skya-10q_20210630.htm

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

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

For the quarter ended June 30, 2021

☐	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: 001-40422

SKYDECK ACQUISITION CORP.

(Exact Name of Registrant as Specified in Its Charter)

Cayman Islands		98-1583722
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

225 Dyer Street, 2^nd Floor, Providence, Rhode Island		02903
(Address of principal executive offices)		(Zip Code)

(401) 854-4567

(Issuer’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Units, each consisting of one Class A ordinary share, $0.0001 par value, and one-third of one redeemable warrant to acquire one Class A ordinary share	SKYAU	The Nasdaq Stock Market LLC
Class A ordinary shares included as part of the units	SKYA	The Nasdaq Stock Market LLC
Redeemable warrants to acquire one Class A ordinary share included as part of the units	SKYAW	The Nasdaq Stock Market LLC

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐

As of August 16, 2021, there were 22,165,962 Class A ordinary shares, $0.0001 par value and 5,541,491 Class B ordinary shares, $0.0001 par value, issued and outstanding.

SKYDECK ACQUISITION CORP.

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2021

TABLE OF CONTENTS

		Page
Part I. Financial Information		3
Item 1. Financial Statements		3
Unaudited Condensed Balance Sheet as of June 30, 2021		3
Unaudited Condensed Statements of Operations for the three months ended June 30, 2021 and for the period period from February 9, 2021 (Inception) through June 30, 2021		4
Unaudited Condensed Statements of Changes in Shareholders’ Equity for the three months ended June 30, 2021 and for the period from February 9, 2021 (Inception) through June 30, 2021		5
Unaudited Condensed Statement of Cash Flows for the period from February 9, 2021 (Inception) through June 30, 2021		6
Notes to Condensed Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk		25
Item 4. Controls and Procedures		25
Part II. Other Information		25
Item 1. Legal Proceedings		25
Item 1A. Risk Factors		25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities		25
Item 3. Defaults Upon Senior Securities		26
Item 4. Mine Safety Disclosures		26
Item 5. Other Information		26
Item 6. Exhibits		27
Part III. Signatures		28

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SKYDECK ACQUISITION CORP.

UNAUDITED CONDENSED BALANCE SHEET

June 30, 2021

	June 30, 2021
	(unaudited)
Assets
Cash	$	1,400,526
Prepaid expenses		437,263
Due from related party		—
Due from continental		—
Total current assets		1,837,789
Long-term prepaid expenses		365,831
Cash held in Trust Account		221,660,093
Total assets	$	223,863,713
Liabilities and Shareholders' Equity
Warrant liability		15,059,823
Forward Purchase Agreement liability		1,220,000
Deferred underwriters' discount		7,758,087
Total liabilities		24,037,910
Commitments
Class A common stock subject to possible redemption, 22,165,962 shares at redemption value at June 30, 2021		221,659,620
Shareholders' Equity:
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		—
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; none issued and outstanding (excluding 22,165,962 shares subject to possible redemption)		—
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 5,750,000 shares issued and outstanding		575
Additional paid-in capital		24,425
Accumulated deficit		(21,858,817	)
Total shareholders' equity		(21,833,817	)
Total Liabilities and Shareholders’ Equity	$	223,863,713

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

SKYDECK ACQUISITION CORP.

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

	For the three months ended June 30, 2021			For the period from February 9, 2021 (inception) through June 30, 2021
Formation and operating costs	$	180,907		$	193,495
Loss from operations	$	(180,907	)	$	(193,495	)
Other Income (Loss)
Other income relating to fair value exceeding amount received for warrants		1,139,755			1,139,755
Offering expenses related to warrant issuance		(556,203	)		(556,203	)
Change in fair value of warrant liabilities		617,205			617,205
Change in fair value of Forward Purchase Agreement		50,000			50,000
Trust interest income		473			473
Total other income		1,251,230			1,251,230
Net income	$	1,070,323		$	1,057,735
Weighted average shares outstanding - Class A ordinary shares.		22,165,962			6,339,018
Basic and diluted net income per ordinary share – Class A ordinary shares	$	—		$	—
Weighted average shares outstanding - Class B ordinary shares.		5,750,000			5,679,497
Basic and diluted net income per ordinary share – Class B ordinary shares	$	0.40		$	0.19

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

SKYDECK ACQUISITION CORP.

