SEC Form 10-Q/A filed by Tishman Speyer Innovation Corp. II common stock (Amendment)
$TSIB
Consumer Electronics/Appliances
Industrials
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM __________ TO ________
COMMISSION FILE NUMBER 001-40056
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
(Address of principal executive offices) |
(Zip Code) | |
Registrant’s telephone number, including area code: (212 ) 715-0300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
one-fifth of one redeemable warrant |
The | |||
The | ||||
The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant (1) has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation Yes
S-T
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and has been subject to such filing requirements for the past 90 days. ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2
of the Exchange Act. (Check one): | Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
| Emerging growth company | ||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule ☒ No ☐
12b-2
of the Act). Yes As of December
20
, 2021, the Registrant
had 30,000,000 shares of its Class A common stock, $0.0001 par value per share, and 7,500,000 shares of its Class B
common stock, $0.0001 par value per share, issued and outstanding.
TABLE OF CONTENTS
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i
EXPLANATORY NOTE
Background of Restatement
On December 16, 2021, the Company’s management and the audit committee of the Company’s board of directors (the “Audit Committee”) concluded that it was appropriate to restate in this Amendment (i) the Company’s previously issued unaudited condensed financial statements as of and for the three months ended March 31, 2021, which were 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 25, 2021, (ii) the Company’s previously issued unaudited condensed financial statements as of and for the three and six months ended June 30, 2021, which were 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, and (iii) Note 2 to the Company’s previously issued unaudited condensed financial statements as of and for the three and nine months ended September 30, 2021, which were included in the Original Form 10-Q, respectively (collectively, the “Restatement Periods”).
The Company historically classified a portion of the Company’s shares of redeemable Class A common stock (the “public shares”) as permanent equity to maintain stockholders’ equity in excess of $5,000,000 on the basis that the Company will consummate its initial business combination only if the Company has net tangible assets of at least $5,000,001. In connection with the preparation of the Original Form 10-Q, management re-evaluated the Company’s application of Accounting Standards Codification 480-10-S99 with respect to its accounting classification of public shares and determined that the public shares include redemption provisions that require classification of all public shares as temporary equity, regardless of the minimum net tangible asset requirement discussed above.
After further consideration, management re-evaluated the impact of the reclassification of a portion of the public shares on the Company’s previously issued financial statements and, in consultation with the Audit Committee, concluded that the reclassification is material with respect to the Company’s previously issued financial statements.
In connection with the restatement, the Company also corrected its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. The restatement had no impact on the Company’s liquidity or cash position.
The previously issued financial statements for the Restatement Periods have been restated in this Amendment. See Note 2 to the Notes to the Company’s unaudited condensed financial statements included in Part I, Item 1 of this Amendment for additional information on the restatement and the related financial statement effects.
Internal Control Considerations
The Company’s management has concluded that in light of the classification error described above, a material weakness existed in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective. 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 the financial statements will not be prevented or detected and corrected on a timely basis. For a discussion of management’s consideration of the material weakness, see Part I, Item 4. Controls and Procedures in this Amendment.
Items Amended
The following items are amended in this Amendment: (i) Part I, Item 1. Financial Statements; (ii) Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations; (iii) Part I, Item 4. Controls and Procedures; (iv) Part II, Item 1A. Risk Factors; and (v) Part II, Item 6. Exhibits. In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the Company is including with this Amendment currently dated certifications from its principal executive officer and principal financial officer. These certifications are filed or furnished, as applicable, as Exhibits 31.1, 31.2, 32.1 and 32.2.
Except as described above, this Amendment does not amend, update or change any other disclosures in the Original Form 10-Q. In addition, the information contained in this Amendment does not reflect events occurring after the filing of the Original Form 10-Q and does not modify or update the disclosures therein, except as identified above. Among other things, forward-looking statements made in the Original Form 10-Q have not been revised to reflect events, results or developments that occurred or facts that became known to us after the date of the Original Form 10-Q, other than the restatement, and such forward-looking statements should be read in conjunction with our filings with the SEC, including those subsequent to the filing of the Original Form 10-Q.
PART I – FINANCIAL INFORMATION
ITEM 1. |
FINANCIAL STATEMENTS |
TISHMAN SPEYER INNOVATION CORP. II
Condensed Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020
September 30, 2021 (Unaudited) |
December 31, 2020 |
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| Assets |
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| Current assets: |
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| Cash |
$ | $ | ||||||
| Prepaid expenses |
— | |||||||
| Deferred offering costs associated with IPO |
— | |||||||
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| Total current assets |
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| Prepaid expenses, non-current |
— | |||||||
| Cash and cash equivalents held in trust account |
— | |||||||
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| Total assets |
$ |
$ | ||||||
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| Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ (Deficit) Equity |
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| Current liabilities: |
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| Accounts payable and accrued expenses |
$ | $ | ||||||
| Due to related party |
— | |||||||
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| Total current liabilities |
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| Derivative warrant liabilities |
— | |||||||
| Deferred underwriters’ discount |
— | |||||||
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| Total liabilities |
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| Commitments and Contingencies |
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| Class A Common stock subject to possible redemption, $ and |
— | |||||||
| Stockholders’ deficit: |
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| Preferred stock, $ or outstanding |
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| Class B common stock, $ |
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| Additional paid-in capital |
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| Accumulated deficit |
( |
) | ( |
) | ||||
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| Total stockholders’ deficit |
( |
) | ||||||
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| Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ (Deficit) Equity |
$ | $ | ||||||
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See accompanying notes to unaudited condensed financial statements.
