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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number 001-40035

 

LAZARD GROWTH ACQUISITION CORP. I

(Exact Name of Registrant as Specified in its Charter)

 

 

Cayman Islands

 

98-1571783

(State or Other Jurisdiction of Incorporation)

 

(I.R.S. Employer Identification No.)

 

 

 

30 Rockefeller Plaza

New York, New York  

 

10112

(Address of principal executive offices)

 

(zip code)

 

Registrant’s telephone number, including area code: (212) 632-6000

 

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 and one-fifth of one redeemable warrant

 

 

  LGACU

 

 

The Nasdaq Stock Market LLC

Class A ordinary shares, par value $0.0001 per share

 

LGAC

 

The Nasdaq Stock Market LLC

Redeemable warrants, exercisable for one Class A ordinary share at an exercise price of $11.50 per share

 

 

  LGACW

 

 

The Nasdaq Stock Market LLC

 

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, 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 August 8, 2022, the registrant had 57,500,000 shares of Class A ordinary shares, $0.0001 par value per share, and 14,375,000 shares of Class B ordinary shares, par value $0.0001 per share issued and outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

 

 

Condensed Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021

1

 

Unaudited Condensed Statements of Operations for the Three Months and Six Months Ended June 30, 2022 and 2021

2

 

Unaudited Condensed Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021

3

 

Unaudited Condensed Statements of Changes in Shareholders’ Deficit for the Three Months and Six Months Ended June 30, 2022 and 2021

4

 

Notes to Unaudited Condensed Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

20

Item 4.

Controls and Procedures

      20

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

21

Item 1A.

Risk Factors

21

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

21

Item 3.

Defaults Upon Senior Securities

21

Item 4.

Mine Safety Disclosures

21

Item 5.

Other Information

21

Item 6.

Exhibits

22

Signatures

23

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

LAZARD GROWTH ACQUISITION CORP. I

Condensed Balance Sheets

 

 

 

June 30, 2022

 

 

December 31, 2021

 

 

 

(unaudited)

 

 

(audited)

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

408,522

 

 

$

660,069

 

Prepaid expenses

 

 

609,506

 

 

 

1,056,726

 

Total current assets

 

 

1,018,028

 

 

 

1,716,795

 

Other assets:

 

 

 

 

 

 

 

 

Cash equivalents held in Trust Account

 

 

575,809,510

 

 

 

575,033,252

 

TOTAL ASSETS

 

$

576,827,538

 

 

$

576,750,047

 

LIABILITIES AND SHAREHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Related party loans

 

$

4,000,000

 

 

$

2,000,000

 

Accrued expenses and payable to affiliate

 

 

2,271,977

 

 

 

3,997,673

 

Accrued offering and formation costs

 

 

-

 

 

 

70,000

 

Total current liabilities

 

 

6,271,977

 

 

 

6,067,673

 

Other liabilities:

 

 

 

 

 

 

 

 

Warrants exercisable for Class A ordinary shares, at fair value

 

 

5,305,000

 

 

 

18,015,000

 

Deferred underwriting commissions

 

 

20,125,000

 

 

 

20,125,000

 

Total liabilities

 

 

31,701,977

 

 

 

44,207,673

 

Commitments and contingencies

 

 

-

 

 

 

-

 

Class A ordinary shares subject to possible redemption, $0.0001 par value; 500,000,000 shares authorized; 57,500,000 shares issued, outstanding and subject to possible redemption at $10.01 and $10.00 per share, respectively

 

 

575,709,510

 

 

 

575,000,000

 

Shareholders' Deficit

 

 

 

 

 

 

 

 

Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding

 

 

-

 

 

 

-

 

Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 14,375,000 shares issued and outstanding

 

 

1,438

 

 

 

1,438

 

Additional paid in capital

 

 

-

 

 

 

-

 

Accumulated Deficit

 

 

(30,585,387

)

 

 

(42,459,064

)

Total shareholders' deficit

 

 

(30,583,949

)

 

 

(42,457,626

)

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT

 

$

576,827,538

 

 

$

576,750,047

 

 

The accompanying notes are an integral part of these condensed financial statements.

