THREE AND NINE MONTHS ENDED JUNE 30, 2021
|
|
Ordinary Shares
|
|
|
Additional
Paid in
|
|
|
Accumulated
|
|
|
Total
Shareholders’
Equity
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
(Deficit)
|
|
Balance – October 1, 2020
|
|
|
7,826,894
|
|
|
$
|
783
|
|
|
$
|
17,563,935
|
|
|
$
|
(12,564,708
|
)
|
|
$
|
5,000,010
|
|
Change in value of ordinary shares subject to possible redemption
|
|
|
607,687
|
|
|
|
60
|
|
|
|
6,076,810
|
|
|
|
—
|
|
|
|
6,076,870
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(6,076,872
|
)
|
|
|
(6,076,872
|
)
|
Balance – December 31, 2020
|
|
|
8,434,581
|
|
|
$
|
843
|
|
|
$
|
23,640,745
|
|
|
$
|
(18,641,580
|
)
|
|
$
|
5,000,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of ordinary shares subject to possible redemption
|
|
|
(3,434,581
|
)
|
|
|
(343
|
)
|
|
|
(23,640,745
|
)
|
|
|
(10,704,722
|
)
|
|
|
(34,345,810
|
)
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,004,061
|
|
|
|
6,004,061
|
|
Balance – March 31, 2021
|
|
|
5,000,000
|
|
|
$
|
500
|
|
|
$
|
—
|
|
|
$
|
(23,342,241
|
)
|
|
$
|
(23,341,741
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,480,906
|
)
|
|
|
(5,480,906
|
)
|
Balance – June 30, 2021
|
|
|
5,000,000
|
|
|
$
|
500
|
|
|
$
|
—
|
|
|
$
|
(28,823,147
|
)
|
|
$
|
(28,822,647
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE AND NINE MONTHS ENDED JUNE 30, 2020
|
|
|
|
Ordinary Shares
|
|
|
Additional
Paid in
|
|
|
(Accumulated
Deficit) /
Retained
|
|
|
Total
Shareholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Equity
|
|
Balance – October 1, 2019
|
|
|
5,031,250
|
|
|
$
|
503
|
|
|
$
|
24,497
|
|
|
$
|
(15,175
|
)
|
|
$
|
9,825
|
|
Forfeiture of Founder Shares
|
|
|
(31,250
|
)
|
|
|
(3
|
)
|
|
|
3
|
|
|
|
—
|
|
|
|
—
|
|
Sale of 20,000,000 Units, net of underwriting discounts, offering costs and warrant liabilities
|
|
|
20,000,000
|
|
|
|
2,000
|
|
|
|
189,268,778
|
|
|
|
—
|
|
|
|
189,270,778
|
|
Ordinary shares subject to possible redemption
|
|
|
(18,249,963
|
)
|
|
|
(1,825
|
)
|
|
|
(182,497,805
|
)
|
|
|
—
|
|
|
|
(182,499,630
|
)
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,780,964
|
)
|
|
|
(1,780,964
|
)
|
Balance – December 31, 2019
|
|
|
6,750,037
|
|
|
$
|
675
|
|
|
$
|
6,795,473
|
|
|
$
|
(1,796,139
|
)
|
|
$
|
5,000,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of ordinary shares subject to possible redemption
|
|
|
(243,253
|
)
|
|
|
(24
|
)
|
|
|
(2,432,506
|
)
|
|
|
—
|
|
|
|
(2,432,530
|
)
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,432,528
|
|
|
|
2,432,528
|
|
Balance – March 31, 2020
|
|
|
6,506,784
|
|
|
$
|
651
|
|
|
$
|
4,362,967
|
|
|
$
|
636,389
|
|
|
$
|
5,000,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of ordinary shares subject to possible redemption
|
|
|
370,242
|
|
|
|
37
|
|
|
|
3,702,382
|
|
|
|
—
|
|
|
|
3,702,420
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,702,423
|
)
|
|
|
(3,702,423
|
)
|
Balance – June 30, 2020
|
|
|
6,877,026
|
|
|
$
|
688
|
|
|
$
|
8,065,350
|
|
|
$
|
(3,066,034
|
)
|
|
$
|
5,000,004
|
|
The accompanying notes are an integral part
of these unaudited condensed interim financial statements.