UNAUDITED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE PERIOD FROM FEBRUARY 9, 2021 (INCEPTION) THROUGH JUNE 30, 2021

	Preferred shares				Class A Ordinary Shares						Class B Ordinary Shares				Additional						Total
	Shares		Amount		Shares			Amount			Shares		Amount		Paid-in Capital			Accumulated Deficit			Shareholders' Equity (Deficit)
Balance as of February 9, 2021 (inception)		—		—		—			—			—		—		—			—			—
Class B ordinary shares issued to Sponsor		—		—		—			—			5,541,491		554		24,446			—			25,000
Net loss		—		—		—			—			—		—		—			(12,588	)		(12,588	)
Balance as of March 31, 2021		—		—		—			—			5,541,491		554		24,446			(12,588	)		12,412

Balance as of March 31, 2021		—		—		—			—			5,541,491		554		24,446			(12,588	)		12,412
Class B ordinary shares issued to Sponsor		—		—		—			—			208,509		21		(21	)		—			—
Sale of 20,000,000 Units on May 21, 2021 net of warrant liability initial fair value		—		—		20,000,000			2,000			—		—		192,604,666			—			192,606,666
Sale of 2,165,962 Units on May 25, 2021, net of warrant liability initial fair value		—		—		2,165,962			217			—		—		20,808,902			—			20,809,119
Net offering costs		—		—		—			—			—		—		(12,262,962	)		—			(12,262,962	)
Initial classification of Forward Purchase Agreement liability				—		—			—			—		—		(1,270,000	)		—			(1,270,000	)
Excess of cash received over fair value of Private Placement Warrants		—		—		—			—			—		—		(1,139,755	)		—			(1,139,755	)
Net loss		—		—		—			—			—		—		—			1,070,323			1,070,323
Class A ordinary shares subject to possible redemption		—		—		(22,165,962	)		(2,217	)		—		—		(198,740,851	)		(22,916,552	)		(221,659,620	)
Balance as of June 30 2021, 2021		—		—		—			—			5,750,000		575		24,425			(21,858,817	)		(21,833,817	)

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

SKYDECK ACQUISITION CORP.

UNAUDITED CONDENSED STATEMENT OF CASH FLOWS

	For the period from February 9, 2021 (inception) through June 30, 2021
Cash flows from operating activities:
Net loss	$	1,057,735
Adjustments to reconcile net loss to net cash used in operating activities:
Offering costs allocated to warrants		556,203
Other income relating to fair value exceeding amount paid for warrants		(1,139,755	)
Change in fair value of warrants		(617,205	)
Change in fair value of Future Purchase Agreement		(50,000	)
Interest earned on cash and marketable securities held in Trust Account		(473	)
Changes in assets and liabilities:
Prepaid assets		(803,094	)
Net cash used in operating activities		(996,589	)

Cash flows from investing activities:
Principal deposited in Trust Account		(221,659,620	)
Net cash used in investing activities		(221,659,620	)

Cash flows from financing activities:
Proceeds from sale of ordinary shares to initial shareholders		25,000
Proceeds from initial public offering, net of costs		217,226,427
Proceeds from private placement		7,433,193
Payment of deferred offering costs		(627,885	)
Net cash provided by financing activities		224,056,735

Net change in cash		1,400,526
Cash, beginning of the period		-
Cash, end of the period	$	1,400,526

Supplemental disclosure of cash flow information:
Initial value of common stock subject to possible redemption	$	221,659,620
Initial classification of Forward Purchase Agreement	$	1,270,000
Deferred underwriters' discount changed to additional paid-in capital	$	7,758,087
Initial classification of warrant liability	$	15,677,028

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

SKYDECK ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

Note 1 — Organization, Business Operation and Going Concern

Skydeck Acquisition Corp. (the “Company”) was incorporated as a Cayman Islands exempted company on February 9, 2021. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”). The Company has not selected any Business Combination target and the Company has not, nor has anyone on its behalf, initiated any substantive discussions, directly or indirectly, with any Business Combination target. The Company will not be limited to a particular industry or geographic region in its identification and acquisition of a target company.

