UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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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.
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RIBBIT LEAP, LTD.
Quarterly Report on Form 10-Q/A
TABLE OF CONTENTS
EXPLANATORY NOTE
Ribbit LEAP, Ltd. (the “Company,” “we,” “us” or “our”) is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q/A for the quarterly period ended September 30, 2021 (this “Quarterly Report”) to amend and restate certain terms in its Quarterly Report on Form 10-Q for the quarterly period September 30, 2021, originally filed with the Securities and Exchange Commission (the “SEC”) on November 12, 2021 (the “Original Quarterly Report”).
Background of Restatement
All of the ordinary shares held by the Company’s public shareholders (the “Public Shares”) contain a redemption feature which provides each holder of such shares with the opportunity to have their shares redeemed, and management has no control over which Public Shares will be redeemed. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480-10-S99-3A provides that redemption provisions not solely within the control of the issuer require shares subject to redemption to be classified outside of permanent equity. Furthermore, ASC 480-10-25-6(b) provides guidance stating that in determining if an instrument is mandatorily redeemable, a provision that defers redemption until a specified liquidity level is reached would not affect classification of the instrument. As such, management has identified errors made in the historical financial statements where, at the closing of the Company’s initial public offering (the “Initial Public Offering”), the Company improperly valued its Class A ordinary shares subject to possible redemption. The Company previously determined the Class A ordinary shares subject to possible redemption to be equal to the redemption value, while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Management determined that the Public Shares can be redeemed or become redeemable subject to the occurrence of future events considered outside the Company’s control. Therefore, management concluded that the redemption value should include all Class A ordinary shares subject to possible redemption, resulting in the Class A ordinary shares subject to possible redemption being equal to their redemption value. As a result, management has noted a reclassification adjustment related to temporary equity and permanent equity as of the Initial Public Offering date and all subsequent reporting periods.
As a result, the Company’s management, together with the audit committee of the Company (the “Audit Committee”), determined that the Company’s financial statements and other financial data as of and for the three months ended March 31, 2021, and for the three and six months ended June 30, 2021, should be restated in this Quarterly Report as a result of this error. The three months ended March 31, 2021 and June 30, 2021 will be restated in Note 2 of this Quarterly Report. These restatements result in a change in the initial carrying value of the Class A ordinary shares subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A ordinary shares. Further, there is no impact to the reported amounts for total assets, total liabilities, cash flows, or net income (loss) but earnings per share was impacted due to a change in presentation relating to the restatements. In connection with the change in presentation for the Class A ordinary shares subject to redemption, the Company also revised its earnings per share calculation to allocate net income (loss) on a pro rata basis between (i) Class A ordinary shares subject to possible redemption and (ii) Class B non-redeemable ordinary shares and Class A non-redeemable ordinary shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of ordinary shares share pro rata in the income (loss) of the Company.
We are filing this Amendment No. 1 to the Quarterly Report on Form 10-Q/A to amend and restate our previously issued interim financial statements as necessary to reflect the restatements. The following items have been amended to reflect the restatements:
Part I, Item 1. Financial Statements
Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part I, Item 4. Controls and Procedures
Part II, Item 1A. Risk Factors
The financial information that has been previously filed or otherwise reported for this period is superseded by the information in this Quarterly Report, and the financial statements and related financial information contained in the Original Quarterly Report should no longer be relied upon. On February 16, 2022, the Company filed a Current Report on Form 8-K disclosing the non-reliance on the financial statements included in the Original Quarterly Report.
3
Internal Control Considerations
Subsequent to our filing of Form 10-Q filing for the period ended September 30, 2021, (the “Original Quarterly Report”) as filed with the SEC on November 12, 2021, management has re-evaluated the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting as of September 30, 2021. The Company’s management has concluded that, in light of the errors described above, and the filing of the Original Quarterly Report, a material weakness exists in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective as of the date of the Original Quarterly Report. Management plans to enhance the system of evaluating and implementing the accounting standards that apply to our financial statements, including enhanced training of our personnel and increased communication among our personnel and third-party professionals with whom we consult regarding application of complex financial instruments. For a discussion of management’s consideration of our disclosure controls and procedures, internal controls over financial reporting, and the material weaknesses identified, see Part I, Item 4, “Controls and Procedures” of this Quarterly Report.
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PART I – FINANCIAL INFORMATION
Item 1. Condensed Interim Financial Statements (Unaudited)
RIBBIT LEAP, LTD.
CONDENSED BALANCE SHEETS
| September 30, 2021 |
| December 31, 2020 | |||
(Unaudited) | ||||||
ASSETS |
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Current assets: |
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Cash | $ | | $ | | ||
Prepaid assets | | | ||||
Total current assets |
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Cash and marketable securities held in Trust Account |
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Other long-term assets | — | | ||||
TOTAL ASSETS | $ | | $ | | ||
LIABILITIES, CLASS A REDEEMABLE SHARES, AND SHAREHOLDERS’ DEFICIT |
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Current liabilities: |
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Accounts payable and accrued expenses | $ | | $ | | ||
Total current liabilities | | | ||||
Class A public warrants liability | | | ||||
Forward purchase securities liability | | | ||||
Class L ordinary shares liability | | | ||||
Deferred underwriting commissions |
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Total Liabilities |
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Commitments and Contingencies (Note 6) |
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Class A ordinary shares subject to possible redemption, $ |
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Shareholders’ Deficit |
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Preference shares, $ |
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Class A ordinary shares $ |
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Class B ordinary shares, $ |
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Additional paid-in-capital |
| — |
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Accumulated deficit |
| ( |
| ( | ||
Total Shareholders’ Deficit |
| ( |
| ( | ||
TOTAL LIABILITIES, CLASS A REDEEMABLE SHARES, AND SHAREHOLDERS’ DEFICIT | $ | | $ | | ||
The accompanying notes are an integral part of the unaudited condensed interim financial statements.
5
RIBBIT LEAP, LTD.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For the period | |||||||||
Three Months Ended | Nine Months Ended | from July 7, 2020 (Inception) | |||||||
| September 30, 2021 |
| September 30, 2021 |
| through September 30, 2020 | ||||
Formation and operating costs | $ | | $ | | $ | | |||
Loss from operations | $ | ( | $ | ( | $ | ( | |||
Other income (expense): | |||||||||
Change in fair value of Class A public warrants liability | | | ( | ||||||
Change in fair value of forward purchase securities liability | | | ( | ||||||
Change in fair value of Class L ordinary shares liability | | | ( | ||||||
Interest earned on marketable securities held in Trust Account | | | — | ||||||
Net income (loss) | $ | | $ | | $ | ( | |||
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Weighted average shares outstanding of Class A redeemable ordinary shares, basic and diluted |
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Basic and diluted net income (loss) per redeemable ordinary share | $ | | $ | | $ | ( | |||
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Weighted average shares outstanding of non-redeemable ordinary shares, basic and diluted | | | | ||||||
Basic and diluted net income (loss) per non-redeemable ordinary share | $ | | $ | | $ | ( | |||
The accompanying notes are an integral part of the unaudited condensed interim financial statements.