UNION ACQUISITION CORP. II
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Nine
Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(5,553,717
|
)
|
|
$
|
(3,050,859
|
)
|
Adjustments to reconcile net (loss) income to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Interest earned on marketable securities held in Trust Account
|
|
|
(44,435
|
)
|
|
|
(1,317,097
|
)
|
Change in fair value of warrant liabilities
|
|
|
4,575,000
|
|
|
|
3,737,500
|
|
Fees charged on Trust Account
|
|
|
37,500
|
|
|
|
32,083
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
55,373
|
|
|
|
(179,022
|
)
|
Accrued expenses
|
|
|
(23,395
|
)
|
|
|
111,193
|
|
Net cash used in operating activities
|
|
|
(953,674
|
)
|
|
|
(666,202
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Investment of cash in Trust Account
|
|
|
—
|
|
|
|
(200,000,000
|
)
|
Cash withdrawn from Trust Account to redeeming shareholders
|
|
|
64,898,081
|
|
|
|
—
|
|
Investment of cash into Trust Account by Sponsor
|
|
|
(813,190
|
)
|
|
|
—
|
|
Net cash provided by (used in) investing activities
|
|
|
64,084,891
|
|
|
|
(200,000,000
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from sale of Units, net of underwriting discounts paid
|
|
|
—
|
|
|
|
196,000,000
|
|
Proceeds from sale of Private Placement Warrants
|
|
|
—
|
|
|
|
6,250,000
|
|
Repayment of promissory note – related party
|
|
|
—
|
|
|
|
(175,000
|
)
|
Redemption of common stock
|
|
|
(64,898,081
|
)
|
|
|
(372,228
|
)
|
Advances from related party
|
|
|
813,190
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(64,084,891
|
)
|
|
|
201,702,772
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash
|
|
|
(953,674
|
)
|
|
|
1,036,570
|
|
Cash – Beginning
|
|
|
955,800
|
|
|
|
27,831
|
|
Cash – Ending
|
|
$
|
2,126
|
|
|
$
|
1,064,401
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Investing and Financing Activities:
|
|
|
|
|
|
|
|
|
Initial classification of ordinary shares subject to possible redemption
|
|
$
|
—
|
|
|
$
|
196,730,600
|
|
Change in value of ordinary shares subject to possible redemption
|
|
$
|
(48,629,141
|
)
|
|
$
|
686,640
|
|
The accompanying notes are an integral part
of these unaudited condensed interim financial statements.
UNION ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 — ORGANIZATION AND PLAN OF BUSINESS
OPERATIONS
Union Acquisition Corp.
II (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on December 6, 2018. The Company
was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization
or other similar business combination with one or more businesses or entities that the Company has not yet identified (a “Business
Combination”).
The Company’s efforts
to identify a prospective target business will not be limited to a particular industry or geographic region, although the Company intends
to focus its search for a target business located in Latin America. The Company is an emerging growth company and, as such, the Company
is subject to all of the risks associated with emerging growth companies.
At June 30, 2021, the Company
had not yet commenced any operations. All activity through June 30, 2021 relates to the Company’s formation, the initial public
offering (the “Initial Public Offering”), which is described below, and, after the Initial Public Offering, identifying a
target company for a Business Combination and activities in connection with the proposed acquisition of Procaps Group, S.A., a public
limited liability company governed by the laws of the Grand Duchy of Luxembourg (“Procaps”) (see Note 5). The Company will
not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates
non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement
for the Company’s Initial Public Offering was declared effective on October 17, 2019. On October 22, 2019, the Company consummated
the Initial Public Offering of 20,000,000 units (the “Units” and, with respect to the ordinary shares included in the Units
being offered, the “Public Shares”), which includes the partial exercise by the underwriters of their over-allotment option
in the amount of 2,500,000 Units, at $10.00 per Unit, generating gross proceeds of $200,000,000 which is described in Note 3.
Simultaneously with the
closing of the Initial Public Offering, the Company consummated the sale of 6,250,000 warrants (the “Private Placement Warrants”)
at a price of $1.00 per warrant in a private placement to two of the Company’s shareholders, generating gross proceeds of $6,250,000,
which is described in Note 4.
Transaction costs
amounted to $4,529,222, consisting of $4,000,000 of underwriting fees and $529,222 of other offering costs.
Following the closing of
the Initial Public Offering on October 22, 2019, an amount of $200,000,000 ($10.00 per Unit) from the net proceeds of the sale of the
Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”)
and invested in U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions
under Rule 2a-7 under the Investment Company Act of 1940, as amended, or the Investment Company Act, which invest only in direct U.S.
government treasury obligations, until the earlier of (i) the consummation of the Business Combination or (ii) the distribution of the
Trust Account, as described below.
The Company’s management
has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the
Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a
Business Combination. The Company’s initial 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 (excluding taxes payable on the income earned on the funds
held in trust) at the time of the signing of an agreement to enter into a Business Combination. 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.
UNION ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
The Company will provide
the holders of the public shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their Public
Shares upon the completion of a Business Combination, either (i) in connection with a shareholder meeting called to approve the Business
Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination
or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their
Public Shares for a pro rata portion of the aggregate amount then on deposit in the Trust Account. There will be no redemption rights
upon the completion of a Business Combination with respect to the Company’s warrants.
The Company will proceed
with a Business Combination only if it has net tangible assets of at least $5,000,001 upon consummation of the Business Combination and,
in the case of a shareholder vote, a majority of the outstanding ordinary shares voted are voted in favor of the Business Combination.
Notwithstanding the foregoing, if the Company seeks shareholder approval of the Business Combination and the Company does not conduct
redemptions pursuant to the tender offer rules, a Public Shareholder, together with any affiliate of such shareholder or any other person
with whom such shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), will be restricted from redeeming its shares with respect to more than an aggregate
of 15% of the Public Shares. In connection with any initial Business Combination, the holders of the Company’s ordinary shares
issued prior to the Initial Public Offering (the “Initial Shareholders”) and officers and directors and their affiliates
have agreed (i) to vote any ordinary shares owned by them in favor of a Business Combination if a vote is held to approve the Business
Combination, (ii) not to redeem any of their ordinary shares in connection therewith or any amendment to the Company’s charter
documents prior to the consummation of a Business Combination and (iii) not to sell any of their ordinary shares to the Company in a
tender offer.