1
TISHMAN SPEYER INNOVATION CORP. II
Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2021 (Unaudited)
For the three months ended September 30, 2021 |
For the nine months ended September 30, 2021 |
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| Formation and operating costs |
$ | $ | ||||||
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| Loss from operations |
( |
) | ( |
) | ||||
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| Other income/(expense) |
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| Interest income on Trust Account |
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| Change in fair value of warrant liabilities |
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| Offering expenses allocated to warrant issuance |
— | ( |
) | |||||
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| Total other income |
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| Net income |
$ | $ | ||||||
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| Weighted average shares outstanding, basic and diluted - Class A common stock |
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| Basic and diluted net income per common share – Class A common stock |
$ | $ | ||||||
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| Weighted average shares outstanding, basic and diluted - Class B common stock |
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| Basic and diluted net income per common share – Class B common stock |
$ | $ | ||||||
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See accompanying notes to unaudited condensed financial statements.
2
TISHMAN SPEYER INNOVATION CORP. II
Condensed Statements of Changes in Stockholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2021 (Unaudited)
Common Stock |
Additional |
Total |
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Class B |
Paid-In |
Accumulated |
Stockholders’ |
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Shares |
Amount |
Capital |
Deficit |
Equity (Deficit) |
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| Balance as of December 31, 2020 |
$ |
$ |
$ |
( |
) |
$ |
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| Forfeiture of Class B shares by Sponsor |
( |
) | ( |
) | — | — | ||||||||||||||
| Accretion of Class A common stock to redemption amount |
— | — | ( |
) | ( |
) |
( |
) | ||||||||||||
| Net loss |
— |
— |
— | ( |
) | ( |
) | |||||||||||||
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| Balance as of March 31, 2021 |
$ |
$ |
— |
$ |
( |
) |
$ |
( |
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| Net loss |
— | — | — | ( |
) | ( |
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| Balance as of June 30, 2021 |
$ |
$ |
— |
$ |
( |
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$ |
( |
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| Net income |
— | — | — | |||||||||||||||||
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| Balance as of September 30, 2021 |
$ |
$ |
— |
$ |
( |
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$ |
( |
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See accompanying notes to unaudited condensed financial statements.
3
TISHMAN SPEYER INNOVATION CORP. II
Condensed Statement of Cash Flows for the Nine Months Ended September 30, 2021 (Unaudited)
| Cash Flows from Operating Activities: |
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| Net income |
$ | |||
| Adjustments to reconcile net income to net cash used in operating activities: |
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| Interest earned on investments held in trust |
( |
) | ||
| Change in fair value of warrant liabilities |
( |
) | ||
| Offering costs allocated to warrants |
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| Changes in current assets and current liabilities: |
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| Prepaid expenses |
( |
) | ||
| Accounts payable and accrued expenses |
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| Due to related party |
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| Net cash used in operating activities |
( |
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| 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 Initial Public Offering, net of underwriters’ discount |
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| Proceeds from issuance of Private Placement Warrants |
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| Payments of offering costs |
( |
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| Net cash provided by financing activities |
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| Net Change in Cash |
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| Cash - Beginning |
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| Cash - Ending |
$ | |||
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| Supplemental Disclosure of Non-cash Financing Activities: |
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| Deferred underwriters’ discount payable charged to temporary equity |
$ | |||
| |
|
See accompanying notes to unaudited condensed financial statements.
4
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
Note 1 — Organization and Business Operations
Organization and General
Tishman Speyer Innovation Corp. II (the “Company”) was incorporated in Delaware on November 12, 2020. The Company was formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). While the Company may pursue an acquisition opportunity in any industry or geographic region, the Company intends to focus its search on identifying a prospective target that can benefit from the Company’s sponsor’s leading brand, operational expertise, and global network in the real estate industry, including real estate adjacent Proptech businesses. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. The Company has selected December 31 as its fiscal year end.
As of September 30, 2021, the Company had not yet commenced any operations. All activity through September 30, 2021, relates to the Company’s formation and the Initial Public Offering (“IPO”) described below, and subsequent to the IPO, to the Company’s search for a target to consummate a Business Combination. The Company will not generate any operating revenues until after the completion of its Business Combination, at the earliest. The Company will generate
non-operating
income in the form of interest income on the proceeds derived from the IPO.The Company’s sponsor is Tishman Speyer Innovation Sponsor II, L.L.C. (the “Sponsor”).