6
RIBBIT LEAP, LTD.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(Unaudited)
| Ordinary Shares | Additional | Total | ||||||||||||||||
Class A | Class B | Paid-in | Accumulated | Shareholders’ | |||||||||||||||
| Shares |
| Amount | Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | |||||||
Balance – January 1, 2021 | | $ | | | $ | | $ | — | $ | ( | $ | ( | |||||||
Net income |
| — |
| — | — |
| — |
| — |
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Balance – March 31, 2021 |
| | $ | | | $ | | $ | — | $ | ( | $ | ( | ||||||
Net income | — | — | — | — | — | | | ||||||||||||
Balance – June 30, 2021 | | $ | | | $ | | $ | — | $ | ( | $ | ( | |||||||
Net income | — | — | — | — | — | | | ||||||||||||
Balance – September 30, 2021 | $ | $ | $ | — | $ | ( | $ | ( | |||||||||||
Ordinary shares | Additional |
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| Total | ||||||||||||||
Class A | Class B | Paid-in | Accumulated | Shareholders’ | |||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | ||||||
Balance – July 7, 2020 (Inception) | | $ | | | $ | | $ | | $ | | $ | | |||||||
Issuance of ordinary shares to Sponsor in private placement | — | — | |
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Issuance of ordinary shares from private placement with Sponsor | | | — | — | | — | | ||||||||||||
Accretion of Class A ordinary shares subject to redemption value | — |
| — | — |
| — |
| ( |
| ( |
| ( | |||||||
Net loss | — |
| — | — |
| — |
| — |
| ( |
| ( | |||||||
Balance – September 30, 2020 | | $ | | | $ | | $ | — | $ | ( | $ | ( | |||||||
The accompanying notes are an integral part of the unaudited condensed interim financial statements.
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RIBBIT LEAP, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For the period | ||||||
For the Nine Months Ended | from July 7, 2020 (Inception) | |||||
| September 30, 2021 |
| through September 30, 2020 | |||
Cash Flows from Operating Activities: |
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Net income (loss) | $ | | $ | ( | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||
Change in fair value of Class A public warrants liability | ( | | ||||
Change in fair value of forward purchase securities liability | ( | | ||||
Change in fair value of Class L ordinary shares liability | ( | | ||||
Interest earned on marketable securities held in Trust Account | ( | — | ||||
Changes in operating assets and liabilities: |
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Prepaid expenses |
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| ( | ||
Other long-term assets |
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Accounts payable and accrued expenses |
| ( |
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Net cash used in operating activities |
| ( |
| ( | ||
Cash Flows from Investing Activities: |
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Investment of cash into Trust Account |
| — |
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Net cash used in investing activities |
| — |
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Cash Flows from Financing Activities: |
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Proceeds from issuance of Class B ordinary shares to Sponsor |
| — |
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Proceeds from issuance of Class L ordinary shares to Sponsor |
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Proceeds received from initial public offering, net of underwriting discounts and offering costs |
| — |
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Proceeds received from private placement |
| — |
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Proceeds from promissory note - related party |
| — |
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Repayment of promissory note - related party |
| — |
| ( | ||
Net cash provided by financing activities |
| — |
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Net Change in Cash |
| ( |
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Cash – Beginning of the Period |
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Cash – End of the Period | $ | | $ | | ||
Supplemental Schedule of Non-Cash Investing and Financing Activities: |
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Offering costs included in accounts payable | $ | — | $ | | ||
Deferred offering costs paid in exchange for issuance of ordinary shares to sponsor | $ | — | $ | | ||
Deferred underwriting commissions in connection with the initial public offering | $ | — | $ | | ||
Initial fair value of Class A public warrants liability | $ | — | $ | | ||
Initial fair value of forward purchase securities liability | $ | — | $ | | ||
The accompanying notes are an integral part of the unaudited condensed interim financial statements.
8
RIBBIT LEAP, LTD.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
Note 1 — Organization and Business Operations
Ribbit LEAP, Ltd. (the “Company”) is a blank check company incorporated on July 7, 2020 (inception) as a Cayman Islands exempted company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses (the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of September 30, 2021, the Company had commenced any operations. All activity for the period from July 7, 2020 (inception) through September 30, 2021, relates to the Company’s formation, the initial public offering (the “Initial Public Offering”) described below, and the Company’s search for a target company for its initial Business Combination. The Company will generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The Company’s sponsor is Ribbit LEAP Sponsor, Ltd., a Cayman Islands exempted company with limited liability (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on September 10, 2020. On September 15, 2020, the Company consummated its Initial Public Offering of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement of
Upon the closing of the Initial Public Offering and Private Placement, $
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the Private Placement, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least
9
The Company will provide the holders (the “Public Shareholders”) of its outstanding shares of Class A ordinary shares, sold in the Initial Public Offering (the “Public Shares”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder 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. The Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $
Notwithstanding the foregoing, the Company’s amended and restated memorandum and articles of association provides that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of
The Company’s initial shareholders have agreed not to propose an amendment to the amended and restated memorandum and articles of association that would modify the substance or timing of the Company’s obligation to allow redemption in connection with the initial Business Combination or to redeem
If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than business days thereafter, redeem 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 on the funds held in the Trust Account and not previously released to the Company to pay its income taxes (less up to $
10
The Company’s initial shareholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial shareholders or members of the Company’s management team acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (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 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 residual assets remaining available for distribution (including Trust Account assets) will be only $
Note 2 — Restatement of Previously Issued Financial Statements
Restatement Of Previously Issued Financial Statements
The Company has followed ASC 480, “Distinguishing Liabilities from Equity,” in accounting for the redeemable Class A ordinary shares. This included recording the redeemable Class A ordinary shares in temporary equity on the balance sheet. However, the Company maintained shareholders’ equity of at least $
In September 2021, the Company's management re-evaluated and ultimately concluded that the classification of $
On February 16, 2022, the Company’s management and the audit committee concluded that the Company’s previously issued (i) audited balance sheet as of September 15, 2020 (the "Post IPO Balance Sheet"), filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed with the SEC on September 18, 2020; (ii) unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020, filed with the SEC on November 9, 2020; (iii) audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as amended (the "10-K/A"), filed with the SEC on May 17, 2021; (iv) unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the SEC on May 17, 2021; and (v) unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on August 12, 2021 (collectively, the “Affected Periods”), in each case, should be restated to classify all of the Public Shares as temporary equity and should no longer be relied upon. As a result, the Company is restating its previously issued financial statements on Amendment No. 2 to the Annual Report on Form 10-K/A (“Amendment No. 2”) for the Post-IPO Balance Sheet as of September 15, 2020, the unaudited condensed financial statements as of and for the three and nine months ended September 30, 2020, and the Company's audited financial statements included in the Amendment No. 1 to the Annual Report on Form 10-K/A (“Amendment No. 1”) and in this Amendment No.