The Company initially had
until April 22, 2021 to complete a Business Combination (the “Combination Period”). If the Company has not completed a Business
Combination within the Combination Period (and shareholders have not amended the Company’s amended and restated memorandum and
articles of association to extend such date), the Company will (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the Public Shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net
of taxes payable, and less up to $100,000 of interest to pay liquidation expenses) divided by the number of then outstanding Public Shares,
which redemption will completely extinguish the rights of the Public Shareholders as shareholders (including the right to receive further
liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the Company’s remaining shareholders and its Board of Directors, dissolve and liquidate, subject in
each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other
applicable law. The proceeds deposited in the Trust Account could, however, become subject to claims of creditors. Therefore, the actual
per-share redemption amount could be reduced.
On April 16, 2021, the Company
held a special meeting pursuant to which the Company’s shareholders approved extending the Combination Period from April 22, 2021
to October 22, 2021 (the “Extension Date”). In connection with the approval of the extension, shareholders elected to redeem
an aggregate of 6,446,836 ordinary shares. As a result, an aggregate of $64,898,081 (or approximately $10.07 per share) was released
from the Company’s Trust Account to pay such shareholders.
On April 16, 2021, the
Company also agreed to deposit a maximum total of $0.12 into the trust account for each of the Shares that are not redeemed in
connection with the Extraordinary General Meeting (the “Contribution”). The terms of the Contribution are that
each month of the Extension a deposit in an amount equal to $0.02 will be made into the trust account until completion of the
business combination. The first payment into the trust account occurred on April 22, 2021 and will recur for each month that is
needed by the Company to complete an initial business combination during the Extension. The Company paid $271,063 on April 22,
2021, May 22, 2021 and June 22, 2021 for a total of 813,190.
In the event of a liquidation,
the Public Shareholders will be entitled to receive a full pro rata interest in the Trust Account (less up to $100,000 of interest to
pay liquidation expenses and which interest shall be net of taxes payable). There will be no redemption rights or liquidating distributions
with respect to the Public Warrants (as defined in Note 3), the Founder Shares (as defined in Note 4) or the Private Placement Warrants,
which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
UNION
ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
In
order to protect the amounts held in the Trust Account, Union Group International Holdings Limited (“Union Group”), one of
the Company’s initial shareholders and an affiliate of a director of the Company, has agreed to be liable to the Company if and
to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which
the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will
not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or
to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public
Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).
Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, Union Group will not be responsible
to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that Union Group will have
to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s
independent registered public accounting firm), prospective target businesses or other entities with which the Company does business,
execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
NOTE
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying unaudited condensed interim 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 Securities and Exchange Commission (the “SEC”). Certain information or footnote
disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the
rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes
necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the
accompanying unaudited condensed interim 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 interim financial statements should be read in conjunction with the Company’s Annual Report on
Form 10-K/A for the year ended September 30, 2020 as filed with the SEC on June 11, 2021, which contains the audited financial statements
and notes thereto. The financial information as of September 30, 2020 is derived from the audited financial statements presented in the
Company’s Annual Report on Form 10-K/A for the years ended September 30, 2020 and 2019. The interim results for the three and nine
months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending September 30, 2021 or for
any future interim periods.
Liquidity
and Going Concern
As
of June 30, 2021, the Company had $2,126 in its operating bank accounts, $137,245,382 in securities held in the Trust Account to be used
for a Business Combination or to repurchase or redeem its common stock in connection therewith and working capital deficit of $891,110.
As of June 30, 2021, approximately $1,412,357 of the amount on deposit in the Trust Account represented interest income, which is available
to pay the Company’s tax obligations.
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, suspending the pursuit of a Business Combination. The Company cannot provide any assurance
that new financing will be available to it on commercially acceptable terms, if at all.
As
a result of the above, in connection with the Company’s assessment of going concern considerations in accordance with
Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of
Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the liquidity
condition and date for mandatory liquidation and dissolution raise substantial doubt about the Company’s ability to continue
as a going concern through October 22, 2021 (approved extension date), the scheduled liquidation date of the Company if it does not
complete a Business Combination prior to such date. These financial statements do not include any adjustments relating
to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable
to continue as a going concern.
UNION
ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of
such extended transition period which means that when a standard is issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company, can adopt the new or revised 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 the unaudited condensed interim financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the unaudited condensed interim financial statements and the reported amounts of revenues and expenses during the reporting periods.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates
included in these condensed 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.
Warrant
Liabilities
The
Company accounts for the Warrants in accordance with the guidance contained in ASC 815-40 under which the Warrants do not meet the criteria
for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Warrants as liabilities at their fair
value and adjust the Warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet
date until exercised, and any change in fair value is recognized in our statement of operations. The Public Warrants for periods where
no observable traded price was available are valued using a Monte Carlo simulation model. For periods subsequent to the detachment of
the Public Warrants from the Units, the Public Warrant quoted market price was used as the fair value as of each relevant date. The fair
value of Private Warrants was determined using a Black-Scholes option pricing model.
UNION
ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
Ordinary
Shares Subject to Possible Redemption
The
Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Ordinary shares subject to mandatory redemption is classified as a liability instrument and is measured
at redemption value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that is either
within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s
control) is classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s
ordinary shares features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence
of uncertain future events. Accordingly, at June 30, 2021 and September 30, 2020, respectively, there are 13,533,164 and 17,173,106 ordinary
shares subject to possible redemption presented as temporary equity, outside of the shareholders’ equity section of the Company’s
unaudited condensed balance sheets.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares
to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary
shares are affected by charges against additional paid in capital and accumulated deficit.
