NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Note
1 — Organization and Plan of Business Operations
Andina
Acquisition Corp. III (the “Company”) was incorporated in the Cayman Islands on July 29, 2016 as a blank check company
for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or
other similar business combination with one or more businesses or entities (a “Business Combination”). The Company’s
efforts to identify a prospective target business are not limited to a particular industry or geographic region, although the
Company initially intended to focus on target businesses in the Americas.
All
activity through March 31, 2021 related to the Company’s formation, its initial public offering (the “Initial Public
Offering”), which is described below, and since the closing of the Initial Public Offering, the Company’s search for an initial business combination, specifically, activities in connection with
the announced and subsequently terminated proposed acquisition of EMMAC Life Sciences Limited, (“EMMAC”) (which activities
ceased in November 2020) and activities in connection with the proposed acquisition of Stryve Foods LLC (“Stryve”),
as described below.
Initial
Public Offering
The
registration statement for the Initial Public Offering (the “IPO”) was declared effective on January 24, 2019 pursuant to
Section 8(a) of the Securities Act of 1933, as amended. On January 31, 2019, the Company consummated the Initial Public Offering of 10,800,000
units (the “Units” and, with respect
to the ordinary shares included in the Units offered, the “Public Shares”), which included a partial exercise by the underwriters
of their over-allotment option in the amount of 800,000
Units, at $10.00
per Unit, generating gross proceeds of $108,000,000,
which is described in Note 4.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 395,000
units (the “Private Units”) at a
price of $10.00
per Private Unit in a private placement (the
“Private Placement”) to certain shareholders, or their affiliates (collectively, the “Initial Shareholders”)
and the underwriters, generating gross proceeds of $3,950,000,
which is described in Note 5.
Transaction
costs amounted to $3,204,451, consisting of $2,700,000 of underwriting fees and $504,451 of offering costs.
Following
the closing of the Initial Public Offering on January 31, 2019, an amount of $108,000,000 ($10.00 per Unit) from the net proceeds
of the sale of the Units in the Initial Public Offering and the sale of the Private Units was placed in a trust account (the “Trust
Account”), which has been invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 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, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution
of the Trust Account to its shareholders, as described below. The Company’s management has broad discretion with respect
to the specific application of the net proceeds of the Initial Public Offering and sale of the Private Units, although substantially
all of the net proceeds are intended to be applied generally toward consummating a Business Combination. Placing funds in the
Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have
all vendors, service providers, prospective target businesses or other entities it engages, execute agreements with the Company
waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute
such agreements. One of the Company’s directors has agreed to be personally liable if the Company liquidates the Trust Account
prior to the consummation of a Business Combination to ensure that the proceeds held in the Trust Account are not reduced by the
claims of target businesses or claims of vendors or other entities that are owed money by the Company for services rendered or
contracted for or products sold to the Company. However, such director may not be able to satisfy those obligations should they
arise. The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence
on prospective acquisitions and continuing general and administrative expenses. Additionally, the interest earned on the Trust
Account balance may be released to the Company to pay the Company’s tax obligations and up to $100,000 may be released to
pay for the Company’s working capital obligations, including any necessary liquidation or dissolution expenses.
In
order to meet its working capital needs following the consummation of the Initial Public Offering, the Company’s Initial
Shareholders, officers and directors or their affiliates 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. Each loan would be evidenced by a promissory
note. The notes would either be paid upon consummation of the Company’s initial Business Combination, without interest,
or, at the lender’s discretion. Up to $500,000 of the notes may be converted upon consummation of the Company’s initial
Business Combination into additional Private Units at a price of $10.00 per unit. In the event that the initial 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.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Initial
Business Combination
Pursuant
to the Nasdaq Capital Markets listing rules, the Company’s initial Business Combination must be with a target business or
businesses whose collective fair market value is at least equal to 80% of the balance in the Trust Account at the time of the
execution of a definitive agreement for such Business Combination, although this may entail simultaneous acquisitions of several
target businesses. The fair market value of the target will be determined by the Company’s board of directors based upon
one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or
book value). The target business or businesses that the Company acquires may have a collective fair market value substantially
in excess of 80% of the Trust Account balance. In order to consummate such a Business Combination, the Company may issue a significant
amount of its debt or equity securities to the sellers of such business and/or seek to raise additional funds through a private
offering of debt or equity securities. There are no limitations on the Company’s ability to incur debt or issue securities
in order to consummate a Business Combination. Since the Company has no specific Business Combination under consideration, the
Company has not entered into any arrangement to issue debt or equity securities. If the net proceeds of Initial Public Offering
prove to be insufficient, either because of the size of the Business Combination, the depletion of the available net proceeds
in search of a target business, or the obligation to convert a significant number of shares from shareholders into cash, the Company
will be required to seek additional financing in order to complete its initial Business Combination. In addition, if the Company
consummates a Business Combination, it may require additional financing to fund the operations or growth of the target business.
The failure to secure additional financing could have a material adverse effect on the continued development or growth of the
target business. None of the Company’s officers, directors or shareholders is required to provide any financing to the Company
in connection with or after a Business Combination.