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1 to the Quarterly Report on Form 10-Q/A for the unaudited condensed financial statements as of and for the three months ended March 31, 2021 and June 30, 2021.
Impact of the Restatement
The following tables summarize the effect of the restatement on each of the line items in the financial statements as of the dates and for the periods, indicated:
| As of March 31, 2021 | ||||||||
As Previously | |||||||||
| Reported |
| Adjustment |
| As Restated | ||||
Balance Sheet |
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Class A ordinary shares subject to possible redemption, $ | $ | | $ | | $ | | |||
Shareholders’ equity (deficit) |
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Class A ordinary shares $ |
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| ( |
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Class B ordinary shares, par value; |
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| — |
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Additional paid-in-capital |
| |
| ( |
| — | |||
Accumulated deficit |
| ( |
| ( |
| ( | |||
Total shareholders’ equity (deficit) | $ | | $ | ( | $ | ( | |||
For the Three Months Ended March 31, 2021 | |||||||||
As Previously | |||||||||
Reported | Adjustment | As Restated | |||||||
Statement of Operations |
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Net income | $ | | $ | — | $ | | |||
Weighted average shares outstanding of redeemable ordinary shares, basic and diluted |
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| — |
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Basic and diluted net income per redeemable ordinary share | $ | — | $ | | $ | | |||
Weighted average shares outstanding of non-redeemable ordinary shares, basic |
| |
| ( |
| — | |||
Basic net income per non-redeemable ordinary share | $ | | $ | ( | $ | — | |||
Weighted average shares outstanding of non-redeemable ordinary shares, dilutive |
| |
| ( |
| — | |||
Dilutive net income per non-redeemable ordinary share | $ | | $ | ( | $ | — | |||
Weighted average shares outstanding of non-redeemable ordinary shares, basic and diluted |
| — |
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Basic and diluted net income per non-redeemable ordinary share | $ | — | $ | | $ | | |||
For the Three Months Ended March 31, 2021 | |||||||||
As Previously | |||||||||
Reported | Adjustment | As Restated | |||||||
Statement of Cash Flows |
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Supplemental schedule of non-cash investing and financing activities: |
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Change in value of Class A ordinary shares subject to possible redemption | $ | | $ | | $ | — | |||
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| As of June 30, 2021 | ||||||||
| As Previously |
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Reported | Adjustment | As Restated | |||||||
Balance Sheet |
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Class A ordinary shares subject to possible redemption, $ | $ | | $ | | $ | | |||
Shareholders’ equity (deficit) |
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Class A ordinary shares $ |
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| ( |
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Class B ordinary shares, par value; |
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| — |
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Additional paid-in-capital |
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| ( |
| — | |||
Accumulated deficit |
| ( |
| ( |
| ( | |||
Total shareholders’ equity (deficit) | $ | | $ | ( | $ | ( | |||
For the Three Months Ended June 30, 2021 | |||||||||
As Previously | |||||||||
Reported | Adjustment | As Restated | |||||||
Statement of Operations |
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Net income | $ | | $ | — | $ | | |||
Weighted average shares outstanding of redeemable ordinary shares, basic and diluted |
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| — |
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Basic and diluted net income per redeemable ordinary share | $ | — | $ | | $ | | |||
Weighted average shares outstanding of non-redeemable ordinary shares, basic |
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| ( |
| — | |||
Basic net income per non-redeemable ordinary share | $ | | $ | ( | $ | — | |||
Weighted average shares outstanding of non-redeemable ordinary shares, dilutive |
| |
| ( |
| — | |||
Dilutive net income per non-redeemable ordinary share | $ | | $ | ( | $ | — | |||
Weighted average shares outstanding of non-redeemable ordinary shares, basic and dilutive |
| — |
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Basic and diluted net income per non-redeemable ordinary share | $ | — | $ | | $ | | |||
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| For the Six Months Ended June 30, 2021 | ||||||||
| As Previously |
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Reported | Adjustment | As Restated | |||||||
Statement of Operations |
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Net income | $ | | $ | — | $ | | |||
Weighted average shares outstanding of redeemable ordinary shares, basic and diluted |
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| — |
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Basic and diluted net income per redeemable ordinary share | $ | — | $ | | $ | | |||
Weighted average shares outstanding of non-redeemable ordinary shares, basic |
| |
| ( |
| — | |||
Basic net income per non-redeemable ordinary share | $ | | $ | ( | $ | — | |||
Weighted average shares outstanding of non-redeemable ordinary shares, dilutive |
| |
| ( |
| — | |||
Dilutive net income per non-redeemable ordinary share | $ | | $ | ( | $ | — | |||
Weighted average shares outstanding of non-redeemable ordinary shares, basic and diluted |
| — |
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Basic and diluted net income per non-redeemable ordinary share | $ | — | $ | | $ | | |||
| For the Six Months Ended June 30, 2021 | ||||||||
| As Previously |
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Reported | Adjustment | As Restated | |||||||
Statement of Cash Flows |
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Supplemental schedule of non-cash investing and financing activities: |
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Change in value of Class A ordinary shares subject to possible redemption | $ | | $ | ( | $ | — | |||
Reassessment Going Concern
In connection with the restatement, the Company has performed an assessment of going concern considerations in accordance with FASB Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern.” If the Company does not complete an initial Business Combination within 24 months from September 15, 2020, the Company will (i) cease all operations except for the purposes of winding up, (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem all of the Class A ordinary redeemable shares issued as part of the units in the Initial Public Offering at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account with Continental Stock Transfer and Trust Company acting as trustee (the “Trust Account”), including interest, net of taxes (less up to $
The accompanying financial statements have been prepared on a going concern basis and do not include any adjustments that might arise as a result of uncertainties about the Company's ability to continue as a going concern.