Offering
Costs
Offering
costs consisted of legal, accounting and other expenses incurred through the Initial Public Offering that were directly related to the
Initial Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based
on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities were expensed
as incurred in the condensed statements of operations. Offering costs associated with the Class A ordinary shares issued were charged
to shareholders’ equity upon the completion of the Initial Public Offering.
Income
Taxes
ASC
Topic 740, “Income Taxes”, prescribes a recognition threshold and a measurement attribute for the financial statement recognition
and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must
be more-likely-than-not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman
Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized
tax benefits as income tax expense. As of June 30, 2021 and September 30, 2020, there were no unrecognized tax benefits and no amounts
accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments,
accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since
inception.
The
Company’s tax provision is zero because the Company is incorporated in the Cayman Islands with no connection to any other taxable
jurisdiction. The Company is considered to be an exempted Cayman Islands company and is presently not subject to income taxes or income
tax filing requirements in the Cayman Islands or the United States. As such, the Company has no deferred tax assets.
Net
Income (Loss) Per Ordinary Share
Net
income (loss) per ordinary share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding
for each of the periods. The calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection
with the (i) Initial Public Offering, (ii) the exercise of the over-allotment option and (iii) Private Placement Warrants since the exercise
of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.
UNION
ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
The
Company’s condensed statements of operations include a presentation of income (loss) per share for ordinary shares subject to possible
redemption in a manner similar to the two-class method of income (loss) per share. Net income per share, basic and diluted, for redeemable
ordinary shares is calculated by dividing the interest income earned on the Trust Account, by the weighted average number of redeemable
ordinary shares outstanding. Net loss per share, basic and diluted, for non-redeemable ordinary shares is calculated by dividing the
net income (loss), adjusted for income attributable to redeemable ordinary shares, by the weighted average number of non-redeemable ordinary
shares outstanding for the periods. Non-redeemable ordinary shares include the Founder Shares as these shares do not have any redemption
features and do not participate in the income earned on the Trust Account.
The
following table reflects the calculation of basic and diluted net income (loss) per ordinary share (in dollars, except per share amounts):
|
|
Three Months Ended
June 30,
|
|
|
Nine Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Redeemable Ordinary Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator: Earnings allocable to Redeemable Ordinary Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income
|
|
$
|
6,676
|
|
|
$
|
95,656
|
|
|
$
|
44,435
|
|
|
$
|
1,317,097
|
|
Net Earnings
|
|
$
|
6,676
|
|
|
$
|
95,656
|
|
|
$
|
44,435
|
|
|
$
|
1,317,097
|
|
Denominator: Weighted Average Redeemable Ordinary Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Ordinary Shares, Basic and Diluted
|
|
|
14,842,531
|
|
|
|
20,000,000
|
|
|
|
18,293,485
|
|
|
|
20,000,000
|
|
Earnings/Basic and Diluted Redeemable Ordinary Shares
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Redeemable Ordinary Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator: Net Income (Loss) minus Redeemable Net Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
(5,480,906
|
)
|
|
$
|
(3,702,423
|
)
|
|
$
|
(5,553,717
|
)
|
|
$
|
(3,050,859
|
)
|
Redeemable Net Earnings
|
|
|
(6,676
|
)
|
|
|
(95,656
|
)
|
|
|
(44,435
|
)
|
|
|
(1,317,097
|
)
|
Non-Redeemable Net Income (Loss)
|
|
$
|
(5,487,582
|
)
|
|
$
|
(3,798,079
|
)
|
|
$
|
(5,598,152
|
)
|
|
$
|
(4,367,956
|
)
|
Denominator: Weighted Average Non-Redeemable Ordinary Shares (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Redeemable Ordinary Shares, Basic and Diluted
|
|
|
5,000,000
|
|
|
|
5,000,000
|
|
|
|
5,000,000
|
|
|
|
5,000,000
|
|
Income (Loss) /Basic and Diluted Non-Redeemable Ordinary Shares
|
|
$
|
(1.10
|
)
|
|
$
|
(0.76
|
)
|
|
$
|
(1.12
|
)
|
|
$
|
(0.87
|
)
|
(1)
|
For
the three and nine months ended June 30, 2021 and 2020, basic and diluted shares are the
same as there are no securities that are dilutive to the shareholders.
|
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 Corporation limit of $250,000. At June 30, 2021 and September 30,
2020, the Company has not experienced losses on this account and management believes the Company is not exposed to significant risks
on such account.
UNION
ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities which qualify as financial instruments under ASC Topic 820, “Fair Value
Measurement,” approximate the carrying amounts represented in the accompanying unaudited condensed interim financial statements,
primarily due to their short-term nature, except for the warrant liabilities (see Note 7).
Recent
Accounting Standards
In
August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06,
Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s
Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies
the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard
also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for
all convertible instruments. ASU 2020-06 is for fiscal years beginning after December 15, 2021 and should be applied on a full or modified
retrospective basis. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim
periods within those fiscal years. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial
position, results of operations or cash flows.
Management
does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on the Company’s unaudited condensed interim financial statements.
NOTE
3 — INITIAL PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company sold 20,000,000 Units, at a purchase price of $10.00 per Unit, which includes the partial
exercise by the underwriters of their over-allotment option in the amount of 2,500,000 Units at $10.00 per Unit. Each Unit consists of
one ordinary share and one redeemable warrant (“Public Warrant”). Each Public Warrant entitles the holder to purchase one
ordinary share at a price of $11.50 per share (see Note 7).