1


LAZARD GROWTH ACQUISITION CORP. I

Condensed Unaudited Statements of Operations

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2022

 

 

2021

 

2022

 

 

2021

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

$

395,469

 

 

$

594,014

 

$

903,071

 

 

$

827,059

 

Total expenses

 

 

395,469

 

 

 

594,014

 

 

903,071

 

 

 

827,059

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of warrant liability

 

 

5,650,000

 

 

 

(2,895,000

)

 

12,710,000

 

 

 

(845,000

)

Interest on trust account

 

 

731,740

 

 

 

11,856

 

 

776,258

 

 

 

11,856

 

Expensed offering costs

 

 

-

 

 

 

(971

)

 

-

 

 

 

(714,494

)

Total other income (expense)

 

 

6,381,740

 

 

 

(2,884,115

)

 

13,486,258

 

 

 

(1,547,638

)

NET INCOME (LOSS)

 

$

5,986,271

 

 

$

(3,478,129

)

$

12,583,187

 

 

$

(2,374,697

)

Weighted average number of shares outstanding, redeemable Class A ordinary shares

 

 

57,500,000

 

 

 

57,500,000

 

 

57,500,000

 

 

 

44,157,459

 

Basic and diluted net income (loss) per share, redeemable Class A ordinary shares

 

$

0.08

 

 

$

(0.05

)

$

0.18

 

 

$

(0.04

)

Weighted average number of shares outstanding, non-redeemable Class B ordinary shares

 

 

14,375,000

 

 

 

14,375,000

 

 

14,375,000

 

 

 

14,375,000

 

Basic and diluted net income (loss) per share, non-redeemable Class B ordinary shares

 

$

0.08

 

 

$

(0.05

)

$

0.18

 

 

$

(0.04

)

 

The accompanying notes are an integral part of these condensed financial statements.

2


LAZARD GROWTH ACQUISITION CORP. I

Condensed Unaudited Statements of Cash Flows

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2022

 

 

2021

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net Income (loss)

 

$

12,583,188

 

 

$

(2,374,697

)

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

 

 

Change in fair value of warrant liability

 

 

(12,710,000

)

 

 

845,000

 

Expensed offering costs

 

 

-

 

 

 

714,494

 

Interest on trust account

 

 

(776,258

)

 

 

(11,856

)

(Increase) decrease in operating assets and increase (decrease) in operating liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

447,218

 

 

 

(1,583,943

)

Accrued expenses and payable to affiliate

 

 

(1,725,695

)

 

 

102,568

 

Accrued offering and formation costs

 

 

(70,000

)

 

 

-

 

Net Cash used in operating activities

 

 

(2,251,547

)

 

 

(2,308,434

)

Investing Activities:

 

 

 

 

 

 

 

 

Cash placed in trust

 

 

-

 

 

 

(575,000,000

)

Cash used in investing activities

 

 

-

 

 

 

(575,000,000

)

Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from related party loans

 

 

2,000,000

 

 

 

1,300,000

 

Proceeds from sale of Initial Public Offering Units

 

 

-

 

 

 

575,000,000

 

Proceeds from sale of Private Placement Warrants

 

 

-

 

 

 

13,500,000

 

Payment of underwriting discount

 

 

-

 

 

 

(11,500,000

)

Payment of offering costs

 

 

-

 

 

 

(702,238

)

Proceeds from promissory note payable

 

 

-

 

 

 

100,833

 

Payment of promissory note payable

 

 

-

 

 

 

(187,583

)

Net cash provided by financing activities

 

 

2,000,000

 

 

 

577,511,012

 

Net Change in Cash

 

 

(251,547

)

 

 

202,578

 

Cash - Beginning of period

 

 

660,069

 

 

 

25,000

 

Cash - End of period

 

$

408,522

 

 

$

227,578

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Deferred offering costs included in accrued offering and formation costs

 

$

-

 

 

$

70,000

 

Deferred underwriting commission

 

$

-

 

 

$

20,125,000

 

Remeasurement of value of Class A ordinary shares subject to possible redemption

 

$

709,510

 

 

$

-

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

3


 

LAZARD GROWTH ACQUISITION CORP. I

Condensed Unaudited Statements of Changes in Shareholders’ Deficit

For the Three Months and Six Months ended June 30, 2022 and June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Class A Ordinary Shares

 

 

Class B Ordinary Shares

 

 

Paid in

 

 

Accumulated

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

Balance, January 1, 2022

 

 

-

 

 

$

-

 

 

 

14,375,000

 

 

$

1,438

 

 

$

-

 

 

$

(42,459,064

)

 

$

(42,457,626

)

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,596,916

 

 

 

6,596,916

 

Balance, March 31, 2022

 

 

-

 

 

$

-

 

 

 

14,375,000

 

 

$

1,438

 

 

$

-

 

 

$

(35,862,148

)