Note 3 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed interim financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP. In the opinion
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of management, the unaudited condensed interim financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the three and nine months ended September 30, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021, or any future interim periods.
The accompanying unaudited condensed interim financial statements should be read in conjunction with Amendment No. 2 as filed with the SEC on March 29, 2022, 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 Amendment No. 2.
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 Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Liquidity and Capital Resources
The accompanying unaudited condensed interim financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of September 30, 2021, and December 31, 2020, the Company had approximately $
The Company’s liquidity needs were satisfied prior to the completion of the Initial Public Offering through receipt of $
The net proceeds from (i) the sale of the shares of Class A ordinary shares in our Initial Public Offering, after deducting offering expenses of $
As of September 30, 2021 and December 31, 2020, the Company had cash and cash equivalents of $
The Company does not believe it will need to raise additional funds in order to meet the expenditures required for operating the business prior to the initial Business Combination. However, if the Company’s estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial Business Combination are less than the actual amount necessary to do so, the Company may have insufficient funds available to operate the business prior to the initial Business Combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required. If the Company completes the initial Business Combination, the Company would repay such loaned amounts. In the event that the Company’s 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. Up to $
15
with FASB Accounting Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined these conditions raise substantial doubt about the Company’s ability to continue as a going concern through the Combination Period, 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 unaudited condensed interim 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.
This may make comparison of the Company’s unaudited condensed interim financial statements with another public company, which is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.
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 an emerging growth 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 an 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 the comparison of the Company’s unaudited condensed interim financial statements with another public company that is neither an emerging growth company nor an emerging growth company that 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 unaudited condensed interim financial statements in conformity with U.S. GAAP requires the Company’s 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 unaudited condensed interim financial statements and the reported amounts of expenses during the reporting period. Amounts 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 had approximately $
Class A Public Warrants Liability, Forward Purchase Securities Liability, and Class L Ordinary Shares Liability
The Company accounts for the Class A Public Warrants, Forward Purchase Securities (as defined in Note 4), and Class L ordinary shares as liability-classified instruments based on an assessment of the applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (“FASB ASC Topic 480”) and FASB ASC Topic 815, Derivatives and Hedging, (“FASB ASC Topic 815”). The assessment considers whether the Class A Public Warrants, Forward Purchase Securities, and Class L ordinary shares are freestanding financial instruments pursuant to FASB ASC Topic 480, meet the definition of a liability, and meet all of the requirements for equity classification under FASB ASC Topic 815, including whether the Class A Public Warrants, Forward Purchase Securities, and Class L ordinary shares are indexed to the Company’s own ordinary shares and whether the 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 issuance of the Class A Public Warrants and Class L ordinary shares, and upon execution of the Forward Purchase Securities Agreement and as of each subsequent quarterly period end date while the Class A Public Warrants, Forward Purchase Securities, and Class L ordinary shares are outstanding. The Company determined that the Class A Public Warrants, Forward Purchase Securities, and Class L ordinary shares did not meet all the criteria for equity classification because they did not meet the criteria to be considered indexed to the Company’s stock. Accordingly, the Class A Public Warrants, Forward Purchase Securities, and Class L Ordinary Shares were recorded at their initial fair value on the date of
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issuance, and are adjusted to fair value at each balance sheet date thereafter. Changes in the estimated fair value of these instruments are recognized as a gain or loss as a component of other income (expense) in the condensed statement of operations.
Marketable Securities Held in Trust Account
As of September 30, 2021 and December 31, 2020, the assets held in the Trust Account were substantially held in U.S. Treasury Bills.
Net Income (Loss) Per Ordinary Share
The Company follows the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as redeemable ordinary shares and non-redeemable ordinary shares. The redeemable ordinary shares include Class A redeemable ordinary shares issued upon the Initial Public Offering. The non-redeemable ordinary shares include Class B non-redeemable ordinary shares and Class A non-redeemable ordinary Private Placement Shares. Income and losses are shared pro rata between the two classes of ordinary shares. Net income (loss) per ordinary share is calculated by dividing the net income (loss) by the weighted average shares of ordinary shares outstanding for the respective period. Class A public warrants were issued on September 15, 2020. At September 30, 2021,
The table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income/(loss) per ordinary share for each class of ordinary shares:
|
|
| For the period | ||||||
Three Months Ended | Nine Months Ended | from July 7, 2020 (Inception) | |||||||
September 30, 2021 | September 30, 2021 | through September 30, 2020 | |||||||
Numerator: |
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|
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|
| |||
Allocation of net income (loss) | $ | | $ | | $ | ( | |||
Denominator: |
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| |||
Weighted average shares outstanding of Class A redeemable ordinary shares, basic and diluted |
| |
| |
| | |||
Basic and diluted net income (loss) per redeemable ordinary share | $ | | $ | | $ | ( | |||
Numerator: |
|
|
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|
| |||
Allocation of net income (loss) | $ | | $ | | $ | ( | |||
Denominator: |
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|
|
| |||
Weighted average shares outstanding of non-redeemable ordinary shares, basic and diluted |
| |
| |
| | |||
Basic and diluted net income (loss) per non-redeemable ordinary share | $ | | $ | | $ | ( | |||
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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 FASB ASC Topic 480. Class A ordinary shares subject to mandatory redemption are classified as a liability instrument and is measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. The Company’s Class A ordinary shares features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, as of September 30, 2021, and December 31, 2020,
The Company’s Class A ordinary shares subject to possible redemption is subject to SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company has elected to recognize the changes immediately. The accretion or re-measurement is treated as a deemed dividend (i.e., a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital).
The accretion of carrying value to redemption value was recognized on September 15, 2020, the date the Company consummated its Initial Public Offering. As of December 31, 2020, the Class A ordinary shares reflected on the balance sheet are reconciled in the following table:
|
| As of December 31, 2020 | |
Gross proceeds | $ | | |
Less: |
| ||
Proceeds allocated to liability instruments |
| ( | |
Class A ordinary shares underwriting discounts and offering costs |
| ( | |
Plus: |
| ||
Accretion of carrying value to redemption value |
| | |
Class A ordinary shares subject to possible redemption | $ | | |
There were no changes in Class A ordinary shares subject to possible redemption during the three or nine months ended September 30, 2021.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. As of September 30, 2021, and December 31, 2020, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Financial Instruments
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. U.S. 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 for identical instruments in active markets; |
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| ● | 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.