NOTE
4 — RELATED PARTY TRANSACTIONS
Founder
Shares
In
December 2018, the Company issued an aggregate of 4,312,500 ordinary shares (“Founder Shares”) for an aggregate purchase
price of $25,000. In August 2019, the Company effected a share capitalization pursuant to which the Company issued an additional 718,750
ordinary shares. As a result, there were 5,031,250 shares outstanding, of which an aggregate of up to 656,250 shares were subject to
forfeiture by the Initial Shareholders to the extent that the underwriters’ over-allotment was not exercised in full or in part,
so that the Initial Shareholders would own 20% of the Company’s issued and outstanding shares after the Initial Public Offering.
As a result of the underwriters’ election to partially exercise their over-allotment option, 31,250 Founder Shares were forfeited
and 625,000 Founder Shares are no longer subject to forfeiture, resulting in 5,000,000 ordinary shares outstanding.
The
Initial Shareholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the
earlier of (i) one year after the date of the consummation of a Business Combination and (ii) the date on which the closing price of
the Company’s ordinary shares equals or exceeds $12.50 price per share (as adjusted for share splits, share dividends, reorganizations
and recapitalizations) for any 20 trading days within any 30-trading day period commencing 150 days after a Business Combination, or
earlier if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, share exchange or other similar
transaction which results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash, securities
or other property.
UNION
ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
Private
Placement
Simultaneously
with the closing of the Initial Public Offering, certain of the Initial Shareholders purchased an aggregate of 6,250,000 Private Placement
Warrants at a price of $1.00 Per Private Placement Warrant for an aggregate purchase price of $6,250,000. Each Private Placement Warrant
is exercisable to purchase one ordinary share at an exercise price of $11.50. The proceeds from the Private Placement Warrants were added
to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination
within the Combination Period, the proceeds of the sale of the Private Placement Warrants will be used to fund the redemption of the
Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless. There will be
no redemption rights or liquidating distributions from the Trust Account with respect to the Private Placement Warrants.
The
Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that
the Private Placement Warrants (i) will not be redeemable by the Company and (ii) may be exercised for cash or on a cashless basis, so
long as they are held by the initial purchasers or any of their permitted transferees. If the Private Placement Warrants are held by
holders other than the initial purchasers or any of their permitted transferees, the Private Placement Warrants will be redeemable by
the Company and exercisable by the holders on the same basis as the Public Warrants. In addition, the Private Placement Warrants may
not be transferable, assignable or salable until 30 days after the consummation of a Business Combination, subject to certain limited
exceptions.
Support
Services
The
Company entered into an agreement, commencing on October 17, 2019 through the earlier of the consummation of a Business Combination or
the Company’s liquidation, to pay an affiliate of one of the Company’s directors a monthly fee of $10,000 for office space,
utilities and administrative support. For the three and nine months ended June 30, 2021 and 2020, the Company incurred $30,000, $30,000,
$85,000 and $90,000 in fees for these services, respectively. At June 30, 2021 and September 30, 2020, $60,000 and $115,000 of such fee
is included in accrued expenses in the accompanying unaudited condensed interim balance sheets.
The
Company also pays its Chief Operating Officer a $10,000 per month consulting fee, commencing on October 17, 2019 through the earlier
of the consummation of a Business Combination or the Company’s liquidation. For the three and nine months ended June 30, 2021 and
2020, the Company incurred and paid $30,000 and $90,000, respectively, in fees for these services.
Advances
from Related Party
As
of June 30, 2021, the Sponsor paid $813,190 on behalf of the Company in connection with the Contribution as described in Note 1. The
advances are non-interest bearing and are currently due on demand.
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Initial Shareholders, the Company’s officers,
directors or their affiliates may, but are not obligated to, loan the Company funds, from time to time or at any time, as may be required
(“Working Capital Loans”). Each Working Capital Loan would be evidenced by a promissory note. The Working Capital Loans would
either be paid upon consummation of a Business Combination, without interest, or, at the holder’s discretion, up to $1,500,000
of the Working Capital Loans may be converted into warrants at a price of $1.00 per warrant. The warrants would be identical to the Private
Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion of the working capital held
outside the Trust Account to repay such loaned amounts, but no proceeds from the Trust Account would be used for such repayment. There
are no borrowings under the working capital loans to date. As of June 30, 2021 and September 30, 2020, no Working Capital Loans were
outstanding.
UNION
ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
NOTE
5 — COMMITMENTS AND CONTINGENCIES
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could
have a negative effect on the Company’s financial position, and/or results of its operations, the specific impact is not readily
determinable as of the date of these unaudited condensed interim financial statements. The unaudited condensed interim financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
Registration
Rights
Pursuant
to a registration rights agreement entered into on October 17, 2019, the holders of the Founder Shares, the Private Placement Warrants
(and their underlying securities) and the warrants that may be issued upon conversion of the Working Capital Loans (and their underlying
securities) are entitled to registration rights. The holders of a majority of these securities will be entitled to make up to two demands
that the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration
rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders
of a majority of the Private Placement Warrants and warrants issued in payment of Working Capital Loans made to the Company (or underlying
securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition,
the holders will have certain “piggy-back” registration rights with respect to registration statements filed subsequent to
the completion of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration
statements.
Underwriting
Agreement
The
Company granted the underwriters a 45-day option to purchase up to 2,625,000 additional Units to cover over-allotments at the Initial
Public Offering price, less the underwriting discounts and commissions. In connection with the closing of the Initial Public Offering
on October 22, 2019, the underwriters elected to partially exercise their over-allotment option to purchase 2,500,000 Units at a purchase
price of $10.00 per Unit.