 

$

(35,860,710

)

Net Income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,986,271

 

 

 

5,986,271

 

Remeasurement of value of Class A ordinary shares subject to possible redemption

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(709,510

)

 

 

(709,510

)

Balance, June 30, 2022

 

 

-

 

 

$

-

 

 

 

14,375,000

 

 

$

1,438

 

 

$

-

 

 

$

(30,585,387

)

 

$

(30,583,949

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Class A Ordinary Shares

 

 

Class B Ordinary Shares

 

 

Paid in

 

 

Accumulated

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

Balance, January 1, 2021

 

 

-

 

 

$

-

 

 

 

14,375,000

 

 

$

1,438

 

 

$

23,562

 

 

$

(7,000

)

 

$

18,000

 

Class A ordinary shares issued, net of offering costs

 

 

57,500,000

 

 

 

5,750

 

 

 

-

 

 

 

-

 

 

 

530,624,927

 

 

 

-

 

 

 

530,630,677

 

Proceeds of sale of Private Placement Warrants in excess of fair value

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,600,000

 

 

 

-

 

 

 

3,600,000

 

Net Income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,103,432

 

 

 

1,103,432

 

Class A ordinary shares subject to possible redemption

 

 

(57,500,000

)

 

 

(5,750

)

 

 

-

 

 

 

-

 

 

 

(534,248,489

)

 

 

(40,745,761

)

 

 

(575,000,000

)

Balance, March 31 2021

 

 

-

 

 

$

-

 

 

 

14,375,000

 

 

$

1,438

 

 

$

-

 

 

$

(39,649,329

)

 

$

(39,647,891

)

Offering costs on Class A ordinary shares issued

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(43,172

)

 

 

(43,172

)

Net Loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,478,129

)

 

 

(3,478,129

)

Balance, June 30, 2021

 

 

-

 

 

$

-

 

 

 

14,375,000

 

 

$

1,438

 

 

$

-

 

 

$

(43,170,630

)

 

$

(43,169,192

)

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

4


 

 

LAZARD GROWTH ACQUISITION CORP. I

Notes to Unaudited Condensed Financial Statements

Note 1 - Organization and Plan of Business Operations

Lazard Growth Acquisition Corp. I (the “Company”) is a blank check company, incorporated as a Cayman Islands exempted company on December 10, 2020. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (a “Business Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of June 30, 2022, the Company had not commenced any operations. All activity for the six months ended June 30, 2022 and 2021, relates to the company’s formation, completing its initial public offering (“Initial Public Offering”) and identifying and evaluating prospective acquisition targets for an initial Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.

On February 12, 2021, the Company consummated the Initial Public Offering of 57,500,000 units (the “Units”) at $10.00 per Unit, and the sale of 9,000,000 warrants, (the “Private Placement Warrants”), at a price of $1.50 per Private Placement Warrant in a private placement to LGACo 1 LLC (the “Sponsor”), that closed simultaneously with the closing of the Initial Public Offering.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants. Although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The stock exchange listing rules require that the Business Combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (as defined below) (excluding the amount of deferred underwriting commissions and taxes payable on the income earned on the Trust Account). The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully effect a Business Combination. Upon the closing of the Initial Public Offering, the Company agreed that $10.00 per Unit sold in the Initial Public Offering, including a portion of the proceeds of the sale of the Private Placement Warrants, were placed in a trust account (“Trust Account”) to be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earliest of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.

The Company will provide the holders of the public shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their public shares upon the completion of the Business Combination, either (i) in connection with a general meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion, based on a variety of factors. The Public Shareholders will be entitled to redeem their public shares, equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the consummation of the Business Combination (initially anticipated to be $10.00 per public share), including interest (which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, subject to certain limitations. The per-share amount to be distributed to the Public Shareholders who properly redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 6). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Class A ordinary shares have been classified as temporary equity upon the completion of the Initial Public Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” (“ASC 480”)

5


 

The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 and, if the Company seeks shareholder approval, it receives an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the Company. If a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination. If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor and each of our officers and directors have agreed to vote their Founder Shares (as defined in Note 3) and any public shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Shareholder may elect to redeem their public shares, without voting, and if they do vote, irrespective of whether they vote for or against a proposed Business Combination.

Notwithstanding the foregoing, if the Company seeks shareholder approval of the Business Combination and the Company does not conduct redemptions pursuant to the tender offer rules, a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the public shares without the Company’s prior written consent.