As of September 30, 2021, and December 31, 2020, the carrying values of cash, accounts payable, accrued expenses, and advances from related party approximate their fair values due to the short-term nature of the instruments. The Company’s portfolio of marketable securities held in the Trust Account is comprised of investment in a money market funds selected by the Company. The fair value for trading securities is determined using quoted market prices in active markets.
Risks and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic on the industry 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 unaudited condensed interim financial statements. The unaudited condensed interim financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Offering Costs
Offering costs consist of legal, accounting, and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering and were charged to shareholders’ equity upon the completion of the Initial Public Offering in September 2020.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under FASB ASC Topic 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
FASB 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. There were
There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman federal income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s unaudited condensed interim financial statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
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Recent Accounting Pronouncements
The Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s unaudited condensed interim financial statements.
Note 4 — Initial Public Offering
On September 15, 2020, pursuant to the Initial Public Offering, the Company sold
Note 5 — Related Party Transactions
Founder Shares
On July 20, 2020, the Sponsor paid $
Class B Ordinary Shares
On September 2, 2020, the Company filed an amended and restated memorandum and articles of association. Pursuant to the amendment, the then-outstanding
The initial shareholders agreed, subject to limited exceptions, not to transfer, assign or sell (i) any of their Founder Shares or Private Placement Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination and (B) the date on which the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the Public Shareholders having the right to exchange their ordinary shares for cash, securities or other property, and (ii) any of their Class L ordinary shares for any reason, other than to specified permitted transferees or a complete liquidation, merger, share exchange, reorganization or other similar transaction following the initial Business Combination that results in all of the Company’s Public Shareholders having the right to exchange their ordinary shares for cash, securities or other property; provided, that any Class A ordinary shares issued upon conversion Class L ordinary shares will not be subject to such restrictions on transfer.
Class L Ordinary Shares
The Sponsor owns
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The Class L ordinary shares are non-voting and will convert into Class A ordinary shares following the initial Business Combination to the extent certain triggering vesting events occur prior to the 10th anniversary of the initial Business Combination. The Class L ordinary shares vest in
| ● | if (and only if) the First Price Vesting shall not have occurred prior to or in connection with such Strategic Transaction and the effective price of the Strategic Transaction is greater than $ |
| ● | if (and only if) the Second Price Vesting shall not have occurred prior to or in connection with such Strategic Transaction and the effective price of the Strategic Transaction is greater than $ |
| ● | if (and only if) the Third Price Vesting shall not have occurred prior to or in connection with such Strategic Transaction and the effective price of the Strategic Transaction is greater than $ |
21
| ● | if (and only if) the Fourth Price Vesting shall not have occurred prior to or in connection with such Strategic Transaction and the effective price of the Strategic Transaction is greater than $ |
| ● | if (and only if) the Fourth Price Vesting shall not have occurred prior to or in connection with such Strategic Transaction and the effective price of the Strategic Transaction is greater than $ |
For example, if
Private Placement Shares
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased
The initial shareholders agreed, subject to limited exceptions, not to transfer, assign or sell (i) any of their Founder Shares or Private Placement Shares until the earlier to occur of: (A)
Forward Purchase Agreement
In September 2020, the Company entered into a forward purchase agreement with LEAP Ribbit Opportunity VI, LLC, a Delaware limited liability company (the “Forward Purchase Agreement”). Pursuant to the Forward Purchase Agreement, LEAP Ribbit Opportunity VI, LLC has agreed to purchase
22
Promissory Note - Related Party
On July 17, 2020, the Sponsor agreed to make available to the Company an aggregate of up to $
Working Capital Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $
Administrative Support Agreement
The Company entered into an agreement, commencing on September 10, 2020, through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of $
Note 6 — Commitments and Contingencies
Registration Rights
The holders of Founder Shares, Private Placement Shares, including the Private Placement Shares issuable upon conversion of Working Capital Loans, the Forward Purchase Securities, and the Class A ordinary share issuable upon conversion of the Class L ordinary shares and Forward Purchase Warrants underlying the Forward Purchase Securities, are entitled to registration rights pursuant to a registration rights agreement signed in connection with the Initial Public Offering. These holders will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, these holders will have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a
The underwriters were paid an underwriting discount of $
In November 2020, the underwriter for the Initial Public Offering agreed to reimburse the Company for certain documented offering costs. The Company received approximately $
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Note 7 — Class A Public Warrants Liability and Class L Ordinary Shares Liability
Class A Public Warrants
Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a)
The warrants have an exercise price of at $
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon a minimum of |
| ● | if, and only if, the last reported sales price (the “closing price”) of the Class A ordinary shares equals or exceeds $ |
In addition, commencing
| ● | in whole and not in part; |
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| ● | at $ |
| ● | if, and only if, the closing price of the Class A ordinary shares equals or exceeds $ |
| ● | if, and only if, there is an effective registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given. |
The “fair market value” of the Class A ordinary shares shall mean the volume weighted average price of the Class A ordinary shares as reported during the
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. Additionally, in no event will the Company be required to net cash settle any Warrants. If the Company is unable to complete the initial Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants.
Accordingly, the warrants may expire worthless.
Class L ordinary shares
The Company is authorized to issue
Note 8 — Shareholders’ Equity
Class A ordinary shares
The Company is authorized to issue
Class B ordinary shares
The Company is authorized to issue
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Holders of the Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders, except as required by law or stock exchange rule; provided that only holders of the Class B ordinary shares shall have the right to vote on the election of the Company’s directors prior to the initial Business Combination. Each Class B ordinary share will convert at the option of the holder into one Class A ordinary share at any time after the initial Business Combination (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations, and the like).
Preference shares
The Company is authorized to issue
Note 9 – Fair Value Measurements
The Company follows the guidance in FASB ASC Topic 820, Fair Value Measurement, (“FASB ASC Topic 820”). for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).
Level 1 instruments include investments in money market funds and U.S. Treasury securities. The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.
The Company classifies its U.S. Treasury and equivalent securities as held-to-maturity in accordance with FASB ASC Topic 320 “Investments – Debt and Equity Securities”. Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying unaudited condensed balance sheet and adjusted for the amortization or accretion of premiums or discounts.