Financing
The registration statement for the Company’s IPO was declared effective on February 11, 2021 (the “Effective Date”). On February 17, 2021, the Company consummated the IPO of 30,000,000 units (the “Units” and, with respect to the common stock included in the Units being offered, the “public share”), at $10.00 per Unit, generating gross proceeds of $300,000,000 , which is discussed in Note
4
. Simultaneously with the closing of the IPO, the Company consummated the sale of 5,333,334 warrants (the “Private Placement Warrant”), at a price of $1.50 per Private Placement Warrant, which is discussed in Note
5
. Transaction costs amounted to $17,018,662 consisting of $6,000,000 of underwriting fee, $10,500,000 of deferred underwriting fee and $518,662 of other offering costs. Of the total transaction cost521,695
s
, $was expensed as
non-operating
expenses in that statement of operations with the rest of the offering cost charged to temporary equity. The transaction costs were allocated based on the relative fair value basis, compared to the total offering proceeds, between the fair value of the public warrant liabilities and the Class A common stock. 5
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
Trust Account
Following the closing of the IPO on February 17, 2021, an amount of $300,000,000 from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement Warrants was placed in a trust account (“Trust Account”) which is invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule
2a-7
of the Investment Company Act, as determined by the Company. Except with respect to interest earned on the funds held in the trust account that may be released to the Company to pay its tax obligations, the proceeds from the IPO and the sale of the Private Placement Warrants will not be released from the trust account until the earliest of (a) the completion of the Company’s initial business combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation, and (c) the redemption of the Company’s public shares if the Company is unable to complete the initial business combination within 24 months from the closing of the IPO, subject to applicable law. The proceeds deposited in the trust account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders. Initial Business Combination
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO, although substantially all of the net proceeds are intended to be generally applied toward consummating a business combination.
The Company’s business combination must be with one or more target businesses that together have a fair market value equal to at least 80 % of the balance in the Trust Account (as defined below) (net of taxes payable) at the time of the signing an agreement to enter into a business combination. However, the Company will only complete a business combination if the post-business combination company owns or acquires 50 % or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a business combination.
The Company will provide its public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial business combination either (i) in connection with a stockholder meeting called to approve the initial business combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed initial business combination or conduct a tender offer will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust Account (initially $10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
The shares of common stock subject to redemption is recorded at a redemption value and classified as temporary equity upon the completion of the IPO, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a business combination if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon consummation of a business combination and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the business combination.
6
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
The Company will have 24 months from the closing of the IPO (with the ability to extend with stockholder approval) to consummate a business combination (the “Combination Period”). However, if the Company is unable to complete a business combination within the Combination Period, the Company will redeem 100 % of the outstanding public shares for a pro rata portion of the funds held in the Trust Account, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to the Company, divided by the number of then outstanding public shares, subject to applicable law and as further described in the registration statement, and then seek to dissolve and liquidate.
The Company’s Sponsor, officers and directors have agreed to (i) waive their redemption rights with respect to their founder shares, private placement shares and public shares in connection with the completion of the initial business combination, (ii) waive their redemption rights with respect to their founder shares and public shares in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation, and (iii) waive their rights to liquidating distributions from the trust account with respect to their founder shares and private placement shares if the Company fails to complete the initial business combination within the Combination Period.
The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. However, the Company has not asked its Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether its Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure that its Sponsor would be able to satisfy those obligations.
Liquidity
As of September 30, 2021, the Company had cash outside the Trust Account of $598,711
available for working capital needs. All remaining cash and cash equivalents held in the Trust Account are generally unavailable for the Company’s use, prior to an initial business combination, and is restricted for use either in a Business Combination, to redeem common stock and to pay taxes. As of September 30, 2021, none of the amount in the Trust Account was withdrawn as described above.
Through September 30, 2021, the Company’s liquidity needs were satisfied through receipt of $25,000 from the sale of the founder shares and the remaining net proceeds from the IPO and the sale of Private Placement Warrants.
The Company anticipates that the $598,711 outside of the Trust Account as of September 30, 2021, will be sufficient to allow the Company to operate for at least the next 12
months from the issuance of the condensed financial statements, assuming that a Business Combination is not consummated during that time. Until consummation of its Business Combination, the Company will be using the funds not held in the Trust Account, and any additional Working Capital Loans (as defined in Note 6) from the initial stockholders, the Company’s officers and directors, or their respective affiliates (which is described in Note 6), for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
7
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
The Company does not believe it will need to raise additional funds in order to meet the expenditures required for operating its business. However, if the Company’s estimates of the costs of
undertaking in-depth due
diligence and negotiating business combination is less than the actual amount necessary to do so, the Company may have insufficient funds available to operate its business prior to the business combination. Moreover, the Company will need to raise additional capital through loans from its Sponsor, officers, directors, or third parties. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in, the Company. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.Risks and Uncertainties
Management continues to evaluate 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 operations and/or the Company’s ability to consummate a Business Combination, the specific impact is not readily determinable as of the date of these condensed financial statements. The condensed financial statements do not include any adjustments that might results from the outcome of this uncertainty. Note 2 — Restatement of Previously Issued Financial Statements (As Restated)
The Company historically classified a portion of the public shares as permanent equity to maintain stockholders’ equity in excess of
$on the basis that the Company will consummate its Business Combination only if the Company has net tangible assets of at least
$.
In connection with the preparation of the Company’s Form 10-Q for the quarterly period ended September 30, 2021, management with respect to its accounting classification of public shares and determined that the public shares include redemption provisions that require classification of all public shares as temporary equity, regardless of the minimum net tangible asset requirement discussed above.
re-evaluated
the Company’s application of ASC 480-10-S99
After further consideration, management re-evaluated the impact of the reclassification of a portion of the public shares on the Company’s previously issued financial statements and, in consultation with the audit committee of the Company’s board of directors, concluded that the reclassification of a portion of the public shares is material with respect to certain of the Company’s previously issued financial statements and that such financial statements should be restated, as further described below.