The Sponsor and each of our officers and directors have agreed to waive their redemption rights with respect to any Founder Shares and public shares held by them in connection with (i) the completion of a Business Combination and (ii) a shareholder vote to approve an amendment to the Amended and Restated Memorandum and Articles of Association that (A) modify the substance or timing of the Company’s obligation to allow redemption of Class A ordinary shares in connection with the Company’s initial Business Combination or to redeem 100% of the public shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (B) with respect to any other provision relating to shareholders’ rights. Additionally, the Sponsor and each of our officers and directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares they hold if the Company fails to consummate a Business Combination within the Combination Period.

The Company has until 24 months from the closing of the Initial Public Offering to consummate a Business Combination (or such extended time beyond 24 months as a result of a shareholder vote to amend its Amended and Restated Memorandum and Articles of Association) (the “Combination Period”). However, if the Company has not completed a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned and not previously released to the Company to pay its taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish the rights of the Public Shareholders as shareholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining Public Shareholders and its Board of Directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

6


 

The Sponsor and each of our executive officers and directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares they hold if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor or any of our executive officers and directors acquire Public Shares, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriter has agreed to waive its rights to deferred underwriting commissions (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period, and in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).

In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account 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 public share, due to reductions in the value of trust assets, in each case net of the interest that may be withdrawn to pay taxes. This liability will not apply to any claims by a third party or prospective target business that executed a waiver of any and all rights to seek access to the Trust Account and as to any claims under the Company’s indemnity of the underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Going Concern Consideration

On March 26, 2021, the Sponsor committed $1,300,000 to be provided to the Company to fund working capital requirements prior to an initial Business Combination. On August 5, 2021, the Sponsor amended its working capital loan to provide additional borrowings up to a total amount of $2,000,000. On March 30, 2022, the Sponsor further amended the working capital loan to provide additional borrowing up to a total borrowing of $5,000,000. After borrowing $4,000,000, the Company had cash of $408,522 as of June 30, 2022 and the Company does not have sufficient liquidity to meet its anticipated obligations during the period beginning with the date of issuance of these financial statements through the end of the Combination Period. In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management determined that while the Sponsor or an affiliate of the Sponsor may, but is not obligated to, loan the Company additional funds as may be needed by the Company, the Company cannot assure you that their plans to raise capital or to complete a Business Combination will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern.

 

Note 2 - Significant Accounting Policies

Basis of Presentation

The Company’s unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC for interim financial information and the instructions to Form 10-Q. Certain disclosures included in the annual financial statements have been condensed or omitted from these financial statements as they are not required for interim financial statements under U.S. GAAP and the rules of the SEC. These unaudited condensed financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results

7


 

for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year.

The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s annual audited financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2022. The interim results for the three months and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future interim periods.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s 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 U.S. 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. Estimates, by their nature, are based on judgment and available information. Therefore, actual results could differ from those estimates and could have a material impact on the financial statements.

Cash and Cash Equivalents Held in Trust Account

Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of ninety (90) days or less. The Company held cash of $408,522 and $660,069 in a demand deposit account at June 30, 2022 and December 31, 2021, respectively. The company held $575,809,510 and $575,033,252 in the Trust Account as of June 30, 2022 and December 31, 2021, respectively. The cash equivalents held in the Trust Account are characterized as a Level I investment within the fair value hierarchy under ASC 820. The cash equivalents held in the Trust Account are held in money market funds which invest only in direct U.S. Treasury obligations and are considered restricted.

8


 

Warrants Exercisable for Class A Ordinary Shares

The Company accounts for the warrants issued in connection with the Initial Public Offering in accordance with ASC 480-10, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” which provides that the Company classifies the warrant instrument as a liability at its fair value and adjusts the instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, in accordance with ASC Topic 815, and any change in fair value is recognized in the Company’s statement of operations.

Income Taxes

The Company accounts for income taxes under ASC 740, "Income Taxes." ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

ASC 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 June 30, 2022 and December 31, 2021 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.

The Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the periods presented.

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 480. Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is 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 as temporary equity, outside of the shareholders’ deficit section of the Company’s balance sheets.

Each month, the Company re-measures the redemption value of the Class A shares subject to possible redemption. During the three months ended June 30, 2022, the cumulative net interest income earned on the Trust Account exceeded the $100,000 available to be used by the Company for liquidation costs should the Company not complete a Business Combination. The remeasurement as of June 30, 2022, resulted in an increase of $709,510 to the redemption value and a charge to accumulated deficit.