In
connection with any proposed initial Business Combination, the Company will either (1) seek shareholder approval of such initial
Business Combination at a meeting called for such purpose at which public shareholders may seek to convert their Public Shares,
regardless of whether they vote for or against the proposed Business Combination, into their pro rata share of the aggregate amount
then on deposit in the Trust Account (net of taxes payable) or (2) provide public shareholders with the opportunity to sell their
Public Shares to the Company by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal
to their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable), in each case subject
to the limitations described herein. Notwithstanding the foregoing, the Initial Shareholders have agreed, pursuant to written
letter agreements with the Company, not to convert any Public Shares held by them into their pro rata share of the aggregate amount
then on deposit in the Trust Account. If the Company determines to engage in a tender offer, such tender offer will be structured
so that each public shareholder may tender any or all of his, her or its Public Shares rather than some pro rata portion of his,
her or its shares. The decision as to whether the Company will seek shareholder approval of a proposed Business Combination or
will allow shareholders to sell their Public Shares to it in a tender offer will be made by the Company based on a variety of
factors such as the timing of the transaction, whether the terms of the transaction would otherwise require it to seek shareholder
approval or whether the Company is deemed to be a foreign private issuer (which would require us to conduct a tender offer rather
than seeking shareholder approval under the U.S. Securities and Exchange Commission (the “SEC”) rules). If the Company
engages in a tender offer in connection with an initial Business Combination, the Company will file tender offer documents with
the SEC, which will contain substantially the same financial and other information about the initial Business Combination as is
required under the SEC’s proxy rules. The Company will consummate an initial Business Combination only if it has net tangible
assets of at least $5,000,001 upon such consummation of a Business Combination and, solely if it seeks shareholder approval, a
majority of the issued and outstanding ordinary shares voted are voted in favor of the Business Combination. The $5,000,001 net
tangible asset value would be determined once a target business is located and the Company can assess all of the assets and liabilities
of the combined company.
The
Initial Shareholders have agreed (i) to vote their insider shares, Private Shares (as defined in Note 5) and any Public Shares
purchased in or after the Initial Public Offering in favor of any proposed Business Combination and (ii) not to convert any shares (including
the insider shares) in connection with a shareholder vote to approve, or sell their shares to the Company in any tender offer in connection
with, a proposed initial Business Combination.
Failure
to Consummate a Business Combination
The
Company initially had until July 31, 2020 to complete a Business Combination. On July 29, 2020, the Company held a special meeting
pursuant to which the Company’s shareholders approved extending the date by which the Company had to complete a Business
Combination from July 31, 2020 to October 31, 2020 (or December 31, 2020 if the Company had executed a definitive agreement for
a Business Combination by October 31, 2020). In connection with the approval of the extension, shareholders elected to redeem
an aggregate of 4,303,096 ordinary shares. As a result, an aggregate of $44,063,656 (or approximately $10.24 per share) was released
from the Trust Account to pay such shareholders.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
On
October 28, 2020, the Company held a special meeting pursuant to which the Company’s shareholders approved extending the
date by which the Company had to complete a Business Combination from October 31, 2020 to January 31, 2021 (or April 30, 2021
if the Company had executed a definitive agreement for a Business Combination by January 31, 2021) (such date or later date, as
applicable, the “Extended Date”). In connection with the approval of the extension, shareholders elected to redeem
an aggregate of 5,174,508 ordinary shares. As a result, an aggregate of $52,996,135 (or approximately $10.24 per share) was released
from the Trust Account to pay such shareholders.
On
January 27, 2021, the Company held a special meeting pursuant to which the Company’s shareholders approved extending the date by which the Company had to
complete a Business Combination from January 31, 2021 to April 30, 2021 (or July 31, 2021 if the Company has executed a definitive agreement
for a Business Combination by April 30, 2021) (such date or later date, as applicable, the “Extended Date”). In connection
with the approval of the extension, shareholders elected to redeem an aggregate of 300 ordinary shares. As a result, an aggregate
of $3,073 (or approximately $10.24 per share) was released from the Company’s Trust Account to pay such shareholders and 4,417,096 ordinary
shares are now issued and outstanding.
On
January 28, 2021, the Company entered into a definitive business combination agreement (the “Business
Combination Agreement”), pursuant to which, subject to the terms and conditions set forth therein, (i) the
Company will re-domesticate as a Delaware corporation, (ii) Stryve will conduct a reorganization pursuant to which Stryve
Foods Holdings LLC (“Stryve Holdings”) will become a holding company for Stryve, the former owners of Stryve will
become the owners of Stryve Holdings, and Stryve will retain all of its business, assets and liabilities, and become a
wholly-owned subsidiary of Stryve Holdings, (iii) Stryve Holdings will contribute to Andina Holdings LLC, the
Company’s subsidiary (“Andina Holdings”), the equity interests of Stryve, in exchange for newly issued
non-voting membership interests of Andina Holdings and the Company’s voting (but non-economic) common stock, and
(iv) the Company will contribute all of the Company’s cash and cash equivalents to Andina Holdings, after
payment of Company shareholders that elect to have their shares redeemed or converted in connection with the
consummation of the Merger, in exchange for newly issued voting membership interests of Andina Holdings, all upon the terms
and subject to the conditions set forth in the Business Combination Agreement. Simultaneously with the execution of the
Business Combination Agreement, the Company and Stryve entered into subscription agreements with investors for an aggregate
of $42,500,000
at a price of $10.00
per share in a private placement in the Company (the “Closing PIPE Investment”), to be consummated simultaneously
with the Closing of the Business Combination. Additionally, simultaneously with the execution of the Business Combination
Agreement, the Company and Stryve entered into subscription agreements with the holders (the “Bridge Investors”) of
$10,600,000 in unsecured promissory notes of Stryve (the “Bridge Notes”) where the obligations of Stryve under the Bridge
Notes will be used to offset and satisfy the obligations of the Bridge Investors and the Bridge Investors will be issued
shares of Class A Common Stock at a price of $8.00 per share (the “Bridge PIPE Investment” and, together with the Closing
PIPE Investment, the “PIPE Investment”). Consummation of the PIPE Investment is conditioned on the concurrent Closing of the
Business Combination (and other customary closing conditions).
