company sends the notice of redemption to the warrant holders.
If the Company is unable to complete the initial Business Combination within the combination period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
 
19
Note 10 — Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. Contracts in Entity’s Own Equity (“ASC 815”), the Company concluded that a provision in the Warrant Agreement related to certain tender or exchange offers precludes the warrants from being accounted for as components of equity. As the warrants meet the definition of a derivative as contemplated in ASC 815, the warrants should be recorded as derivative liabilities. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
 
  •  
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
 
  •  
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
 
  •  
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at September 30, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
 
           
Quoted
    
Significant
    
Significant
 
         
Prices In
    
Other
    
Other
 
         
Active
    
Observable
    
Unobservable
 
  
September 30,
    
Markets
    
Inputs
    
Inputs
 
  
2021
    
(Level 1)
    
(Level 2)
    
(Level 3)
 
Description
                                   
Warrant liabilities – Public Warrants
     5,346,000        5,346,000        —          —    
Warrant liabilities – Private Warrants
     4,644,000        —          —          4,644,000  
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 9,990,000      $ 5,346,000      $ —        $ 4,644,000  
    
 
 
    
 
 
    
 
 
    
 
 
 
The Company’s warrant liability for the Public Warrants is based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. The fair value of the Public Warrant liability is classified within Level 1 of the fair value hierarchy. The Company utilizes a Black Scholes model to value the Private Placement Warrants at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the private warrant liability is determined using Level 3 inputs. Inherent in a binomial options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its ordinary shares based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the
U.S. Treasury zero-coupon yield curve
on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
The aforementioned warrant liabilities are not subject to qualified hedge accounting.
There were no transfers between Levels 1, 2 or 3 during the quarter ended September 30, 2021.
 
20
The following table provides quantitative information regarding Level 3 fair value measurements:
 
    
At

March 12,

2021

(Initial

Measurement)

Public

Warrants
   
At

March 12,

2021

(Initial

Measurement)

Private

Placement

Warrants
 
Share price
   $ 9.70     $ 9.70  
Strike price
   $ 11.50     $ 11.50  
Term (in years)
     5.0       5.0  
Volatility
     24.0 %      24.0 % 
Risk-free rate
     0.98 %      0.98 % 
Dividend yield
     0.0 %      0.0 % 
Redemption trigger price
   $ 18.00     $ 0.00  
 
    
At
 
    
September 30,
 
    
2021
 
    
Private
 
    
Placement
 
    
Warrants
 
Share price
   $ 9.78  
Strike price
   $ 11.50  
Term (in years)
     5.0  
Volatility
     15.2 % 
Risk-free rate
     1.07 % 
Dividend yield
     0 % 
Redemption trigger price
   $ 0.00  
The following table presents the changes in the f
air value
of warrant liabilities:
 
           
Private
    
Warrant
 
  
Public
    
Placement
    
Liabilities
 
Fair value as of November 24, 2020
   $ —
 
 
     $ —
 
 
     $ —
 
 
 
Initial measurement on March 12, 2021
     9,108,000        8,313,333        17,421,333  
Change in valuation inputs or other assumptions
     (264,000 )
 
  		     (286,666 )       (550,667 ) 
    
 
 
    
 
 
    
 
 
 
Fair value as of March 31, 2021
   $
8,844,000
     $ 8,026,667      $ 16,870,667  
Change in valuation inputs or other assumptions
     (1,782,000 )       (1,720,000 )       (3,502,000 ) 
    
 
 
    
 
 
    
 
 
 
Fair value as of June 30, 2021
   $ 7,062,000      $ 6,306,667      $ 13,368,667  
Change in valuation inputs or other assumptions
     (1,716,000 )       (1,662,667 )       (3,378,667 ) 
    
 
 
    
 
 
    
 
 
 
Fair value as of September 30, 2021
   $ 5,346,000      $ 4,644,000      $ 9,990,000  
    
 
 
    
 
 
    
 
 
 
 
21
Note 11 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the 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 financial statements.
 