As of September 30, 2021 and December 31, 2020, assets held in the Trust Account were comprised of $
|
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|
| Unrealized |
| ||||||||
Amortized | Gross | ||||||||||||
| Level |
| Held-To-Maturity |
| Cost |
| Holding Gain (Loss) |
| Fair Value | ||||
September 30, 2021 (unaudited) | 1 | U.S. Treasury Securities (Mature on 10/14/2021) | $ | | $ | | $ | | |||||
December 31, 2020 |
| 1 |
| U.S. Treasury Securities (Mature on 3/18/2021) | $ | | $ | ( | $ | | |||
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The following table presents the Company’s fair value hierarchy for liabilities measured at fair value on a recurring basis as of September 30, 2021:
Total | ||||||||||||
Description |
| Level 1 |
| Level 2 |
| Level 3 |
| (Unaudited) | ||||
Liabilities: |
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|
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|
| ||||
Class A public warrants liability | $ | | $ | — | $ | — | $ | | ||||
Forward purchase securities liability |
| — |
| — |
| |
| | ||||
Class L ordinary shares liability |
| — |
| — |
| |
| | ||||
Total | $ | | $ | — | $ | | $ | | ||||
The following table presents the Company’s fair value hierarchy for liabilities measured at fair value on a recurring basis as of December 31, 2020:
Description |
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
Liabilities: |
|
|
|
|
|
|
|
| ||||
Class A public warrants liability | $ | | $ | — | $ | — | $ | | ||||
Forward purchase securities liability |
| — |
| — |
| |
| | ||||
Class L ordinary shares liability |
| — |
| — |
| |
| | ||||
Total | $ | | $ | — | $ | | $ | | ||||
Class A Public Warrant Liability
The Class A Public Warrants are accounted for as liabilities pursuant to FASB ASC Topic 815-40, Derivatives and Hedging, Contracts in Entity’s Own Equity (“ASC Topic 815-40”) and are measured at fair value as of each reporting period. Changes in the fair value of the Class A Public Warrants are recorded in the condensed statement of operations each period. The Class A Public Warrants were valued using the instrument’s publicly listed trading price (NYSE: LEAP.WS) as of the balance sheet date.
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. The estimated fair value of the Class A Public Warrants transferred from a Level 2 measurement to a Level 1 fair value measurement in July 2020, when the Class A Public Warrants were separately listed and traded.
Forward Purchase Securities Liability
The Forward Purchase Securities were valued using a forward pricing method in an arbitrage free-framework, which is considered to be a Level 3 fair value measurement. Under the net assets method utilized, the aggregate commitment of $
The key inputs into the valuation of the Forward Purchase Securities were:
| As of |
|
| ||
September 30, 2021 |
| As of | |||
Input | (Unaudited) | December 31, 2020 | |||
Risk-free rate |
| | % | | % |
Remaining term in years |
| | |
|
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The following table presents a summary of the changes in the fair value of the Forward Purchase Securities liability, a Level 3 liability, measured on a recurring basis, as of December 31, 2020, and September 30, 2021:
Forward Purchase | |||
| Securities Liability | ||
Fair value, July 7, 2020 (inception) | $ | | |
Initial measurement on September 15, 2020 |
| | |
Change in fair value of forward purchase securities liability |
| | |
Fair value, December 31, 2020 |
| | |
Change in fair value of forward purchase securities liability |
| ( | |
Fair value, September 30, 2021 (unaudited) | $ | | |
Class L Ordinary Shares Liability
As a result of the Class L ordinary shares issued on September 2, 2020, the Company measured the liability at fair value determined at Level 3. In order to capture the market conditions associated with the Class L ordinary shares liability, the Company applied an approach that incorporated a Monte Carlo simulation, which involved random iterations of future stock-price paths over the contractual life of the Class L ordinary shares. Based on assumptions regarding potential changes in control of the Company, and the probability distribution of outcomes, the payoff to the holder was determined based on the achievement of the various market thresholds within each simulated path. The present value of the payoff in each simulated trial is calculated, and the fair value of the liability is determined by taking the average of all present values.
The key inputs into the valuation of the Class L ordinary shares were:
| As of |
|
| |||||
September 30, 2021 |
| As of | ||||||
Input | (Unaudited) | December 31, 2020 | ||||||
Risk-free rate |
| | % | | % | |||
Remaining term in years |
| | |
| ||||
Volatility |
| | % | | % | |||
Underlying share price | $ | | $ | | ||||
The following table presents a summary of the changes in the fair value of the Class L ordinary shares liability, a Level 3 liability, measured on a recurring basis, as of December 31, 2020, and September 30, 2021:
Class L Ordinary | |||
| Securities Liability | ||
Fair value, July 7, 2020 (inception) | $ | | |
Initial measurement on September 2, 2020 |
| | |
Change in fair value of Class L ordinary shares liability |
| | |
Fair Value, December 31, 2020 |
| | |
Change in fair value of Class L ordinary shares liability |
| ( | |
Fair Value, September 30, 2021 (unaudited) | $ | | |
Note 10 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the unaudited condensed interim financial statements were issued. Based upon this review, the Company did not identify any subsequent events, not previously disclosed, that would have required adjustment or disclosure in the unaudited condensed interim financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to the “Company,” “Ribbit LEAP,” “our,” “us,” or “we” refer to Ribbit LEAP, Ltd. The following discussion and analysis of the company’s financial condition and results of operations should be read in conjunction with the unaudited condensed interim financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Amendment No. 1 to the Quarterly Report on Form 10-Q/A includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Amendment No. 1 to the Quarterly Report on Form 10-Q/A. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings.
Overview
We are a blank check company incorporated on July 7, 2020, as a Cayman Islands exempted company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
We have not selected any specific business combination target. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private placement, our shares, debt or a combination of cash, equity, and debt.
The registration statement for our initial public offering was declared effective on September 10, 2020 (the “Initial Public Offering”). On September 15, 2020, we consummated the initial public offering of 40,250,000 units, including the 5,250,000 units as a result of the underwriters’ exercise of their over-allotment option at $10.00 per unit, generating gross proceeds of $402.5 million and incurring offering costs of approximately $22.9 million, inclusive of approximately $14.1 million in deferred underwriting commissions. Each unit consists of one Class A ordinary share, $0.0001 par value per share, and one-fifth of one redeemable warrant, each whole public warrant entitling the holder thereof to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment.
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement of 1,005,000 Class A ordinary shares generating gross proceeds of $10.1 million.