Pursuant
to the terms of the Company’s amended and restated memorandum and articles of association, failure to consummate a Business
Combination by the Extended Date will trigger the automatic winding up, dissolution and liquidation of the Company. As a result,
this has the same effect as if the Company had formally gone through a voluntary liquidation procedure under Cayman Islands Companies
Law. Accordingly, no vote would be required from shareholders to commence such a voluntary winding up, dissolution and liquidation.
The holders of the insider shares will not participate in any liquidation distribution from the Trust Account with respect to
their insider shares.
Liquidity
and Going Concern
As
of March 31, 2021, the Company had $77,204 in its operating bank accounts, $13,542,749 in marketable securities held in the Trust
Account to be used for a Business Combination or to repurchase or redeem its Public Shares in connection therewith and working
capital deficit of $1,387,460. As of March 31, 2021, approximately $322,000 of the amount on deposit in the Trust Account represented
interest income, which is available to pay the Company’s tax obligations, if any.
Until
the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying
and evaluating target businesses, performing due diligence on prospective target businesses, traveling to and from the offices,
plants or similar location of prospective target businesses or their representatives or owners, reviewing corporate documents
and material agreements of prospective target businesses and structuring, negotiating and completing a Business Combination.
The
Company will need to raise additional capital through loans or additional investments from its Sponsor, an affiliate of the Sponsor,
or its officers or directors. The Company’s officers, directors and Sponsor, or their affiliates, 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 through the Extended Date, which is the date the Company is required cease all operations except for the purpose of winding
up if it has not completed a Business Combination. These condensed 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
Management
continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus
could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company,
the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Note
2 – Restatement of Interim Financial Statements
Due
to a misapplication of the accounting treatment related to its ordinary shares subject to redemption, non-redeemable ordinary shares
and additional paid-in capital for maintaining minimum net tangible assets of at least $5 million following any ordinary share redemption,
the Company’s previously issued interim condensed financial statements for the quarterly period ended March 31, 2021 should no longer be
relied upon. As such, the Company is restating its unaudited interim condensed financial statements as of and for three months ended
March 31, 2021 included in this Report.
Impact
of the Restatement
The
impact of the restatement on the Condensed Statement balance sheet as of March 31, 2021 included in this Report is presented below.
Schedule
of Impact of Restatement
|
|
As Previously Reported
|
|
|
Adjustments
|
|
|
As Restated
|
|
Statement of Operations for the three months ended March 31, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares subject to redemption:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares outstanding
|
|
|
623,332
|
|
|
|
698,764
|
|
|
|
1,322,096
|
|
Amount
|
|
$
|
6,385,035
|
|
|
$
|
7,157,714
|
|
|
$
|
13,542,749
|
|
Ordinary shares excluding shares subject to possible redemption
|
|
|
3,793,764
|
|
|
|
(698,764
|
)
|
|
|
3,095,000
|
|
Number of shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock value
|
|
$
|
(380
|
)
|
|
$
|
70
|
|
|
$
|
(310
|
)
|
Additional paid-in capital
|
|
$
|
(5,322,270
|
)
|
|
$
|
5,322,270
|
|
|
$
|
-
|
|
Accumulated deficit
|
|
$
|
322,646
|
|
|
$
|
1,835,374
|
|
|
$
|
2,158,020
|
|
The
impact of the restatement on the Condensed Statement of operations for the three months ended March 31, 2021 included in this filing
is presented below.
|
|
|
As Previously
|
|
|
|
Adjustments
|
|
|
|
As restated
|
|
Basic and diluted weighted average shares outstanding, Ordinary shares subject to possible
redemption
|
|
|
767,189
|
|
|
|
376,169
|
|
|
|
1,143,358
|
|
Basic and diluted weighted average shares outstanding, Non-redeemable ordinary shares
|
|
|
3,650,004
|
|
|
|
(376,169
|
)
|
|
|
3,273,835
|
|
Basic and diluted net loss per share, Non-redeemable ordinary shares
|
|
$
|
(0.40
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.45
|
)
|
The
impact of the restatement on the Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2021 included in
this filing is presented below.