22
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 Colonnade Acquisition Corp. II References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Colonnade Sponsor II 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. 333-253091) 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 March 31, 2021 and June 30, 2021. Management identified errors made in its historical financial statements where, at the closing of our IPO, 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 IPO 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 24, 2020 formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using cash derived from the proceeds of the IPO, 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 revenues to date. Our only activities from November 24, 2020 (inception) through September 30, 2021 were organizational activities, those necessary to prepare for the IPO, described below, and the Company’s search for a target business with which to complete 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. We are incurring 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 completing a Business Combination.
For the nine months ended September 30, 2021, we had a net income of $6,268,705. We incurred $742,033 of formation and operating costs consisting mostly of general and administrative expenses. We had investment income of $54,458 on our amounts held in the Trust Account, unrealized gain from change in fair value of warrant liabilities of $7,431,333, and offering expenses related to warrant issuance of $475,053.
 
23
For the three months ended September 30, 2021, we had a net income of $3,100,349. We incurred $303,083 of formation and operating costs consisting mostly of general and administrative expenses. We had investment income of $24,766 on our amounts held in the Trust Account and unrealized gain from change in fair value of warrant liabilities of $3,378,666.
Liquidity, Capital Resources and Going Concern
Until the consummation of the IPO, the Company’s only source of liquidity was an initial purchase of ordinary shares by the Sponsor and loans from our Sponsor.
On March 12, 2021, we consummated the IPO of 33,000,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $330,000,000. Simultaneously with the closing of the IPO, we consummated the sale of 5,733,333 Private Placement Warrants to the Sponsor at a price of $1.50 per warrant, generating gross proceeds of $8,600,000.
Following the IPO, and the sale of the Private Placement Warrants, a total of $330,000,000 was placed in the Trust Account. We incurred $17,212,069 in transaction costs, including $6,090,000 of underwriting fees, $10,657,500 of deferred underwriting fees and $464,569 of other costs.
For the nine months ended September 30, 2021, cash used in operating activities was $1,651,444, which consisted of our net income of $6,278,705, interest earned on marketable securities held in the Trust Account of $54,458, changes in the fair value of warrant liabilities of $7,431,333, offering costs allocated to warrants of $475,053 and changes in current assets and current liabilities, which used $909,411 of cash.
As of September 30, 2021, we had cash and marketable securities held in the Trust Account of $330,054,458. We may withdraw interest to pay our taxes, if any. Through September 30, 2021, we have not withdrawn any amounts to pay for our tax obligations. 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. To the extent that our share capital 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 September 30, 2021, we had cash outside the trust account of $415,801 available for working capital needs. All remaining cash held in the trust account are generally unavailable for the Company’s use, prior to an initial business combination, and is restricted for use either in a business combination or to redeem ordinary shares. As of September 30, 2021, none of the amount in the trust account was available to be withdrawn as described above.
Through September 30, 2021, the Company’s liquidity needs were satisfied through receipt of $25,000 from the sale of the Founder Shares, and the remaining net proceeds from the IPO and the sale of Private Placement Warrants.
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 would repay such loaned amounts. 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 $1.50 per warrant unit at the option of the lender. The warrants would be identical to the Private Placement Warrants.
Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination. The Company may need to raise additional capital through loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties. The Company’s Sponsor, officers and directors may, but are not obligated to, loan the Company funds from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses.
 
 
24
The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of the Business Combination or the date the Company is required to liquidate. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Off-Balance Sheet
Financing Arrangements
We have no obligations, assets or liabilities, which would
be considered off-balance sheet arrangements
as of September 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 $30,000 for office space, utilities, secretarial and administrative support services, provided to the Company. We began incurring these fees on March 10, 2021 and will continue to incur these fees monthly until the earlier of the completion of a Business Combination and the Company’s liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $10,657,500 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of 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:
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “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
We
apply the two-class method in
calculating earnings per share. Ordinary shares subject to possible redemption, which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic net loss per ordinary share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. Our net income is adjusted for the portion of income that is attributable to ordinary shares subject to redemption, as these shares only participate in the earnings of the Trust Account and not our income or losses.
 
25
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued share purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480
and ASC 815-15. The classification
of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.
We issued an aggregate of 12,333,333 warrants in connection with our IPO and private placement, which are recognized as derivative liabilities in accordance with ASC 815. Accordingly, we recognize the warrants as liabilities at fair value and adjust the instruments to fair value at each reporting period. The liabilities are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. The fair value of Public Warrants have been estimated using Monte Carlo simulations and the Private Placement Warrants have been estimated using Black Scholes model at each measurement date.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined
by Rule 12b-2 of the
Exchange Act and are not required to provide the information otherwise required under this item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by
Rules 13a-15 and 15d-15 under
the Exchange Act, our Chief Executive Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2021. Based upon his evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under
the Exchange Act) were not effective as of September 30, 2021, due to the material weakness in our internal control over financial reporting regarding the restatements related to complex financial instruments.
 