In connection with the restatement, the Company also corrected its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. The restatement had no impact on the Company’s liquidity or cash position.
8
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
Impact of the
Restatement
The impact to the financial statements as of June 30, 2021 and March 31, 2021 is presented below:
As Previously Reported |
Adjustment |
As Restated |
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Condensed Balance Sheet as of June 30, 2021 |
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Class A common stock, $ per share |
$ | $ | $ | |||||||||
Class A common stock - $ |
( |
) | ||||||||||
Additional paid-in capital |
( |
) | ||||||||||
Accumulated deficit |
( |
) | ( |
) | ( |
) | ||||||
Total stockholders’ equity (deficit) |
$ | $ | ( |
) | $ | ( |
) | |||||
Class A shares subject to possible redemption |
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Condensed Statement Of Operations for the Three and Six Months Ended June 30, 2021 |
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Basic and diluted net loss per common share – Class A common stock for the three months ended June 30, 2021 |
$ | $ | ( |
) | $ | ( |
) | |||||
Basic and diluted net loss per common share – Class B common stock for the three months ended June 30, 2021 |
( |
) | ( |
) | ||||||||
Basic and diluted net loss per common share – Class A common stock for the six months ended June 30, 2021 |
$ | $ | ( |
) | $ | ( |
) | |||||
Basic and diluted net loss per common share – Class B common stock for the six months ended June 30 , 2021 |
( |
) | ( |
) | ||||||||
Condensed Statement Of Cash Flows For The Six Months Ended June 30 , 2021 |
||||||||||||
Initial value of Class A common stock subject to possible redemption, as corrected |
$ |
$ |
( |
) | $ |
|||||||
Change in value of Class A common stock subject to possible redemption |
$ |
( |
) |
$ |
$ |
|||||||
9
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
Condensed Balance Sheet as of March 31, 2021 |
||||||||||||
Class A common stock, $ per share |
$ | $ | $ | |||||||||
Class A common stock - $ |
( |
) | ||||||||||
Class B common stock - $ |
||||||||||||
Additional paid-in capital |
( |
) | ||||||||||
Accumulated deficit |
( |
) | ( |
) | ( |
) | ||||||
Total stockholders’ equity (deficit) |
$ | $ | ( |
) | $ | ( |
) | |||||
Class A shares subject to possible redemption |
||||||||||||
Condensed Statement Of Operations For The Three Months Ended March 31, 2021 |
||||||||||||
Basic and diluted net loss per common share – Class A common stockfor the three months ended March 31, 2021 |
$ | $ | ( |
) | $ | ( |
) | |||||
Basic and diluted net loss per common share – Class B common stockfor the three months ended March 31, 2021 |
( |
) | ( |
) | ||||||||
Condensed Statement Of Cash Flows For The Three Months Ended March 31, 2021 |
||||||||||||
Initial value of Class A common stock subject to possible redemption, as corrected |
$ |
$ |
( |
) | $ |
|||||||
Change in value of Class A common stock subject to possible redemption |
$ |
( |
) |
$ |
$ |
10
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
Note 3 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form
10-Q
and Article 8 of Regulation S-X
of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s prospectus for its IPO as filed with the SEC on February 12, 2021, as well as the Company’s Current Report on Form
8-K
filed with the SEC on February 17, 2021, the interim results for the three months ended March 31, 2021 on Form 10-Q filed with the SEC on May 25, 2021 and the interim results for the three months ended June 30, 2021 on Form 10-Q filed with the SEC on August 12, 2021, in each case as restated in Note 2. The interim results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future periods.1
1
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to
non-emerging
growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liability. Such estimates may be subject to change as more current information becomes available, and accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents Held in Trust Account
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. At September 30, 2021, the Trust Account had $300,011,222 held in cash and cash equivalents. During the three and nine months ended September 30, 2021, the Company did no no cash equivalents.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000 . At September 30, 2021 and December 31, 2020, the Company has not experienced losses on this account.
1
2
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, common stock are classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of September 30, 2021, 30,000,000
shares of Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s condensed balance sheet.
Under ASC 480-10-S99, the Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security.