Business
Combination Marketing Agreement
The
Company engaged the representative of the underwriters in the Initial Public Offering as an advisor in connection with a Business Combination
to assist the Company in holding meetings with its shareholders to discuss the potential Business Combination and the target business’
attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection
with a Business Combination, assist the Company in obtaining shareholder approval for the Business Combination and assist the Company
with its press releases and public filings in connection with the Business Combination. The Company will pay this entity an aggregate
cash fee for such services upon the consummation of a Business Combination in an amount equal to $4,200,000 (exclusive of any applicable
finders’ fees which might become payable).
Procaps
Business Combination Agreement
On
March 31, 2021, the Company (the “Registrant” or “SPAC”), Crynssen Pharma Group Limited, a private
limited liability company registered and incorporated under the laws of Malta (the “Company”), Procaps (“Holdco”)
and OZLEM Limited, an exempted company incorporated under the laws of the Cayman Islands (“Merger Sub”) entered into
a Business Combination Agreement (the “Business Combination Agreement”).
UNION
ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
Pursuant
to the Business Combination Agreement, (i) Merger Sub will merge with and into SPAC, with SPAC surviving such merger and becoming a direct
wholly-owned subsidiary of Holdco (the “Merger”) and, in the context of the Merger, (a) all ordinary shares of SPAC,
par value $0.0001 per share (“SPAC Ordinary Shares”) outstanding will be exchanged with Holdco for the right to receive
ordinary shares of Holdco, nominal value $0.01 per share (“Holdco Ordinary Shares”) pursuant to a share capital increase
of Holdco, (b) the SPAC Warrants will become warrants of Holdco (“Holdco Warrants”) exercisable for Holdco Ordinary
Shares, on substantially the same terms as the SPAC Warrants and (c) Holdco shall enter into an Assignment, Assumption and Amendment
Agreement with SPAC and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent, to amend and assume
SPAC’s obligations under the existing Warrant Agreement, dated October 17, 2019, to give effect to the conversion of SPAC Warrants
to Holdco Warrants; (ii) immediately following consummation of the Merger and pursuant to those certain individual Contribution and Exchange
Agreements, each dated as of March 31, 2021, and entered into by and among Holdco, the Company and each of the shareholders of the Company
(the “Company Shareholders”) (collectively, the “Exchange Agreements”), each of the Company Shareholders,
effective on the Closing Date immediately following the Merger (the “Exchange Effective Time”) will contribute its
respective ordinary shares of the Company, nominal value $1.00 per share (“Company Ordinary Shares”) to Holdco in
exchange for Holdco Ordinary Shares, and, in the case of the International Finance Corporation (“IFC”), for Holdco
Ordinary Shares and redeemable B shares of Holdco (the “Holdco Redeemable B Shares”), to be subscribed for by each
such Company Shareholder (such contributions and exchanges of Company Ordinary Shares for Holdco Ordinary Shares and, with respect to
IFC, Holdco Ordinary Shares and Holdco Redeemable B Shares, collectively, the “Exchange”) and Holdco will, simultaneously
with the Exchange, redeem all redeemable A shares of Holdco (the “Holdco Redeemable A Shares” and together with the
Holdco Ordinary Shares and Holdco Redeemable B Shares, the “Holdco Shares”) held by the Company as a result of its
incorporation; (iii) as a result of the Exchange, the Company will become a direct wholly-owned subsidiary of Holdco and the Company
Shareholders will become holders of issued and outstanding Holdco Shares; and (iv) immediately following the Exchange, Holdco will redeem
6,000,000 Holdco Redeemable B Shares for a total purchase price of $60,000,000 in accordance with that certain Share Redemption Agreement
entered into by and between Holdco and IFC on March 31, 2021. Capitalized terms used but not defined herein shall have the respective
meanings set forth in the Business Combination Agreement.
The
Company has entered into separate subscription agreements (collectively, the “Subscription Agreements”), dated March
31, 2021, with certain investors, pursuant to which SPAC has agreed to issue and sell, in private placements to close contemporaneously
with, but immediately prior to, the Merger, an aggregate of 10,000,000 SPAC Ordinary Shares, for a purchase price of $10.00 per SPAC
Ordinary Share and an aggregate purchase price of $100,000,000 (the “PIPE Investment”), which will automatically be
converted into Holdco Ordinary Shares at the Merger Effective Time. The Subscription Agreements give the investors customary registration
and indemnification rights.
Nomura
Agreement
On
April 12, 2021, the Company announced that it has entered into an agreement (the “Support Agreement”) with Nomura
Securities International, Inc. (“Nomura”) to support the special resolution (“Extension Amendment Proposal”)
to amend the Company’s amended and restated memorandum and articles of association to extend the date by which the Company must
consummate a business combination from April 22, 2021 to October 22, 2021 (the “Extension”). Pursuant to the Support
Agreement, Nomura agrees (i) to use reasonable efforts to acquire up to 1,900,000 Shares (the “Maximum Number of Shares”)
prior to April 16, 2021 and (ii) that it will not make an Election with respect to any Shares it purchases under the terms of the Support
Agreement and will use reasonable efforts to withdraw any outstanding Election previously made with respect to such Shares. Pursuant
to the Support Agreement, the Company agrees to pay Nomura an amount in cash equal to (i) the Maximum Number of Shares multiplied by
(ii) $10.07 multiplied by (iii) 0.01, subject to certain adjustments. Nomura acquired 1,200,000 shares in connection with this agreement
and the Company paid $156,360 to Nomura which is recorded in the statement of operations for the three and nine months ended June 30,
2021.