|
|
As Previously Reported
|
|
|
Adjustments
|
|
|
As Restated
|
|
Statement of Cash Flows for the three months ended March 31, 2021 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Investing and Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of ordinary shares subject to possible redemption
|
|
|
(1,475,478
|
)
|
|
|
7,157,714
|
|
|
|
5,682,236
|
|
Note
3 — Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements are presented in U.S. dollars and 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 10 of Regulation S-X of the Securities and Exchange Commission
(the “SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance
with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly,
they do not include all the information and footnotes necessary for a comprehensive 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 Annual Report on
Form 10-K for the year ended December 31, 2020 as filed with the SEC on February 18, 2021, which contains the audited financial
statements and notes thereto. The financial information as of December 31, 2020 is derived from the audited financial statements
presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The interim results for the
three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31,
2021 or for any future interim periods.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Use
of Estimates
The
preparation of condensed financial statements 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 and
disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of
expenses during the reporting period. Actual results could differ 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.
The Company did not have any cash equivalents as of March 31, 2021 and December 31, 2020.
Marketable
Securities Held in Trust Account
At
March 31, 2021, the assets held in the Trust Account were substantially held in money market fund (Select Treasury Institutional
Funds), which primarily invest in short term U.S. Treasury securities. The Company accounts for its securities held in the trust
account in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 320 “Debt and Equity
Securities.” These securities are classified as trading securities with unrealized gains/losses, if any, recognized through
the statement of operations.
Ordinary
Shares Subject to Possible Redemption
The
Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” 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 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, 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 sheets.
Warrant
Liability
The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives
and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant
to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for
equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether
the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s
control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is
conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For
issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded
as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the
criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance,
and each balance sheet date thereafter.
On
April 12, 2021, the staff of the Securities and Exchange Commission (the “SEC Staff”) issued a public statement entitled
“Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies
(“SPACs”)” (the “SEC Staff Statement”). In the SEC Staff Statement, the SEC Staff expressed its
view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities rather
than equity on a SPAC’s balance sheet.
Historically,
the Company’s Private Warrants and Public Warrants were reflected as a component of equity as opposed to liabilities on the balance sheets
and the statements of operations did not include the subsequent non-cash changes in estimated fair value of the warrants, based
on the Company’s application of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic 815-40, Derivatives and Hedging, Contracts in Entity’s Own Equity (“ASC 815-40”). Some of the views expressed
in the SEC Staff Statement were not consistent with the Company’s historical interpretation of specific provisions within
its warrant agreement and the Company’s application of ASC 815-40 to the warrant agreement. After discussion and evaluation,
including with the Company’s accounting advisor and the Company’s audit committee, and taking into consideration the SEC Staff Statement, management
has concluded that the Company’s Private Warrants should be presented as liabilities with subsequent fair value remeasurement.
Accordingly,
the Company classifies the Private Warrants as liabilities at their fair value and adjusts the warrants to fair value at each
reporting period. This liability is subject to re-measurement 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 the warrants initially was estimated using
a binomial lattice model incorporating the Cox-Ross-Rubenstein methodology.
Net
Income (Loss) per Ordinary Share
Net
loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding for the
period. The Company applies the two-class method in calculating earnings per share. Ordinary shares subject to possible redemption
at March 31, 2021 and December 31, 2020, 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. The Company has not considered the effect of (1) warrants sold in the Initial Public Offering and
the Private Placement to purchase 11,195,000 ordinary shares, and (2) rights sold in the Initial Public Offering and the Private
Placement that convert into 1,119,500 ordinary shares, in the calculation of diluted loss per share, since the exercise of the
warrants and the conversion of the rights into ordinary shares are contingent upon the occurrence of future events. As a result,
diluted net loss per ordinary share is the same as basic net loss per ordinary share for the periods presented
Reconciliation
of Net Income (Loss) per Ordinary Share
The
Company’s net income (loss) is adjusted for the portion of income that is attributable to ordinary shares subject to possible
redemption, as these shares only participate in the earnings of the Trust Account and not the income or losses of the Company.
Accordingly, basic and diluted loss per ordinary share is calculated as follows:
Schedule of Basic and Diluted Loss Per Ordinary Share
|
|
2021
|
|
|
2020
|
|
|
|
Three
Months Ended
March
31,
|
|
|
|
2021
|
|
|
2020
|
|
Ordinary Shares subject
to possible redemption
|
|
|
|
|
|
|
|
|
Numerator: Earnings allocable to ordinary shares subject
to possible redemption
|
|
|
|
|
|
|
|
|
Interest
earned on marketable securities held in Trust Account
|
|
$
|
319
|
|
|
$
|
400,472
|
|
Unrealized
gain on marketable securities held in Trust Account
|
|
|
—
|
|
|
|
56,368
|
|
Net
Income allocable to ordinary shares subject to possible redemption
|
|
$
|
319
|
|
|
$
|
456,840
|
|
Denominator: Weighted
Average ordinary shares subject to possible redemption
|
|
|
|
|
|
|
|
|
Basic and diluted
weighted average shares outstanding
|
|
|
1,143,358
|
|
|
|
10,344,550
|
|
Basic
and diluted net income per redeemable ordinary share
|
|
$
|
0.00
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
Non-Redeemable Ordinary Shares
|
|
|
|
|
|
|
|
|
Numerator: Net Loss
minus Net Earnings
|
|
|
|
|
|
|
|
|
Net Income (loss)
|
|
$
|
(1,472,407
|
)
|
|
$
|
333,179
|
|
Net
Income allocable to ordinary shares stock subject to possible redemption
|
|
|
(319
|
)
|
|
|
(456,840
|
)
|
Non-Redeemable
Net Loss
|
|
$
|
(1,472,726
|
)
|
|
$
|
(123,661
|
)
|
Denominator: Weighted Average Non-Redeemable
ordinary shares
|
|
|
|
|
|
|
|
|
Basic and diluted
weighted average shares outstanding
|
|
|
3,273,835
|
|
|
|
3,550,450
|
|
Basic
and diluted net loss per Non-Redeemable ordinary share
|
|
$
|
(0.45
|
)
|
|
$
|
(0.03
|
)
|
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Income
Taxes
The
Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an
asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities
are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future
taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected
to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.