26
The restatements constitute a material weakness in our internal control over financial reporting. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited interim financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Quarterly Report on
Form 10-Q
present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Regarding the restatements to the March 31, 2021, and June 30, 2021 quarterly financial statements included in the Company’s Form 10-Qs, as well as the Company’s balance sheet included on the Company’s Form 8-K, these were necessitated by the fact that the Company’s shares are complex equity instruments with certain redemption provisions not solely within the control of the Company and thus require ordinary shares subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of the Class A ordinary shares in permanent equity. The Company revised its financial statements to classify all Class A ordinary shares as temporary equity and any related impact, as the threshold in its charter would not change the nature of the underlying shares as redeemable and thus would be required to be disclosed outside of permanent equity.
It is noted that the non-cash adjustments to the financial statement do not impact the amounts previously reported for our cash and cash equivalents or total assets. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited interim financial statements were prepared in accordance with U.S. generally accepted accounting principles.
Changes in Internal Control Over Financial Reporting
We have commenced our remediation efforts in connection with the identification of the material weakness discussed above and have taken the following steps during the quarter ended September 30, 2021:
 
  •  
We have implemented procedures intended to ensure that we identify and apply the applicable accounting guidance to all complex transactions.
 
  •  
We are establishing additional monitoring and oversight controls designed to ensure the accuracy and completeness of our consolidated financial statements and related disclosures.
Other than the changes discussed above, there have been no changes to our internal control over financial reporting during the quarter ended September 30, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
As of the date of this Quarterly Report, there have been no material changes with respect to those risk factors previously disclosed in our Registration Statement filed with the SEC and in our
Form 10-Q for
the period ended March 31, 2021 filed with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On March 12, 2021, we consummated the IPO of 33,000,000 Units. The Units sold in the IPO were sold at an offering price of $10.00 per unit, generating total gross proceeds of $330,000,000. Barclays Capital Inc. and Deutsche Bank Securities Inc. acted as the joint-book running managers of the IPO. The securities in the offering were registered under the Securities Act on a registration statement
on Form S-1 (No. 333-253091). The Securities
and Exchange Commission declared the registration statement effective on March 9, 2021.
 
27
Simultaneously with the consummation of the IPO, the Sponsor consummated the private placement of an aggregate of 5,733,333 warrants at a price of $1.50 per Private Placement Warrant, generating total proceeds of $8,600,000. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
The Private Placement Warrants are identical to the warrants underlying the Units sold in the IPO, except that the Private Placement Warrants are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.
Of the gross proceeds received from the IPO and the Private Placement Warrants, $330,000,000 was placed in the Trust Account.
We paid a total of $6,090,000 in underwriting discounts and commissions and $464,569 for other costs and expenses related to the IPO. In addition, the underwriters agreed to defer up to $10,657,500 in underwriting discounts and commissions.
For a description of the use of the proceeds generated in our IPO, see Part I, Item 2 of
this Form 10-Q.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report
on Form 10-Q.
 
No.
  
Description of Exhibit
   
31.1*   
   
32.1**   
   
101.INS*   
Inline XBRL Instance Document (the instance document does not appear in the interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
   
101.CAL*   
Inline XBRL Taxonomy Extension Calculation Linkbase Document
   
101.SCH*   
Inline XBRL Taxonomy Extension Schema Document
   
101.DEF*   
Inline XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB*   
Inline XBRL Taxonomy Extension Labels Linkbase Document
   
101.PRE*   
Inline XBRL Taxonomy Extension Presentation Linkbase Document
   
104   
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
 
*
Filed herewith.
**
This certification is furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
 
28
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
       
COLONNADE ACQUISITION CORP. II
       
Date: November
22
, 2021 		         
/s/ Remy W. Trafelet
        Name:   Remy W. Trafelet
        Title:   Chief Executive Officer and Director
           
(Principal Executive Officer and Principal
Financial and Accounting Officer)
 
29
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