NOTE
6 — SHAREHOLDERS’ EQUITY
Preference
Shares
The
Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share with such designation, rights and preferences
as may be determined from time to time by the Company’s Board of Directors. At June 30, 2021 and September 30, 2020, there were
no preference shares issued or outstanding.
Ordinary
Shares
The
Company is authorized to issue 150,000,000 ordinary shares, with a par value of $0.0001 per share. Holders of the ordinary shares are
entitled to one vote for each ordinary share. At June 30, 2021 and September 30, 2020, there were 5,000,000 and 7,826,894 ordinary shares
issued and outstanding, excluding 13,553,164 and 17,173,106 ordinary shares subject to possible redemption, respectively.
UNION
ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
The
Company determined the ordinary shares subject to redemption to be equal to the redemption value of approximately $10.00 per ordinary
share while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Upon considering
the impact of the PIPE Investment and associated Subscription Agreements entered into on March 31, 2021, it was concluded that the redemption
value should include all Public Shares resulting in the ordinary shares subject to possible redemption being equal to $135,101,919. This
resulted in a measurement adjustment to the initial carrying value of the ordinary shares subject to redemption with the offset recorded
to additional paid-in capital and accumulated deficit.
NOTE
7 — WARRANT LIABILITIES
The
Public Warrants will become exercisable on the later of (a) the completion of a Business Combination or (b) 12 months from the closing
of the Initial Public Offering. Each Public Warrant entitles the holder to purchase one ordinary share at a price of $11.50 per share.
In addition, if (x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection
with the closing of an initial Business Combination at an issue price or effective issue price of less than $9.20 per share (with such
issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any
such issuance to the Company’s Initial Shareholders or their affiliates, without taking into account any founders’ shares
held by the Initial Shareholders or their affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”),
(y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available
for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions),
and (z) the volume weighted average trading price of the ordinary shares during the 20 trading day period starting on the trading day
prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below
$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, and the $18.00 per share redemption trigger price described below will be adjusted (to the nearest
cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
No
Public Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the ordinary
shares issuable upon exercise of the Public Warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing,
if a registration statement covering the ordinary shares issuable upon exercise of the Public Warrants is not effective within a specified
period following the consummation of a Business Combination, warrant holders may, until such time as there is an effective registration
statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants
on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available.
If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. The
Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The
Company may redeem the Public Warrants:
|
●
|
in
whole and not in part;
|
|
●
|
at
a price of $0.01 per warrant;
|
|
●
|
at
any time after the warrants become exercisable;
|
|
●
|
upon
not less than 30 days’ prior written notice of redemption;
|
|
●
|
if,
and only if, the reported last sale price of the Company’s ordinary shares equals or exceeds $18.00 per share (subject to adjustment)
for any 20 trading days within a 30-trading day period ending on the third business day prior to the notice of redemption to the
warrant holders; and
|
|
●
|
if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants and a current prospectus relating to those shares is available throughout the 30-day redemption period.
|
UNION
ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the
Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
The
exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including
in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, the warrants
will not be adjusted for issuance of ordinary shares at a price below its exercise price. The Company has agreed to use its best efforts
to have declared effective a prospectus relating to the ordinary shares issuable upon exercise of the warrants and keep such prospectus
current until the expiration of the warrants. However, if the Company does not maintain a current prospectus relating to the ordinary
shares issuable upon exercise of the warrants, holders will be unable to exercise their warrants for cash and the Company will not be
required to net cash settle or cash settle the warrant exercise. There will be no redemption rights upon the completion of a Business
Combination with respect to the Company’s warrants. 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
8 — FAIR VALUE MEASUREMENTS
The
Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each
reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. The Company
classifies its U.S. Treasury and equivalent securities as held-to-maturity in accordance with ASC 320 “Investments - Debt and Equity
Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity.
Held-to-maturity treasury securities are recorded at amortized cost on the accompanying balance sheets and adjusted for the amortization
or accretion of premiums or discounts.
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company
seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is
used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and
liabilities:
|
Level 1:
|
Unadjusted
quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
|
|
Level 2:
|
Quoted
prices in markets that are not active or financial instruments for which significant inputs to models are observable (including but
not limited to quoted prices for similar securities, interest rates, foreign exchange rates, volatility, and credit risk, either
directly or indirectly;
|
|
Level 3:
|
Prices
or valuations that require significant unobservable input (including Management’s assumptions in determining fair value measurement).
|
At
June 30, 2021, assets held in the Trust Account were comprised of $271,213 in cash, $99,994,737 in U.S. Treasury Bills and $36,979,432 in
money market funds, which are invested in U.S. Treasury securities.
At
September 30, 2020, assets held in the Trust Account were comprised of $46,650 in cash and $201,276,689 in U.S. Treasury Bills.