ASC
Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the
Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits
as income tax expense. As of March 31, 2021 and December 31, 2020, there were no unrecognized tax benefits and no amounts accrued
for 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 over the next twelve months.
The
Company may be subject to potential examination by foreign taxing authorities in the areas of income taxes. These potential examinations
may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance
with foreign tax laws.
The
Company is considered an exempted Cayman Islands company and is presently not subject to income taxes or income tax filing requirements
in the Cayman Islands or the United States. As such, the Company’s tax provision is zero for all periods presented.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration 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. The Company has not experienced losses on this
account and management believes the Company is not exposed to significant risks on such account.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair
Value Measurement,” approximates the carrying amounts represented in the accompanying condensed financial statements, primarily
due to their short-term nature.
Fair
Value Measurements
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the
inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
These tiers 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.
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy.
In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest
level input that is significant to the fair value measurement.
Derivative
Financial Instruments
The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments
that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and
is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification
of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at
the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on
whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet 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 the accompanying condensed financial statements.
Note
4 — Initial Public Offering
Pursuant
to the Initial Public Offering, the Company sold 10,800,000
Units at a purchase price of $10.00
per Unit, which included a partial exercise by
the underwriters of their over-allotment option in the amount of 800,000
Units at $10.00
per Unit. Each
Unit consists of one ordinary share of the Company, one right (the “Public Right”) and one redeemable warrant (the “Public
Warrant”). Each Public Right entitles the holder to receive one-tenth (1/10) of an ordinary share upon consummation of a Business
Combination. Each Public Warrant entitles the holder to purchase one ordinary share at an exercise price of $11.50 per share (see Note
1 and Note 8).
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
If
the Company is unable to complete an initial Business Combination by the Extended Date and the Company redeems the public shares
for the funds held in the Trust Account, holders of the rights and warrants will not receive any of such funds for their rights
and warrants and the rights and warrants will expire worthless.
Note
5 — Private Units
Simultaneously
with the closing of the Initial Public Offering, certain of the Initial Shareholders, including the underwriters in the Initial
Public Offering (and their respective designees), purchased an aggregate of 395,000 Private Units at a price of $10.00 per Private
Unit, for an aggregate purchase price of $3,950,000. Each Private Unit consists of one ordinary share (“Private Share”),
one right (the “Private Right”) and one redeemable warrant (each, a “Private Warrant”). The proceeds from
the Private Units have been added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does
not complete a Business Combination by the Extended Date, the proceeds of the sale of the Private Units will be used to fund the
redemption of the public shares (subject to the requirements of applicable law), and the Private Units and all underlying securities
will expire worthless.
The
Private Units are identical to the Units sold in the Initial Public Offering except that the Private Warrants are non-redeemable
and exercisable on a cashless basis so long as they are held by the initial purchasers or their permitted transferees. Additionally,
the purchasers of the Private Units have agreed (A) to vote the Private Shares in favor of any proposed Business Combination,
(B) not to propose, or vote in favor of, an amendment to the Company’s amended and restated memorandum and articles of association
with respect to its pre-Business Combination activities prior to the consummation of such a Business Combination unless the Company
provides public shareholders with the opportunity to convert their Public Shares in connection with any such vote, (C) not to
convert any Private Shares into the right to receive cash from the Trust Account in connection with a shareholder vote to approve
a proposed initial Business Combination or a vote to amend the provisions of the Company’s amended and restated memorandum
and articles of association relating to shareholders’ rights or pre-Business Combination activity and (D) that the Private
Shares shall not participate in any liquidating distribution from the Trust Account upon winding up if a Business Combination
is not consummated. The purchasers of the Private Units have also agreed not to transfer, assign or sell any of the Private Units
or underlying securities (except to permitted transferees) until the completion of an initial Business Combination.
Note
6 — Related Party Transactions
As
of March 31, 2021 directors and officers have reimbursable expenses of $45,529.