Upon the closing of the Initial Public Offering and private placement, $402.5 million of the net proceeds of the Initial Public Offering were placed in a trust account, located in the United States, at JP Morgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee. Except with respect to interest earned on the funds in the trust account that may be released to us to pay our taxes, if any, the proceeds from the Initial Public Offering will not be released from the trust account until the earliest to occur of: (a) the completion of our initial business combination, (b) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (i) to modify the substance or timing of its obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of the Initial Public Offering or (ii) with respect to any other provisions relating to shareholders’ rights or pre-initial business combination activity and (c) the redemption of all of our public shares if we have not completed our initial business combination within 24 months from the closing of the Initial Public Offering, or 27 months from the Initial Public Offering if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months from the Initial Public Offering, subject to applicable law.
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If we are unable to complete a business combination within 24 months from the closing of the Initial Public Offering, or 27 months from the Initial Public Offering if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months from the Initial Public Offering, or September 15, 2022 or December 15, 2022, we 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 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 on the funds held in the trust account and not previously released to us to pay our income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights 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 our remaining shareholders and our 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.
The issuance of additional shares in a business combination, including pursuant to the forward purchase agreement:
| ● | may significantly dilute the equity interest of investors in this offering; |
| ● | may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares; |
| ● | could cause a change in control if a substantial number of our Class A ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; |
| ● | may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; |
| ● | may adversely affect prevailing market prices for our units, Class A ordinary shares and/or warrants; and |
| ● | may not result in adjustment to the exercise price of our warrants. |
Similarly, if we issue debt or otherwise incur significant debt, it could result in:
| ● | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
| ● | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| ● | our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
| ● | our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding; |
| ● | our inability to pay dividends on our Class A ordinary shares; |
| ● | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
| ● | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| ● | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and |
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| ● | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. |
As indicated in the accompanying unaudited condensed interim financial statements, as of September 30, 2021 and December 31, 2020 we had approximately $0.9 million and $1.4 million in cash. Further, we expect to incur significant costs in the pursuit of our initial business combination. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities, those necessary to prepare for our Initial Public Offering and identifying a target company for our initial business combination. We do not expect to generate any operating revenues until after completion of our initial business combination. We generate non-operating income in the form of interest income on cash and cash equivalents held in the trust account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as expenses as we conduct due diligence on prospective business combination candidates.
While we may pursue a business combination target in any business, industry, sector, or geographical location, we are focusing on the biotechnology sector to capitalize on the expertise and capabilities of our management team in order to create long-term shareholder value. In particular, we expect to target businesses in developed countries including, but not limited to, the United States and countries in Europe. We may pursue a transaction in which our shareholders immediately prior to the completion of our initial business combination would collectively own a minority interest in the post-business combination company.
For the three and nine months ended September 30, 2021 we had net income of $39.4 million and $130.6 million, respectively. Net income for the three and nine months ended September 30, 2021 consisted of a decrease in fair value of the Class A public warrants liability of $7.2 million and $23.3 million, a decrease in fair value of the forward purchase securities liability of $7.5 million and $34.6 million, a decrease in fair value of the Class L ordinary shares liability of $24.9 million and $73.2 million, and interest income on marketable securities held in the trust account of $28,797 and $85,426, offset by operating costs of $0.2 million and $0.6 million, respectively.
For the period from July 7, 2020 (inception) through September 30, 2020, we had a net loss of $50.9 million, which consisted of formation and operating costs of $0.1 million, an increase in fair value of the Class A public warrants liability of $0.6 million, an increase in fair value of the forward purchase securities liability of $1.2 million, and an increase in fair value of the Class L ordinary share liability of $48.9 million.
Liquidity and Capital Resources
Our liquidity needs were satisfied prior to the completion of our Initial Public Offering through receipt of a $25,000 capital contribution from our sponsor in exchange for the issuance of the founder shares to our sponsor and a commitment from our sponsor to loan us up to $300,000 to cover our expenses in connection with our Initial Public Offering.
The net proceeds from (i) the sale of the shares of Class A ordinary shares in our Initial Public Offering, after deducting offering expenses of $0.8 million, underwriting fees of $8.1 million (excluding deferred underwriting commissions of $14.1 million), and (ii) the sale of the private placement shares for a purchase of $10.1 million generated net proceeds of $403.7 million. Of these net proceeds, $402.5 million was placed within the trust account, which includes the deferred underwriting commissions described above. The proceeds held in the trust account are invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. In November 2020, the underwriter for the Initial Public Offering agreed to reimburse the Company for certain documented offering costs. The Company received approximately $0.8 million pursuant to, and in satisfaction of this reimbursement agreement in December 2020, which was recorded as a reduction of the issuance cost originally charged to shareholders’ equity.
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For the nine months ended September 30, 2021, cash used in operating activities was $0.6 million. For the nine months ended September 30, 2021, net income of $130.6 million was affected by a non-cash gain on the change in fair value of the Class A Public Warrants liability of $23.3 million, a non-cash gain on the change in fair value of the Forward Purchase Securities liability of $34.6 million, and a non-cash gain on the change in fair value of the Class L ordinary share liability of $73.2 million, interest earned on marketable securities held in the trust account of $85,426, and net changes in operating assets and liabilities of $87,882.
As of September 30, 2021, we had cash and marketable securities of $402.6 million held in the trust account. We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (less taxes paid and deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay taxes. During the period, we did not withdraw any of interest earned on the trust account to pay for our franchise taxes. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of September 30, 2021, we had cash of approximately $0.9 million outside of the trust account, respectively. We intend to use the funds held outside the trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete our initial business combination.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business prior to our initial business combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence, and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1.5 million of such loans may be convertible into private placement shares at a price of $10.00 per share at the option of the lender. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
We may need to obtain additional financing either to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held in our trust account, or because we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
COVID-19
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus first identified in Wuhan, China (the “COVID-19 Outbreak”) and the risks to the international community as the virus spreads globally. In March 2020, the WHO classified the COVID-19 Outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 Outbreak continues to evolve as of this date. As such, we cannot estimate the full magnitude that the pandemic will have on our business. If the COVID-19 Outbreak continues, it may have a material adverse effect on our operations and financial condition, liquidity, future results of operations, capital resources, going concern considerations, and/or our search for a target company.
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We are actively monitoring the impact of the global pandemic on our financial condition, liquidity, operations, industry, and workforce. Given the daily evolution of the COVID-19 Outbreak and the global responses, we are not able to estimate the effects of the COVID-19 Outbreak on our results of operations, financial condition, liquidity, capital resources, and/or our search for a target company. The impacts of the current COVID-19 pandemic are broad reaching and the impacts to us is to date unknown.