At September 30, 2021 and December 31, 2020, the Class A common stock reflected in the balance sheets is reconciled in the following table:
Gross proceeds |
$ |
|||
Less: Proceeds allocated to Public Warrants |
( |
) | ||
Less: Class A common stock issuance costs |
( |
) | ||
Add: Accretion of carrying value to redemption value |
||||
Class A common stock subject to possible redemption |
$ |
|||
Net Income per Common Share
The Company has two classes of 11,333,334 Class A common stock at $11.50 per share were issued on February 17, 2021. No
common shares
, which are referred to as Class A common stock and Class B common stock. Earnings and losses are shared pro rata between the two classes of stock. Private and public warrants to purchase warrants were exercised during the three or nine months ended September 30, 2021. The calculation of diluted income per common share does not consider the effect of the warrants issued in connection with the (i) IPO, (ii) exercise of over-allotment, and (iii) Private Placement since the exercise of the warrants are contingent upon the occurrence of future events. As a result, diluted net income per common share is the same as basic net income per common share for the periods presented. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
1
3
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
Below is a reconciliation of the net income per share of common stock:
For the three months ended September 30, 2021 |
For the nine months ended September 30, 2021 |
|||||||||||||||
Class A |
Class B |
Class A |
Class B |
|||||||||||||
| Basic and diluted net income per share |
||||||||||||||||
| Numerator: |
||||||||||||||||
| Allocation of net income |
$ | $ | |
$ | $ | |||||||||||
| Denominator |
||||||||||||||||
| Weighted-average shares outstanding |
||||||||||||||||
| Basic and diluted net income per share |
$ | $ | $ | $ | ||||||||||||
Offering Costs
The Company complies with the requirements of the ASC and SEC Staff Accounting Bulletin (“SAB”) Topic 5A - “Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheets date that are related to the IPO and that were charged to 17,018,662 have been charged to 6,000,000 of underwriting fee, $10,500,000 of deferred underwriting fee and $518,695 of other offering costs). Of the total transaction cost521,695 was reclassified to expense as a
340-10-S99-1
temporary
equity upon the completion of the IPO. Accordingly, on February 17, 2021, offering costs totaling $temporary
equity (consisting of $s
, $non-operating
expense in the statement of operations with the rest of the offering cost charged to temporary
equity. The transaction costs were allocated based on the relative fair value basis, compared to the total offering proceeds, between the fair value of the public warrant liabilities and the Class A common stock. Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurements and Disclosures,” approximate the carrying amounts represented in the condensed balance sheets, other than the derivative warrant liabilities.
1
4
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC
815-15.
The Company accounts for its 11,333,334
warrants issued in connection with its IPO and concurrent private placement as derivative warrant liabilities in accordance with ASC
815-40.
Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement
at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. At February 17, 2021, the Company utilized a Monte Carlo simulation model to value the initial value of the public warrants and a Monte Carlo simulation model to value the private warrants. At September 30, 2021, the Company used the quoted stock price in the active market to value the public warrants and a Monte Carlo simulation model to value the private warrants with changes in fair value charged to the statements of operations.Income Taxes
The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. The tax provision for the three and nine months ended September 30, 2021 has been
deemed to be de minimis
, as well as the deferred tax assets as of September 30, 2021 and December 31, 2020. ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be
more-likely-than-not
to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company has identified the United States as its only “major” tax jurisdiction.
The Company may be subject to potential examination by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
1
5
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standard Update (the “ASU”) , which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The Company early adopted the ASU on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
No. 2020-06,
Debt—Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s Own EquityManagement does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
Note 4 — Initial Public Offering
On February 17, 2021, the Company sold 30,000,000 Units at a price of $10.00 per Unit. Each Unit consists of one share of Class A common stock, par value $0.0001 per share 11.50 per share, subject to adjustment (see Note 9).
and one-fifth of
one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $Note 5 — Private Placement Warrants
Simultaneously with the closing of the IPO, the Sponsor purchased an aggregate of 5,333,334 Private Placement Warrants, at a price of $1.50 per Private Placement Warrant, for an aggregate purchase price of $8,000,000 . A portion of the proceeds from the Private Placement Warrants were added to the net proceeds from the IPO held in the Trust Account. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at $11.50 per share.
The initial stockholders, including the Sponsor, have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (i) one year after the completion of the initial Business Combination and (ii) the date following the completion of the initial Business Combination on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their common stock for cash, securities or other property. Notwithstanding the foregoing, if the closing price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 -trading day period commencing at least 150 days after the initial Business Combination, the Founder Shares will be released from the
lock-up.
1
6
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
Note 6 — Related Party Transactions
Founder Shares
On November 18, 2020, the Sponsor paid an aggregate price of $25,000 in exchange for the issuance of 8,625,000 shares of Class B common stock (the “Founder Shares”). On November 24, 2020, the Sponsor forfeited 5,750,000 Founder Shares to the Company. On January 22, 2021, the Company effected a 2.5 -for-1 Class B common stock split, resulting in aggregate Founders Shares outstanding of 7,187,500 . On February 12, 2021, the Company effected a 1.2 -for-1 Class B common stock split, resulting in aggregate Founders Shares outstanding of 8,625,000 1,125,000 Founders Shares on March 28, 2021, resulting in 7,500,000
. All share and per share amounts have been retrospectively restated to reflect the stock splits. The underwriters did not exercise the overallotment option, and as a result, the Sponsor forfeited
The Company’s initial stockholders have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of (A) one year after the completion of the Company’s initial business combination and (B) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction after the Company’s initial business combination that results in all of the Company’s stockholders having the right to exchange their Class A common stock for cash, securities or other property; except to certain permitted transferees and under certain circumstances as described herein under “Principal Stockholders — Transfers of Founder Shares and Private Placement Warrants”. Any permitted transferees will be subject to the same restrictions and other agreements of the Company’s initial stockholders with respect to any founder shares. The Company refers to such transfer restrictions as the 12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 -trading day period commencing at least 150 days after the company’s initial business combination.
lock-up.