Note
7 — Commitments
Business
Combination Marketing Agreement
The
Company engaged the joint book-running managers in the Initial Public Offering as advisors in connection with a Business Combination
to assist the Company in holding meetings with its shareholders to discuss the potential Business Combination and the target business’
attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection
with a Business Combination, assist the Company in obtaining shareholder approval for the Business Combination and assist the
Company with its press releases and public filings in connection with the Business Combination. The Company will pay the joint
book-running managers aggregate cash fees for such services upon the consummation of a Business Combination in an amount equal
to $3,240,000 (exclusive of any applicable finders’ fees which might become payable). If a proposed Business Combination
is not consummated for any reason during the 18-month period from the closing of the Initial Public Offering or as currently extended
through July 31, 2021, no fee will be due or payable to the advisors. In the case of a Business Combination with Stryve, the fees
have been reduced by 50%.
Fee
Arrangements
Following
the Initial Public Offering, the Company entered into a letter agreement with a member of the Company’s board of directors
that provides for a success fee to be paid to such director upon consummation of a Business Combination with a target business
introduced to the Company by such director in an amount equal to 0.6% of the total consideration paid by the Company in the transaction,
subject to certain minimum and maximum amounts set forth in the agreement.
In
addition, the Company entered into several letter agreements with unaffiliated third parties that provide for a success fee to
be paid to each such third party upon consummation of a Business Combination with a target business introduced to the Company
by such third party in amounts ranging from 0.75% to 1.0% of the total consideration paid by the Company in the transaction, subject
to certain minimum and maximum amounts set forth in the various agreements.
Related
to the business combination with Stryve, the Company entered into engagement letters with Cowen and Craig-Hallum, to be financial advisors
and placement agent to the transaction, with an aggregate success fee of 2% of the transaction value and 6% fee of gross proceeds
raised as agents and a capital markets advisory fee.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Registration
Rights
Pursuant
to a registration rights agreement entered into on January 28, 2019, the holders of the insider shares, as well as the holders
of the Private Units (and underlying securities) and any securities issued in payment of working capital loans made to the Company,
are entitled to registration rights. The holders of a majority of these securities are entitled to make up to three demands that
the Company register such securities. Notwithstanding anything to the contrary, the underwriters (and their designees) may only
make a demand registration (i) on one occasion and (ii) during the five-year period beginning on January 28, 2019. The holders
of the majority of the insider shares can elect to exercise these registration rights at any time commencing three months prior
to the date on which these ordinary shares are to be released from escrow. The holders of a majority of the Private Units (and
underlying securities) and securities issued in payment of working capital loans (or underlying securities) can elect to exercise
these registration rights at any time after the Company consummates a Business Combination. In addition, the holders have certain
“piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a
Business Combination. Notwithstanding anything to the contrary, the underwriters (and their designees) may participate in a “piggy-back”
registration only during the seven-year period beginning January 28, 2019. The Company will bear the expenses incurred in connection
with the filing of any such registration statements.
Extension
On
January 5, 2021, the Company received a written notice (the “Notice”) from the Listing Qualifications Department of
The Nasdaq Stock Market (“Nasdaq”) indicating that the Company is not in compliance with Listing Rule 5620(a) and
5810(c)(2)(G), due to the Company’s failure to hold an annual meeting of stockholders within twelve months of the end of
the Company’s fiscal year end. The Notice is only a notification of deficiency, not of imminent delisting, and has no current
effect on the listing or trading of the Company’s securities on the Nasdaq Capital Market. The Company held their 2020 general
annual meeting on January 27, 2021 and intends to submit a plan of compliance with Nasdaq. On February 2, 2021, the Company received
a letter from Nasdaq indicating it had regained compliance.
On
January 27, 2021, the Company held a special meeting pursuant to which the Company’s shareholders approved extending the
date by which the Company had to complete a Business Combination from January 31, 2021 to April 30, 2021 (or July 31, 2021 if
the Company has executed a definitive agreement for a Business Combination by April 30, 2021) (such date or later date, as applicable,
the “Extended Date”). In connection with the approval of the extension, shareholders elected to redeem an aggregate
of 300 ordinary shares. As a result, an aggregate of $3,073 (or approximately $10.24 per share) was released from the
Trust Account to pay such shareholders and 4,417,096 ordinary shares are now issued and outstanding.
Business
Combination Agreement
On
January 28, 2021, the Company entered into a definitive business combination agreement (the “Business Combination Agreement”),
pursuant to which, subject to the terms and conditions set forth therein (the “Merger”), (i) the Company will re-domesticate
as a Delaware corporation, (ii) Stryve, will conduct a reorganization pursuant to which Stryve Foods Holdings LLC (“Stryve
Holdings”) will become a holding company for Stryve, the former owners of Stryve will become the owners of Stryve Holdings,
and Stryve will retain all of its business, assets and liabilities, and become a wholly owned subsidiary of Stryve Holdings, (iii)
Stryve Holdings will contribute to Andina Holdings LLC, a subsidiary of Andina (“Andina Holdings”), the equity interests
of Stryve, in exchange for newly issued non-voting membership interests of Andina Holdings and voting (but non-economic) common
stock of the Company, and (iv) the Company will contribute all of its cash and cash equivalents to Andina Holdings, after payment
of the Company shareholders that elect to have their Company shares redeemed or converted in connection with the consummation
of the Merger, in exchange for newly issued voting membership interests of Andina Holdings, all upon the terms and subject to
the conditions set forth in the Business Combination Agreement.