As of June 30, 2021, the Company had not commenced any operations. All activity for the period from February 9, 2021 (inception) through June 30, 2021 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”) described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end

The Company’s sponsor is Skydeck Management LLC, a Delaware limited liability company (the “Sponsor”).

The registration statement for the Company’s Initial Public Offering was declared effective on May 18, 2021 (the “Effective Date”). On May 21, 2021, Company consummated its Initial Public Offering of 20,000,000 units (the “Units”). Each Unit consists of one Class A ordinary share of the Company, par value $0.0001 per share (the “Class A Ordinary Shares”), and one-third of one redeemable warrant of the Company (the “Warrants”), each whole Warrant entitling the holder thereof to purchase one Class A Ordinary Share for $11.50 per share. The Units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $200,000,000, which is discussed in Note 3.

On May 25, 2021, the Company announced the closing of its sale of an additional 2,165,962 Units pursuant to the partial exercise by the underwriters of their over-allotment option (the “Over-Allotment Option”) (described below). The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $21,659,620. Following the closing of the Over-Allotment Option, an aggregate amount of $221,659,620 has been placed in the Company’s trust account established in connection with the Initial Public Offering.

The underwriters had a 45-day option from the date of the Company’s final prospectus for the Initial Public Offering (May 18, 2021) to purchase up to an additional 3,000,000 Units to cover over-allotments. As described above, the underwriters partially exercised the Over-Allotment Option on May 25, 2021 to purchase 2,165,962 Units. The option to purchase the remaining 834,038 Units expired unexercised on July 2, 2021.

Substantially with the closing of the Initial Public Offering, the Company completed the private sale of an aggregate of 4,666,667 warrants (the “Private Placement Warrants”) to the Sponsor at a purchase price of $1.50 per Private Placement Warrant, generating gross proceeds to the Company of $7,000,000. Simultaneously with the partial exercise of the Over-Allotment Option, the Company sold an additional 288,795 Private Placement Warrants to its Sponsor, generating gross proceeds to the Company of $433,193.

The Private Placement Warrants are identical to the Warrants sold as part of the Units in the Initial Public Offering except that, so long as they are held by the Sponsor or their respective permitted transferees: (1) they will not be redeemable by the Company; (2) they (including the Class A Ordinary Shares issuable upon exercise of these Warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of the initial Business Combination; (3) they may be exercised by the holders on a cashless basis; and (4) they (including the Class A Ordinary Shares issuable upon exercise of these Warrants) are entitled to registration rights.

A total of $221,659,620 was placed in a U.S.-based trust account (the “Trust Account”) at JPMorgan maintained by Continental Stock Transfer & Trust Company, acting as trustee.

Transaction costs of the Initial Public Offering amounted to $12,819,165 consisting of $4,433,193 of underwriting discount, $7,758,087 of deferred underwriting discount, and $627,885 of other offering costs. Of the transaction costs, $556,203 is included within the statement of operations and $12,262,962 is included in equity.