Net Income (Loss) Per Ordinary Share

Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. As of June 30, 2022 and 2021, the Company had outstanding warrants to purchase up to 20,500,000 Class A ordinary shares. The weighted average of these shares have been excluded from the calculation of diluted net income (loss) per share of  redeemable Class A ordinary shares because the exercise of the warrants is contingent upon the occurrence of future events. At June 30, 2022 and 2021, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the income (loss) of the Company. As a result, diluted income (loss) per share is the same as basic income (loss) per share for the periods presented.

9


 

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. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such accounts.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value measurements and disclosures,” approximates the carrying amounts represented in the accompanying balance sheets primarily due to their short-term nature. 

Recent Accounting Standards

In August 2020, the Financial Accounting Standards Board issued 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 for fiscal years beginning after December 15, 2023 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.

Note 3 - Related Party Transactions

Founder Shares

On December 17, 2020, the Sponsor paid $25,000 to purchase an aggregate of 14,375,000 Class B ordinary shares (the “Founder Shares”). The Sponsor agreed to forfeit up to 1,875,000 Founder Shares to the extent to which the underwriter exercised its over-allotment option, so that the number of Founder Shares would equal, on an as-converted basis, approximately 20% of the Company’s issued and outstanding ordinary shares after the Initial Public Offering. The underwriter exercised the over-allotment option in full and none of the Founder Shares were forfeited.

On February 5, 2021, the Sponsor transferred 25,000 of its Founder Shares to each of the Company’s five independent directors (125,000 Founder Shares in the aggregate). Effective May 11, 2021, a member of the Company’s board of directors (the “Board”) resigned his position as a member of the Board and subsequently transferred back to the Sponsor the 25,000 Founder Shares he previously received from the Sponsor in connection with his service on the Board.

The Sponsor’s transfer of 100,000 Founders Shares to the Company’s directors is within the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The fair value of the 100,000 shares transferred to the Company’s directors was $342,000 or $3.42 per share. The Founders Shares were effectively transferred subject to a performance condition (i.e., the consummation of a Business Combination). Compensation expense related to the Founders Shares is recognized only when the performance condition is probable of achievement under the applicable accounting literature. Stock-based compensation would be recognized at the date a Business Combination is considered probable in an amount equal to the number of Founders Shares times the grant date fair value per share (unless subsequently modified) As of June 30, 2022, the Company has not yet entered into any definitive agreements in connection with any Business Combination. Any such agreements may be subject to certain conditions to closing, such as, for example, approval by the Company’s shareholders. As a result, the Company determined that the consummation of a Business Combination is not yet considered probable, and, therefore, no stock-based compensation expense has been recognized. 

10


 

The Sponsor and each of our executive officers and directors have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earliest of: (i) one year after the completion of a Business Combination and (ii) subsequent to a Business Combination, (A) if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (B) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of the Public Shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.

On February 5, 2021, the Sponsor converted into a series limited liability company and LGA HoldCo LLC, an affiliate of Lazard Ltd, provided each of the Company’s executive officers and certain other employees of Lazard Ltd and its subsidiaries the opportunity to purchase certain membership interests in a series of the Sponsor (the “Employee Participation Interests”) pursuant to which such persons have economic interests in certain of the Founder Shares but do not have voting rights or dispositive power with respect thereto. In particular, the Company’s executive officers and such other employees of Lazard Ltd and its subsidiaries possess Employee Participation Interests representing economic interests in approximately 30% in the aggregate of the Company’s issued and outstanding Founder Shares, including approximately 2% in the aggregate which has been provided by the Company’s executive officers; however, the Sponsor maintains the voting rights attributable to, and the dispositive power in respect of, all such Founder Shares. Each of the Company’s executive officers and such other employees of Lazard Ltd and its subsidiaries will also be eligible to directly or indirectly purchase or receive additional economic or other interests in the Company’s securities from Lazard Ltd and its subsidiaries, including additional Employee Participation Interests, on a discretionary basis in the future.

Related Party Loans

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor committed $1,300,000 to be provided to the Company (“Working Capital Loan”) to fund our expenses relating to investigating and selecting a target business and other working capital requirements prior to our initial business combination. On August 5, 2021, the Sponsor amended its commitment to provide up to $2,000,000 of borrowing in the aggregate. On March 30, 2022, the Sponsor further amended the Working Capital Loan to provide additional borrowing up to a total borrowing of $5,000,000. If the Company completes a Business Combination, the Company may repay the Working Capital Loan out of the proceeds of the Trust Account released to the Company. 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 Loan, but no proceeds held in the Trust Account would be used to repay the Working Capital Loan.