Subject
to and upon the terms and conditions of the Business Combination Agreement, Stryve Holdings will contribute to Andina
Holdings all of the issued and outstanding equity interests of Stryve (the “Seller Contribution”) and Andina
Holdings shall issue to Stryve Holdings a number of newly issued Andina Holdings Class B Units (the “Seller
Consideration Units”) equal in value to (the “Seller Consideration”) (i) One Hundred and Thirty Million
U.S. Dollars ($130,000,000),
minus (ii) the amount, if any, by which the target consolidated net working capital amount of $553,635 exceeds the
consolidated net working capital of Stryve (but not less than zero), plus (iii) the amount, if any, by which the consolidated
net working capital of Stryve exceeds the target consolidated net working capital amount of $553,635
(but not less than zero), minus (iv) the amount of indebtedness of Stryve at the closing (excluding certain capitalized
leases and any obligations under the Bridge Notes or other convertible debt of Stryve Holdings that is converted into equity
in connection with the closing), minus (v) the amount of any Stryve transaction expenses, with each Andina Holdings Class B
Unit valued for such purposes at a price of $10.00
per Unit. Additionally, the Company will issue to the Seller a number of shares of newly issued shares of the
Company’s Class V Common Stock equal to the number of Seller Consideration Units.
The
Business Combination Agreement contains customary representations, warranties and covenants by the parties thereto and the closing
is subject to certain conditions as further described in the Business Combination Agreement.
Simultaneously
with the execution of the Business Combination Agreement, the Company and Stryve entered into subscription agreements with investors
for an aggregate of $42,500,000 at a price of $10.00 per share in a private placement in the Company (the “Closing PIPE Investment”),
to be consummated simultaneously with the Closing of the Business Combination. Additionally, simultaneously with the execution of the
Business Combination Agreement, the Company and Stryve entered into subscription agreements with the holders (the “Bridge Investors”)
of $10,600,000 in unsecured promissory notes of Stryve (the “Bridge Notes”) where the obligations of Stryve under the Bridge
Notes will be used to offset and satisfy the obligations of the Bridge Investors and the Bridge Investors will be issued shares of Class
A Common Stock at a price of $8.00 per share (the “Bridge PIPE Investment” and, together with the Closing PIPE Investment,
the “PIPE Investment”). Consummation of the PIPE Investment is conditioned on the concurrent Closing of the Business Combination
(and other customary closing conditions).
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
Note
8 — Shareholders’ Equity
Ordinary
Shares
The
Company is authorized to issue 100,000,000
ordinary shares with a par value of $0.0001
per share. As of March 31, 2021 and December
31, 2020, there were 3,095,000
and 3,650,004
ordinary shares issued and outstanding, excluding
1,322,096 and
767,392 ordinary
shares subject to possible redemption, respectively.
In
connection with the organization of the Company, a total of 2,875,000 ordinary shares were sold to the Initial Shareholders for
an aggregate purchase price of $25,000. The 2,875,000 shares included an aggregate of up to 375,000 shares subject to forfeiture
to the extent that the underwriters’ over-allotment option was not exercised in full or in part so that the Company’s
Initial Shareholders would own 20% of the issued and outstanding shares after the Initial Public Offering. As a result of the
underwriters’ election to partially exercise their over-allotment option to purchase an additional 800,000 Units, 200,000
shares are no longer subject to forfeiture and 175,000 shares were forfeited, resulting in an aggregate of 2,700,000 shares issued
and outstanding at the Initial Public Offering date.
The
Initial Shareholders have agreed not to transfer, assign or sell any of the insider shares (except to certain permitted transferees)
until (1) with respect to 50% of the insider shares, the earlier of one year after the date of the consummation of an initial
Business Combination and the date on which the closing price of the Company’s ordinary shares equals or exceeds $12.50 per
share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any
30-trading day period commencing after an initial Business Combination and (2) with respect to the remaining 50% of the insider
shares, one year after the date of the consummation of an initial Business Combination, or earlier, in either case, if, subsequent
to an initial Business Combination, the Company consummates a liquidation, merger, stock exchange or other similar transaction
which results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash, securities
or other property.
Rights
Each
holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination, even if a holder
of such right converted all ordinary shares held by it in connection with a Business Combination. No fractional shares will be
issued upon exchange of the rights. No additional consideration will be required to be paid by a holder of rights in order to
receive its additional shares upon consummation of a Business Combination as the consideration related thereto has been included
in the Unit purchase price paid for by investors in the Initial Public Offering. If the Company enters into a definitive agreement
for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the
holders of rights to receive the same per share consideration the holders of the ordinary shares will receive in the transaction
on an as-converted into ordinary shares basis and each holder of rights will be required to affirmatively covert its rights in
order to receive 1/10 of an ordinary share underlying each right (without paying additional consideration). The ordinary shares
issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company).
If
the Company is unable to complete a Business Combination by the Extended Date and the Company liquidates the funds held in the
Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution
from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless.
Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of
a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the
rights may expire worthless.
Warrants
The
Public Warrants will become exercisable on the later of the completion of an initial Business Combination or January 28, 2020.