Off-Balance Sheet Financing Arrangements
As of September 30, 2021 and December 31, 2020, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
As of September 30, 2021 and December 31, 2020, we do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than the underwriters are entitled to a deferred fee of $14.1 million in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the trust account solely in the event that we complete a business combination, subject to the terms of the underwriting agreement.
In September 2020, we entered into a forward purchase agreement that will provide for the purchase by an affiliate of our sponsor of an aggregate of 10,000,000 Class A ordinary shares and 2,000,000 redeemable warrants, for an aggregate purchase price of $100,000,000, or $10.00 per one Class A ordinary share and one-fifth of one redeemable warrant, in a private placement to close substantially concurrently with the closing of our initial business combination. The obligations under the forward purchase agreement will not depend on whether any Class A ordinary shares are redeemed by our public shareholders. The Class A ordinary shares and redeemable warrants issuable pursuant to the forward purchase agreement will be identical to the Class A ordinary shares and redeemable warrants included in the units in the Initial Public Offering, respectively, except that the affiliate of our sponsor will have certain registration rights, as described herein.
Critical Accounting Policies
The preparation of unaudited condensed interim financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed interim financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, the Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of our unaudited condensed balance sheet.
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Class A Public Warrants Liability, Forward Purchase Security Liability, and Class L Ordinary Shares Liability
We account for the Class A Public Warrants, Forward Purchase Securities, and Class L ordinary shares in accordance with the guidance contained in FASB ASC Topic 815, “Derivatives and Hedging,” (“FASB ASC Topic 815”). under which the Class A public warrants, forward purchase securities, and Class L ordinary shares do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the Class A public warrants, forward purchase securities, and Class L ordinary shares as liabilities at their fair value and adjust the Class A public warrants, forward purchase securities, and Class L ordinary shares to fair value at each reporting period. These liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our condensed statement of operations. The fair value of the Class A public warrants has been estimated using the quoted market price.
Net Income (Loss) Per Ordinary Share (Restated)
We follow the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” We have two classes of ordinary shares, which are referred to as redeemable ordinary shares and non-redeemable ordinary shares. The redeemable ordinary shares include Class A redeemable ordinary shares issued upon the Initial Public Offering. The non-redeemable ordinary shares include Class B non-redeemable ordinary shares and Class A non-redeemable ordinary Private Placement Shares. Income and losses are shared pro rata between the two classes of ordinary shares. The calculation of diluted net income (loss) does not consider the effect of the public warrants underlying the Units sold in the Initial Public Offering, Forward Purchase Securities, or Class L ordinary shares in the calculation of diluted income (loss) per share, because these instruments are contingently exercisable, and the contingencies have not yet been met. Net income (loss) per ordinary share is calculated by dividing the net income (loss) by the weighted average shares of ordinary shares outstanding for the respective period. Accretion associated with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed interim financial statements.
JOBS Act
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Business Startups Act of 2012, (the “JOBS Act”). The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. As an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our unaudited condensed interim financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an “emerging growth company,” whichever is earlier.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
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Item 4. Controls and Procedures. (Restated)
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer (who serves as our principal executive officer) and Chief Operating Officer (who serves as our principal financial and accounting officer), to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As of September 30, 2021, as required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Operating Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon their evaluation, our Chief Executive Officer and Chief Operating Officer concluded that, during the period covered by this report, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective due to the material weakness in our internal control over financial reporting described in “Management’s Report on Internal Control over Financial Reporting” included in our Amendment No. 1 to the Annual Report on Form 10-K/A as filed with the SEC on May 17, 2021 and our Amendment No. 2 to the Annual Report on Form 10-K/A as filed with the SEC on March 29, 2022. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited condensed interim financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the unaudited condensed interim financial statements included in this Amendment No. 1 Quarterly Report on Form 10-Q/A present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2021 covered by this Amendment No. 1 to the Quarterly Report on Form 10-Q/A that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Management is in the process of implementing remediation steps to address the material weakness that led to the restatement of our audited financial statements described in the Amendment No. 1 to the Annual Report on Form 10-K/A as filed with the SEC on May 17, 2021, and our audited financial statements described in the Amendment No. 2 to the Annual Report on Form 10-K/A as filed with the SEC on March 29, 2022 and to improve our internal control over financial reporting. Specifically, we are expanding and improving our review process for complex securities and related accounting standards. We plan to further improve this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS. (RESTATED)
Factors that could cause our actual results to differ materially from those in this Amendment No. 1 to the Quarterly Report on Form 10-Q/A include the risk factors described in our final prospectus for our Initial Public Offering filed with the SEC. You should review the risk factors below for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this report. If any of the following risks actually occur, our business, financial condition and results of operations could be adversely affected.
We have identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation of those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As described elsewhere in this Amendment No. 1 to the Quarterly Report on Form 10-Q/A, we identified a material weakness in our internal control over financial reporting related to the accounting for certain complex financial instruments related to the improper classification of our common stock subject to possible redemption at the closing of our Initial Public Offering and the restatement of our earnings per share calculation. As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as of September 30, 2021. This material weakness resulted in a material misstatement of the initial carrying value of the ordinary shares subject to possible redemption and the restatement of our earnings per share calculation for the affected periods.
To respond to this material weakness, we have devoted, and plan to continue to devote, significant effort and resources to the remediation and improvement of our internal control over financial reporting. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance these processes to better evaluate our research and understanding of the nuances of the complex accounting standards that apply to our financial statements. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. For a discussion of management’s consideration of the material weakness we identified, see Note 2 to the accompanying condensed financial statements, as well as Part I, Item 4: Controls and Procedures included in this Amendment No. 1 to the Quarterly Report on Form 10-Q/A.
Any failure to maintain such internal control could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
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We may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.
After consultation with management and our audit committee, we concluded that there was a material weakness in our internal controls over financial reporting. As a result of such material weakness and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the restatement and material weaknesses in our internal control over financial reporting and the preparation of our financial statements. As of the date of this Amendment No. 1 to the Quarterly Report on Form 10-Q/A, we have no knowledge of any such litigation or dispute. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability to complete a business combination.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
ITEM 5. Other Information.
None.
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ITEM 6. Exhibits.
Exhibit | Description | |
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101.INS | Inline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RIBBIT LEAP, LTD. | ||
Date: March 29, 2022 | By: | /s/ Meyer Malka |
Meyer Malka | ||
Chief Executive Officer and Chairman | ||
(Principal Executive Officer) | ||
Date: March 29, 2022 | By: | /s/ Cynthia McAdam |
Cynthia McAdam | ||
Chief Operating Officer | ||
(Principal Financial Officer) |
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