At the lender’s discretion, up to $2,000,000 of such Working Capital Loan may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant. Pursuant to the terms of the Working Capital Loan, as amended on March 30, 2022, such conversion right may only be exercised at the time of a Business Combination. The warrants would be identical to the Private Placement Warrants. As of June 30, 2022 and December 31, 2021, the Company had $4,000,000 and $2,000,000, respectively, outstanding borrowings under the Working Capital Loan.

In addition, the Sponsor or an affiliate of the Sponsor may, but are not obligated to, loan the Company additional funds (“Supplemental Loans”) as may be required. The terms of such Supplemental Loans, if any, have not been determined and no written agreements exist with respect to such loans.

11


 

Advisory Services

Lazard Frères & Co. LLC, an affiliate of the Company, is acting as the Company’s independent financial advisor as defined under Financial Industry Regulatory Authority (“FINRA”) Rule 5110(j)(9), to provide independent financial consulting services, consisting of a review of deal structure and terms and related structuring advice in connection with the Initial Public Offering, for which it has and will receive a financial advisory fee, which was paid upon the closing of the Initial Public Offering and shall be payable upon the consummation of the Business Combination. Upon the completion of the Initial Public Offering, Lazard Frères & Co. LLC received a financial advisory fee of $3,000,000. Pursuant to the terms of the underwriting agreement, the underwriter agreed to reimburse the Company for a portion of the offering costs in an amount equal to the fee paid to Lazard Frères & Co. LLC. On February 12, 2021, the underwriter reimbursed the Company $3,000,000.

Administrative Support Agreement

The Company agreed, commencing on the date that the Company’s securities are first listed on the Nasdaq Capital Market, which was February 10, 2021, and through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay an affiliate of the Sponsor a total of $20,000 per month for office space, secretarial and administrative support. For the three months ended June 30, 2022 and 2021,and six months ended June 30, 2022 and 2021, the Company incurred administrative expenses of $60,000 and $120,000 respectively.

Note 4 - Fair Value Measurements

Fair Value Hierarchy of Assets and Liabilities—The Company categorizes its warrants exercisable for Class A ordinary shares, which are recorded at fair value into a three-level fair value hierarchy as follows:

Level 1. Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market    that the Company has the ability to access.

Level 2. Assets and liabilities whose values are based on (i) quoted prices for similar assets or liabilities in an active market, or quoted prices for identical or similar assets or liabilities in non-active markets, or (ii) inputs other than quoted prices that are directly observable or derived principally from, or corroborated by, market data.

Level 3. Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect our own assumptions about the assumptions a market participant would use in pricing the asset or liability

 

12


 

 

The Company’s Public Warrants exercisable for Class A ordinary shares began trading on Nasdaq in April 2021 and at such time they were reclassified from Level 3 to Level 1. Their fair value at June 30, 2022 and December 31, 2021 is based on an observable market quote. The fair value of the Public Warrants prior to the commencement of trading and the fair value of the Private Warrants is based on a valuation model that utilizes both observable and unobservable inputs. Observable inputs include market prices of warrants issued by other SPACs and unobservable inputs include model adjustments for valuation uncertainty pertaining to the probability of the Company consummating a Business Combination.

The following tables present, as of June 30, 2022 and December 31, 2021, the classification of assets and liabilities measured at fair value on a recurring basis within the fair value hierarchy.

 

 

 

June 30, 2022

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents held in Trust Account

 

$

575,809,510

 

 

$

-

 

 

$

-

 

 

$

575,809,510

 

Total

 

$

575,809,510

 

 

$

-

 

 

$

-

 

 

$

575,809,510

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants exercisable for Class A ordinary shares

 

$

2,875,000

 

 

$

-

 

 

$

2,430,000

 

 

$

5,305,000

 

Total

 

$

2,875,000

 

 

$

-

 

 

$

2,430,000

 

 

$

5,305,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents held in Trust Account

 

$

575,033,252

 

 

$

-

 

 

$

-

 

 

$

575,033,252

 

Total

 

$

575,033,252

 

 

$

-

 

 

$

-

 

 

$

575,033,252

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants exercisable for Class A ordinary shares

 

$

10,005,000

 

 

$

-

 

 

$

8,010,000

 

 

$

18,015,000

 

Total

 

$

10,005,000

 

 

$

-

 

 

$

8,010,000