Upon the closing of the Initial Public Offering, management has agreed that an amount equal to at least $10.00 per Unit sold in the Initial Public Offering, including the proceeds of the Private Placement Warrants, will be held in the Trust Account and may only be invested in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act that invest only in direct U.S. government treasury obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its income taxes, if any, the Company’s amended and restated memorandum and articles of association, and subject to the requirements of law and regulation, will provide that the proceeds from the Initial Public Offering and the sale of the Private Placement Warrants held in the Trust Account will not be released from the Trust Account (1) to the Company, until the completion of the initial Business Combination, or (2) to the Company’s public shareholders, until the earliest of (i) the completion of the initial Business Combination, and then only in connection with those Class A ordinary shares that such shareholders properly elected to redeem, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend the Company’s amended and restated memorandum and articles of association (A) to modify the substance or timing of the Company’s obligation to provide holders of its Class A ordinary shares the right to have their shares redeemed in connection with the initial Business Combination or to redeem 100% of the Company’s public shares if the Company does not complete the initial Business Combination by May 21, 2023 (the “Combination Period”) or (B) with respect to any other provision relating to the rights of holders of the Company’s Class A ordinary shares, and (iii) the redemption of the Company’s public shares if the Company has not consummated its Business Combination within the Combination Period, subject to applicable law.

The Company will provide its public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon the completion of the initial Business Combination either (i) in connection with a general meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed Business Combination or conduct a tender offer will be made by the Company, solely in its discretion.

The shareholders will be entitled to redeem their shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its income taxes, if any, divided by the number of then outstanding public shares. The amount in the Trust Account is initially anticipated to be $10.00 per public share. The per share amount the Company will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters.

The shares of ordinary share subject to redemption were recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with the Financial Accounting Standards Board’s (“FASB”) 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 upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business Combination.

The Company will have 24 months from the closing of the Initial Public Offering to consummate the initial Business Combination. If the Company has not consummated the initial Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its income taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and the Company’s board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

The Sponsor and each member of the management team have agreed to (i) waive their redemption rights with respect to their Founder Shares (as described in Note 5), (ii) waive their redemption rights with respect to their Founder Shares and public shares in connection with a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and articles of association, (iii) waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares they hold if the Company fails to consummate the initial Business Combination within the Combination Period (although they will be entitled to liquidating distributions from the Trust Account with respect to any public shares they hold if the Company fails to complete its initial Business Combination within the prescribed time frame), and (iv) vote their Founder Shares and public shares in favor of the Company’s initial Business Combination.

The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per public share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay the Company’s tax obligations, provided that such liability will not apply to any claims by a third party or prospective target business that executed a waiver of any and all rights to seek access to the Trust Account nor will it apply 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”). However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and the Company believes that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure that the Sponsor would be able to satisfy those obligations. None of the Company’s officers or directors will indemnify the Company for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

Risks and Uncertainties

Management is currently evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Liquidity and Capital Resources

As of June 30, 2021, the Company had $1,400,526 cash and working capital of $1,837,789. Until the consummation of the Initial Public Offering, the Company’s only source of liquidity was an initial purchase of common stock by our Sponsor and loans from our Sponsor under the promissory note. At June 30, 2021, $0 was outstanding under the promissory note.

On May 21, 2021, the Company consummated its Initial Public Offering (see Note 3) and Private Placement (See Note 4), and on May 25, 2021, the underwriters partially exercised their Over-Allotment Option. Of the net proceeds from the Initial Public Offering, exercise of the over-allotment option, and associated Private Placements, $221,659,620 of cash was placed in the Trust Account and $1,400,256 of cash was held outside of the Trust Account and is available for the Company’s working capital purposes.

The Company’s initial stockholders, officers, directors or their affiliates 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 may repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans may 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, other than the interest on such proceeds that may be released for working capital purposes. 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, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into Private Placement Warrants of the post Business Combination entity at a price of $1.50 per warrant. As of June 30, 2021, no Working Capital Loans were outstanding.

Based on the foregoing, management believes that the Company will have sufficient working capital to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective Initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.

Note 2 — Summary of 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 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 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 Initial Public Offering as filed with the SEC on May 20, 2021, as well as the Company’s Current Report on Form 8-K, as filed with the SEC on May 28, 2021. The interim results for the period ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.