Notwithstanding the foregoing, the founder shares will be released from the lockup if the closing price of the Company’s Class A common stock equals or exceeds $Promissory Note — Related Party
The Sponsor had agreed to loan the Company an aggregate of up to $300,000 to be used for the payment of costs related to the IPO. The promissory note was no n-interest bearing, unsecured and was repaid at the closing of the IPO. As of September 30, 2021 and December 31, 2020, there was no
Administrative Support Agreement
Commencing on the IPO and through the earlier of the consummation of the initial Business Combination and the Company’s liquidation, the Company will reimburse an affiliate of the Sponsor for office space, secretarial and administrative services provided to the Company in the amount of $10,000 per month. For the three and nine months ended September 30, 2021, the Company has incurred $30,000 and $74,286 in expense under the support agreement, respectively. As of September 30, 2021, the Company has recorded a due from related party of $74,286 .
1
7
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
Working Capital Loans
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. As of September 30, 2021 and December 31, 2020, the Company had no
Note
7
— Commitments and Contingencies Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to the consummation of the IPO. These holders will be entitled to certain demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection with the filing of any such registration statements. The registration rights agreement will not provide for any maximum cash penalties nor any penalties connected with delays in registering the Company’s common stock.
Underwriting Agreement
On February 17, 2021, the underwriters were paid cash underwriting commissions of 2 % of the gross proceeds of the IPO, totaling $6,000,000 .
In addition, $0.35 per unit, or approximately $10,500,000 in the aggregate, will be payable to the underwriters for deferred underwriting commissions. The deferred commissions will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Note
8
— Stockholders’ Equity Preferred Stock
Class
A Common Stock
Class
B Common Stock
1
8
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
Stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Prior to the initial Business Combination, holders of Class B common stock will have the right to elect all of the Company’s directors and may remove members of the Company’s board of directors for any reason. On any other matter submitted to a vote of stockholders, holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of the Company’s stockholders except as required by law or stock exchange rule.
The Class B common stock will automatically convert into Class A common stock at the time of the initial Business Combination, or earlier at the option of the holder, on a one-for-one 20 % of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by Public Stockholders), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial Business Combination and any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion of Founder Shares will never occur on a less than basis.
as-converted
basis, one-for-one
Note 9 — 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) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the IPO; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, the Company will use its commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the Public Warrants. The Company will use its commercially reasonable efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless” basis, and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but the Company will be required to use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. The warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
1
9
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
If (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the initial stockholders or their affiliates, without taking into account any Founder Shares held by the initial stockholders or such affiliates, as applicable, prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 50 % of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Class A common stock during the 10 trading day period starting on the trading day after the day on which the Company consummates the initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the Warrants will be adjusted (to the nearest cent) to be equal to 115 % of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price of the Warrants will be adjusted (to the nearest cent) to be equal to 180 % of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price of the Warrants will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be
non-redeemable
so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The Company may call the Public Warrants for redemption:
• |
in whole and not in part; |
| • | at a price of $ |
| • | upon a minimum of |
| • | if, and only if, the last sales price of the Class A common stock equals or exceeds $ |
In addition, the Company may call the Public Warrants for redemption:
| • | in whole and not in part; |
| • | at $ |
| • | if, and only if, the closing price of Class A common stock equals or exceeds $ |
| • | if the closing price of Class A common stock for any |
20
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
In no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of 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.
Note 10 — Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| • | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| • | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| • | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
September 30, 2021 |
||||||||||||||||
Carrying Value |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Assets: |
||||||||||||||||
Cash and Cash equivalents held in Trust Account |
$ | $ | $ | — | $ | — | ||||||||||
Liabilities: |
||||||||||||||||
Warrant liabilities |
$ | $ | $ | — | $ | |||||||||||
As of December 31, 2020, there were no assets or liabilities that were measured at fair value on a recurring basis. At September 30, 2021, the Company use the quoted stock price in the active market to value the public warrants and a Monte Carlo simulation model to value the private warrants with changes in fair value charged to the statement of operations. The estimated fair value of the private warrant liability is determined using Level 3 inputs. Inherent in the model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury
at zero-coupon
yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain 2
1
TISHMAN SPEYER INNOVATION CORP. II
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED)
There were no transfers between levels for the three and nine months ended September 30, 2021, other than the transfer of the Public Warrants from Level 3 to Level 1 due to the public warrants valuation using the quoted stock price in the active market. The transfer was recognized at June 30, 2021.
The following table provides quantitative information regarding Level 3 fair value measurements:
September 30, 2021 |
||||
| Stock price |
$ | |
||
| Strike price |
$ | |||
| Term (in years) |
||||
| Volatility |
% | |||
| Risk-free rate |
% | |||
| Dividend yield |
% | |||
The following table provides a reconciliation of changes in fair value of the beginning and ending balances of the Company’s assets and liabilities classified as Level 3:
Derivative warrant liabilities |
||||
| Fair value at January 1, 2021 |
$ | |||
| Initial value at IPO date |
||||
| Change in fair value |
( |
) | ||
| Transfer of Public warrants from Level 3 to Level 1 |
( |
) | ||
| Fair Value at September 30, 2021 |
$ | |||
Note 1
1
— Subsequent Events The Company evaluated subsequent events and transactions that occurred up to the date the condensed unaudited financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements, other than the restatement discussed in Note 2.