However, except as set forth below, no Public Warrants will be exercisable for cash unless the Company has an effective and current
registration statement covering the ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating
to such ordinary shares. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon
exercise of the Public Warrants is not effective within 90 days from the consummation of an initial Business Combination, warrant
holders may, until such time as there is an effective registration statement and during any period when the Company shall have
failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption from registration
provided by Section 3(a)(9) of the Securities Act provided that such exemption is available. If an exemption from registration
is not available, holders will not be able to exercise their Public Warrants on a cashless basis. The warrants will expire five
years from the consummation of an initial Business Combination.
The
Company may call the Public Warrants for redemption (excluding the Private Warrants), in whole and not in part, at a price of
$.01 per warrant:
|
●
|
at any time while
the warrants are exercisable,
|
|
●
|
upon not less than
30 days’ prior written notice of redemption to each warrant holder,
|
|
●
|
if, and only if,
the reported last sale price of the ordinary shares equals or exceeds $18.00 per share, for any 20 trading days within a 30
trading day period ending on the third business day prior to the notice of redemption to warrant holders, and
|
|
●
|
if, and only if,
there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time
of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date
of redemption.
|
The
Private Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the
Private Warrants and the ordinary shares issuable upon the exercise of the Private Warrants will not be transferable, assignable
or salable until after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private
Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their
permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees,
the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2021
(Unaudited)
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise
the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and
number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event
of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. In addition, if
(x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection with
the closing of its initial Business Combination at an issue price or effective issue price of less than $8.50 per 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 Company affiliates, without taking into account any insider shares held by such affiliates
prior to such issuance) (where “insider shares” refers to the 2,875,000 ordinary shares held by the Company’s
Initial Shareholders prior to the Company’s Initial Public Offering), (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 Company’s initial
Business Combination on the date of the consummation of its initial Business Combination (net of redemptions) and (z) the volume
weighted average trading price of the Company’s ordinary shares during the 20 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 $8.50 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the
greater of (i) the Market Value or (ii) the price at which the Company issues the additional ordinary shares or equity-linked
securities. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to
complete a Business Combination within the required time 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 respect to such warrants. Accordingly, the warrants may
expire worthless.
Note
9 — Fair Value Measurements
The
Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value
at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company
would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an
orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets
and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and
to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).
The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable
inputs used in order to value the assets and liabilities:
|
Level
1:
|
Quoted
prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing
basis.
|
|
|
|
|
Level 2:
|
Observable inputs
other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities
and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
|
|
Level 3:
|
Unobservable inputs
based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The
following table presents information about the Company’s assets that are measured at fair value on a recurring basis at
March 31, 2021 and December 31, 2020 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine
such fair value:
Schedule of Fair Value Assets Measured on Recurring Basis
Description
|
|
Level
|
|
|
March
31, 2021
|
|
|
December
30, 2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable
securities held in Trust Account
|
|
|
1
|
|
|
$
|
13,542,749
|
|
|
|
13,545,503
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liability –
Private Warrants
|
|
|
3
|
|
|
|
770,250
|
|
|
|
|
|
Marketable
securities held in Trust Account
As
of March 31, 2021 and December 31, 2020, investment in the Trust Account consisted of $13,542,749 and $13,545,503,
respectively in a money market fund with the fair value approximate to the carrying cost.
Private
Warrants
The
Private Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities
on the Company’s consolidated balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring
basis, with changes in fair value presented within change in fair value of warrant liabilities in the consolidated statement of
operations.
The
Private Warrants were valued using a binomial lattice model incorporating the Cox-Ross-Rubenstein methodology, which is considered
to be a Level 3 fair value measurement. The Warrants were classified as Level 3 at the initial measurement date due to the use
of unobservable inputs.
At
the time of the IPO, in January 31, 2019, the Private Warrants liability had a fair value $0.41
per Private Warrant, or an aggregate amount of
$161,950.
The Private Warrants liability as of January 31, 2019 was concluded to be non-material, as well as in other previous periods reported.
The impact of the Private Warrant Liability since the IPO will be reported in the current period as of March 31, 2021.
The
key inputs into the binomial lattice model incorporating the Cox-Ross-Rubenstein methodology for the Private Warrants were as
follows at March 31, 2021:
Schedule of Binomial Lattice Model for Private Warrants
Input
|
|
March
31, 2021
|
|
Risk-free
interest rate
|
|
|
0.87
|
%
|
Dividend yield
|
|
|
0.00
|
%
|
Selected volatility
|
|
|
25.2
|
%
|
Exercise price
|
|
$
|
11.50
|
|
Market Stock Price
|
|
$
|
10.27
|
|
On
March 31, 2021, the Private Placement Warrants were determined to be $1.95 per warrant for an aggregate value of $770,250.
The
following table presents the changes in the fair value of warrant liabilities for the period:
Schedule of Changes in Fair Value of Warrant Liabilities
|
|
Private
|
|
|
|
|
|
|
Fair value as
of March 31, 2021
|
|
$
|
770,250
|
|
Note
10 — Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed
financial statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent
events that would have required adjustment or disclosure in the condensed financial statements.