Emerging Growth Company Status

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, 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 condensed 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 financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. At June 30, 2021, the Company had no cash equivalents.

Offering Costs Associated with Initial Public Offering

Deferred offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that were directly related to the Initial Public Offering. Offering costs were charged to shareholders’ equity or the statement of operations based on the relative value of the Warrants to the proceeds received from the Units sold upon the completion of the Initial Public Offering. Accordingly, at June 30, 2021, offering costs totaling $12,819,165 (consisting of $4,433,193 of underwriting fee, $7,758,087 of deferred underwriting fee and $627,885 of other offering costs) were recognized with $556,203 which was allocated to the public warrants (the “Public Warrants”) and Private Placement Warrants, included in the statement of operations and $12,262,962 is included in shareholders’ equity.

Investments Held in Trust Account

Investments held in the Trust Account are held in a money market fund characterized as Level 1 investments within the fair value hierarchy under ASC 820 (as defined below).

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. The Company’s derivative instruments will be recorded at fair value as of the Initial Public Offering (May 21, 2021) and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified on the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company has determined the Warrants and the forward purchase agreement warrants (“FPA Warrants”) (see below and Note 6) are derivative instruments.

Warrant Instruments

The Company accounts for the 12,344,116 Warrants (the 7,388,654 Public Warrants and the 4,955,462 Private Placement Warrants) issued in connection with the Initial Public Offering, Private Placement and partial exercise of the Over-Allotment Option in accordance with the guidance contained in FASB ASC 815 “Derivatives and Hedging” whereby under that provision the Warrants do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company will classify the warrant instruments as a liability at fair value and adjust the instrument to fair value at each reporting period. This liability will be re-measured at each balance sheet date until the Warrants are exercised or expire, and any change in fair value will be recognized in the Company’s statement of operations. The fair value of Warrants will be estimated using an internal valuation model. The valuation model utilizes inputs and other assumptions and may not be reflective of the price at which they can be settled. Such warrant classification is also subject to re-evaluation at each reporting period.

Forward Purchase Agreement

The Company accounts for the 1,000,000 FPA Warrants in the Units associated with the Forward Purchase Agreement in accordance with the guidance contained in FASB ASC 815 “Derivatives and Hedging” whereby under that provision the FPA Warrants do not meet the criteria for equity treatment and must be recorded as a liability. The Company classifies the FPA Warrant as a liability at fair value and adjusts the FPA Warrants to fair value at each reporting period. This liability will be re-measured at each balance sheet date until the FPA Warrants are exercised or expire, and any change in fair value will be recognized in the Company’s statement of operations. The fair value of the FPA Warrants will be estimated using an internal valuation model. The valuation model utilizes inputs and other assumptions and may not be reflective of the price at which they can be settled. Such FPA Warrant classification is also subject to re-evaluation at each reporting period. (see Note 6) Upon recognition of the FPA warrant liability a corresponding reduction was recognized to equity.

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid to 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:

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Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

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Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

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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.

Net Income Per Share

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income per share is computed by dividing net income by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture by the Sponsor. Weighted average shares were reduced for the effect of an aggregate of 208,509 Class B ordinary shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters (see Note 5). At June 30, 2021, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then

share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period presented.

	For the Three Months Ended			For the period from February 9, 2021 (inception) through
	June 30, 2021			June 30, 2021
Class A Ordinary share subject to possible redemption
Numerator: net income allocable to Class A ordinary share subject to possible redemption
Interest income on marketable securities held in trust	$	473		$	473
Less: interest available to be withdrawn for payment of taxes	$	(473	)	$	(473	)
Net income allocable to Class A ordinary share subject to possible redemption	$	—		$	—
Denominator: weighted average redeemable Class A ordinary share
Redeemable Class A ordinary share, basic and diluted		22,165,962			6,339,018
Basic and diluted net income per share, redeemable ordinary share

SEC Form 10-Q filed by Skydeck Acquisition Corp.