2
2
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
References in this report to “we,” “us” or the “Company” refer to Tishman Speyer Innovation Corp. II, a Delaware corporation, to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Tishman Speyer Innovation Sponsor II, L.L.C., a Delaware limited liability company. “Tishman Speyer” refers to Tishman Speyer Properties, L.P., a New York limited partnership, and the parent of our Sponsor. References to our “initial stockholders” refer to our Sponsor and to our independent directors, Joshua Kazam, Jennifer Rubio, Ned Segal and Michelangelo Volpi. Refer to the glossary at the end of this report for additional terms.
This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” gives effect to the restatement of our financial statements, as discussed in Note 2—Restatement of Previously Issued Financial Statements to our condensed financial statements included in this report. For further detail regarding the restatement, see “Explanatory Note” and Part I, Item 4. Controls and Procedures.
Special Note Regarding Forward-Looking Statements
This discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the “Risk Factors” section of the final prospectus for our initial public offering filed with the SEC. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company, originally incorporated in Delaware on November 12, 2020, and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination.
Following the closing of our initial public offering (the “IPO”), on February 17, 2021, $300,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement Warrants was placed in the Trust Account and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in money market funds meeting certain conditions under Rule
2a-7
promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, until the earlier of: (i) the completion of a Business Combination, (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation, and (iii) the redemption of the Company’s public shares if the Company is unable to complete the initial Business Combination by February 17, 2023, subject to applicable law. The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders. Our management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
23
Results of Operations
As of September 30, 2021, we had not commenced any operations. All activity for the period from January 1, 2021 through September 30, 2021, relates to preparation and consummation of the IPO and our search for a target to consummate a Business Combination. We will not generate any operating revenues until after the completion of a Business Combination, at the earliest. We will generate
non-operating income
in the form of interest income from the proceeds derived from the IPO and placed in the Trust Account (defined below). For the three months ended September 30, 2021, we had a net income of $10,104,931, consisting mostly of change in fair value of warrant liabilities of $10,527,846 partially offset by $427,524 in formation and operating costs.
For the nine months ended September 30, 2021, we had a net income of $5,422,897, consisting mostly of change in fair value of warrant liabilities of $6,882,845 offset by $949,475 in formation and operating costs and $521,695 in offering expense allocated to issuance of the warrants.
Liquidity and Capital Resources
As of September 30, 2021, we had cash outside our trust account of $598,711, available for working capital needs. All remaining cash was held in the trust account and is generally unavailable for our use, prior to an initial business combination.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (excluding deferred underwriting commissions) to complete our Business Combination. We may withdraw interest to pay our taxes. We estimate our annual franchise tax obligations, based on the number of shares of our common stock authorized and outstanding after the completion of the IPO, to be $200,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation per annum, which we may pay from funds from the IPO held outside of the Trust Account or from interest earned on the funds held in the Trust Account and released to us for this purpose. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account. We expect the interest earned on the amount in the Trust Account will be sufficient to pay our income taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our 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.
Further, our Sponsor, officers and directors or their respective affiliates may, but are not obligated to, loan us funds as may be required (the “Working Capital Loans”). If we complete a Business Combination, we would repay the Working Capital Loans out of the proceeds of the Trust Account released to us. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, we may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. To date, we had no borrowings under the Working Capital Loans.
24
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking
in-depth
due diligence and negotiating a 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 Business Combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended 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 Business Combination, we would repay such loaned amounts. In the event that our Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants of the post business combination entity at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants. 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 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. Off-Balance
Sheet Financing Arrangements We did not have any
off-balance
sheet arrangement as of September 30, 2021. Contractual Obligations
As of September 30, 2021, we did not have any long-term debt, capital or operating lease obligations.
We entered into an administrative services agreement pursuant to which we will pay our Sponsor for office space and secretarial and administrative services provided to members of our management team, in an amount not to exceed $10,000 per month.
Critical Accounting Policies and Estimates
The preparation of condensed financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC
815-15.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed
at the end of each reporting period. We account for our 11,333,334 warrants issued in connection with its IPO (6,000,000) and Private Placement (5,333,334) as derivative warrant liabilities in accordance with ASC
815-40.
Accordingly, we recognize the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement
at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. At September 30, 2021, the Company used the quoted stock price in the active market to value the public warrants and a Monte Carlo simulation model to value the private warrants.25
Class A Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance with the guidance in the Financial Accounting Standards Board’s Accounting Standards Codification Topic 480 “.” Common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. Our Class A common stock feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, at September 30, 2021, 30,000,000 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of our balance sheet.
Distinguishing Liabilities from Equity
Net Income Per Common Share
We have two classes of stock, which are referred to as Class A common stock and Class B common stock. Earnings and losses are shared pro rata between the two classes of stock. Private and public warrants to purchase 11,333,334 Class A common stock at $11.50 per share were issued on February 17, 2021. No warrants were exercised during the three or nine months ended September 30, 2021. The calculation of diluted income per common share does not consider the effect of the warrants issued in connection with the (i) IPO, (ii) exercise of over-allotment, and (iii) Private Placement since the exercise of the warrants are contingent upon the occurrence of future events. As a result, diluted net income per common share is the same as basic net income per common share for the periods presented.