UNION
ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
The
following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring
basis at June 30, 2021 and September 30, 2020 and indicates the fair value hierarchy of the valuation inputs the Company utilized to
determine such fair value:
Description
|
|
Level
|
|
|
June 30,
2021
|
|
|
September 30,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Investments held in the Trust Account
|
|
1
|
|
|
$
|
137,245,382
|
|
|
$
|
201,276,435
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liabilities – Public Warrants
|
|
1
|
|
|
$
|
18,200,000
|
|
|
$
|
15,000,000
|
|
Warrant liabilities – Private Placement Warrants
|
|
3
|
|
|
$
|
11,875,000
|
|
|
$
|
10,500,000
|
|
The
gross holding losses and fair value of held-to-maturity securities at June 30, 2021 are presented below.
|
|
Held-To-Maturity
|
|
Level
|
|
|
Amortized Cost
|
|
|
Gross
Holding
Loss
|
|
|
Fair Value
|
|
June 30, 2021
|
|
U.S. Treasury Securities (Mature on 11/04/2021)
|
|
1
|
|
|
$
|
99,994,737
|
|
|
$
|
(12,737
|
)
|
|
$
|
99,982,000
|
|
|
|
|
|
|
|
|
$
|
99,994,737
|
|
|
$
|
(12,737
|
)
|
|
$
|
99,982,000
|
|
The
gross holding losses and fair value of held-to-maturity securities at September 30, 2020 are presented below.
|
|
Held-To-Maturity
|
|
Level
|
|
|
Amortized Cost
|
|
|
Gross
Holding
Loss
|
|
|
Fair Value
|
|
September 30, 2020
|
|
U.S. Treasury Securities (Mature on 10/22/2020)
|
|
1
|
|
|
$
|
26,298,490
|
|
|
$
|
195
|
|
|
$
|
26,298,685
|
|
September 30, 2020
|
|
U.S. Treasury Securities (Mature on 10/29/2020)
|
|
1
|
|
|
$
|
24,998,590
|
|
|
$
|
(340
|
)
|
|
$
|
24,998,250
|
|
September 30, 2020
|
|
U.S. Treasury Securities (Mature on 11/5/2020)
|
|
1
|
|
|
$
|
49,994,033
|
|
|
$
|
1,967
|
|
|
$
|
49,996,000
|
|
September 30, 2020
|
|
U.S. Treasury Securities (Mature on 11/27/2020)
|
|
1
|
|
|
$
|
49,993,862
|
|
|
$
|
(1,362
|
)
|
|
$
|
49,992,500
|
|
September 30, 2020
|
|
U.S. Treasury Securities (Mature on 12/10/2020)
|
|
1
|
|
|
$
|
49,991,714
|
|
|
$
|
(714
|
)
|
|
$
|
49,991,000
|
|
|
|
|
|
|
|
|
$
|
201,276,689
|
|
|
$
|
(254
|
)
|
|
$
|
201,276,435
|
|
The
Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the accompanying
condensed balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair
value presented within loss on warrant liabilities in the condensed statements of operations.
The
Private Placement Warrants were valued using a Black Scholes Option Pricing Model, which is considered to be a Level 3 fair value
measurement. The Public Warrants were initially valued using a Monte Carlo simulation. The subsequent measurements of the Public Warrants
after the detachment of the Public Warrants from the Units was classified as Level 1 due to the use of an observable market quote in
an active market. The primary unobservable input utilized in determining the fair value of the ordinary shares. The expected volatility
was initially derived from observable public warrant pricing on comparable ‘blank check’ companies without an identified target.
Inherent
in a Black Scholes Option Pricing Model are assumptions related to the Unit price, expected volatility, risk-free interest rate, term
to expiration, and dividend yield. The Unit price is based on the publicly traded price of the Units as of the measurement date. The
Company estimated the volatility for the Public and Private Placement Warrants based on the implied volatility from the traded prices
of warrants issued by other special purpose acquisition companies. The risk-free interest rate is based on interpolated U.S. Treasury
rates, commensurate with a similar term to the Public and Private Placement Warrants. The term to expiration was calculated as the contractual
term of the Public and Private Placement Warrants, assuming one year to a Business Combination from the IPO date. Finally, the Company
does not anticipate paying a dividend. Any changes in these assumptions can change the valuation significantly.
UNION ACQUISITION CORP. II
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(Unaudited)
The
following table presents the quantitative information regarding Level 3 fair value measurement inputs at their measurement dates:
|
|
As of
June 30,
2021
|
|
|
As of
September 30,
2020
|
|
Share Price
|
|
$
|
10.09
|
|
|
$
|
9.93
|
|
Term (in years)
|
|
|
5.3
|
|
|
|
5.5
|
|
Volatility
|
|
|
24.2
|
%
|
|
|
23.5
|
%
|
Risk-free rate
|
|
|
0.92
|
%
|
|
|
0.33
|
%
|
Dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
The
change in the fair value of the derivative warrant liabilities, measured using Level 3 inputs, for the three and nine months ended June
30, 2021 is summarized as follows:
|
|
Private
Placement
|
|
Fair value as of October 1, 2020
|
|
$
|
10,500,000
|
|
Change in fair value of derivative warrant liabilities
|
|
|
1,875,000
|
|
Fair value as of December 31, 2020
|
|
|
12,375,000
|
|
Change in fair value of derivative warrant liabilities
|
|
|
(1,000,000
|
)
|
Fair value as of March 31, 2021
|
|
|
11,375,000
|
|
Change in fair value
|
|
|
500,000
|
|
Fair value as of June 30, 2021
|
|
$
|
11,875,000
|
|
Transfers
to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were no transfers between levels for the three and
nine months ended June 30, 2021 and 2020.
NOTE
9 — SUBSEQUENT EVENTS
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed
interim 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 unaudited condensed interim financial statements.