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standard Update (the “ASU”) No. , which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The Company early adopted the ASU on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
2020-06,
Debt—Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s Own EquityManagement does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
26
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a “smaller reporting company,” we are not required to provide the information called for by this Item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of 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 and Chief Financial Officer, to allow timely decisions regarding required disclosure.
As required by Rules
13a-15
and 15d-15
under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2021. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e)
under the Exchange Act) were not effective, due to the material weakness in our internal control over financial reporting related to the evaluation of accounting standards for complex financial instruments, as further described below. 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 and corrected on a timely basis. In connection with the preparation of this report, management re-evaluated the Company’s application of ASC 480-10-S99 to its accounting classification of public shares. Upon such re-evaluation, management determined that the public shares include redemption provisions that require classification of the public shares as temporary equity, regardless of the minimum net tangible asset requirement, and as a result, concluded that our previously issued financial statements for the Restatement Periods should be restated in this report to reflect the reclassification, as discussed in Note 2—Restatement of Previously Issued Financial Statements to our condensed financial statements in this report.
As a result, our management concluded that the material weakness identified in connection with the preparation of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the SEC on May 25, 2021, had not been remediated and that there was a material weakness in our internal control over financial reporting related to the evaluation of accounting standards for complex financial instruments in internal control over financial reporting as of September 30, 2021.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except for the circumstances that led our management to conclude that our previously issued financial statements should be restated to reflect the reclassification of a portion of our the public shares, as described above, and our remediation efforts described below.
In light of the material weakness described above, our personnel and third-party professionals with whom we consult regarding complex accounting applications continued to perform additional analyses as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. We plan to continue to enhance our system of evaluating and implementing the accounting standards that apply to our financial statements. We can offer no assurance that our remediation plan will ultimately have the intended effects.
27
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
As of September 30, 2021, to the knowledge of our management, there was no material litigation, arbitration or governmental proceeding pending against us or any members of our management team in their capacity as such, and we and the members of our management team have not been subject to any such proceeding.
ITEM 1A. RISK FACTORS.
We have identified a material weakness in our internal control over financial reporting. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
As described elsewhere in this report, we have identified a material weakness in our internal control over financial reporting related to our evaluation of accounting standards for complex financial instruments, and we have restated certain of our previously issued financial statements in this report. As a result of this material weakness, our management has concluded that our disclosure controls and procedures were not effective as of September 30, 2021. See Note 2—Restatement of Previously Issued Financial Statements to our condensed financial statements and Part I, Item 4. Controls and Procedures in this report.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to take steps to remediate the material weakness. If we identify any new material weakness in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and the price of our securities may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TISHMAN SPEYER INNOVATION CORP. II | ||||||||
| By: | /s/ | |||||||
| Name: | Paul A. Galiano | |||||||
| Dated: December 20, 2021 | Title: | Chief Operating Officer, Chief Financial Officer and Director (Principal Accounting Officer) | ||||||
29
GLOSSARY
As used in this report, unless otherwise noted or the context otherwise requires, references to:
“” are to a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses;
Business Combination
“” are to the shares of the Company’s Class A common stock, par value $0.0001 per share;
Class
A common stock
“” are to the shares of the Company’s Class B common stock, par value $0.0001 per share;
Class
B common stock
“” are to the Company’s Class A common stock and Class B common stock;
common stock
“” are to Tishman Speyer Innovation Corp. II, a Delaware corporation;
Company
“” are to the Securities Exchange Act of 1934, as amended;
Exchange Act
“” are to the shares of the Class B common stock and Class A common stock issued upon the automatic conversion thereof at the time of the Company’s initial business combination;
Founder Shares
“” are to generally accepted accounting principles in the United States, as applied on a consistent basis;
GAAP
“” are to holders of the Founder Shares;
initial stockholders
“” are to the Investment Company Act of 1940, as amended;
Investment Company Act
“” are to the initial public offering by the Company, which closed on November 13, 2020;
IPO
“” are to the warrants issued to the Sponsor in a private placement simultaneously with the closing of the IPO;
Private Placement Warrants
“” are to shares of our Class A common stock sold as part of the units in the IPO (whether they were purchased in the IPO or thereafter in the open market);
public shares
“” are to the holders of the public shares, including the Sponsor and management team to the extent the Sponsor and/or members of its management team purchase public shares provided that the Sponsor’s and each member of its management team’s status as a “public stockholder” will only exist with respect to such public shares;
public stockholders
“” are to the Sarbanes-Oxley Act of 2002;
Sarbanes-Oxley Act
“” are to the U.S. Securities and Exchange Commission;
SEC
“” are to Tishman Speyer Innovation Sponsor II, L.L.C., a Delaware limited liability company;
Sponsor
“” are to Tishman Speyer Properties, L.P., a New York limited partnership, and the parent of the Sponsor; and
Tishman Speyer
“” are trust account established by the Company for the benefit of its stockholders at J.P. Morgan Chase Bank, N.A.
Trust Account
Unless specified otherwise, amounts in this report are presented in United States (“U.S.”) dollars. Defined terms in the financial statements contained in this report have the meanings ascribed to them in the financial statements.
30