TIO TECH A: Discussion and analysis by management of the financial position and operating results. (form 10-Q)
References in this report (the "Quarterly Report") to "we," "us" or the "Company" refer to
Tio Tech A. References to our "management" or our "management team" refer to our officers and directors, references to the "sponsor" refer to Tio Tech SPAC Holdings GmbH. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Cautionary Note Regarding Forward-Looking Statements This Quarterly Report includes "forward-looking statements" that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the "Risk Factors" section of the Company's final prospectus for its Initial Public Offering filed with the U.S. Securities and Exchange Commission(the "SEC"). The Company's securities filings can be accessed on the EDGAR section of the SEC'swebsite at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Overview We are a blank check company incorporated on February 8, 2021as a Cayman Islandsexempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. While we may pursue an initial Business Combination target in any industry or region, we currently intend to focus on technology-enabled businesses in Europe. We intend to effectuate our initial Business Combination using cash from the proceeds of our Initial Public Offering and the private placement of the private placement warrants, the proceeds of the sale of our shares in connection with our initial Business Combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of this offering or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing. We have neither engaged in any operations nor generated any revenues to date. Our entire activity since inception has been to prepare for our Initial Public Offering, which was consummated on April 12, 2021and, after the Initial Public Offering, identifying a target company for a Business Combination. Liquidity and Capital Resources On April 12, 2021, the Company consummated its Initial Public Offering of 30,000,000 Units. On April 15, 2021, the Underwriter exercised its over-allotment option in full and purchased an additional 4,500,000 Units, which purchase settled on April 16, 2021, at $10.00per Unit, generating aggregate gross proceeds of $345,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 5,083,333 at a price of $1.50per Private Placement Warrant, generating total proceeds of $7,625,000. Following the Initial Public Offering and the sale of the Private Placement Warrants, a total of $345,000,000was placed in the Trust Account. We incurred $15,383,343in offering costs, consisting of $5,400,000of underwriting discount, $9,450,000of deferred underwriting discount, and $533,343of other offering costs, of which $749,481was allocated to warrants and charged to expense. At June 30, 2021, we had marketable securities held in the Trust Account of $ 345,006,782. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (excluding deferred underwriting commissions and less taxes payable) to complete our initial Business Combination. We may withdraw interest from the Trust Account to pay our taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies. 16
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June 30, 2021, we had cash of $1,007,612held outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate, and complete a Business Combination. In order to fund working capital deficiencies or finance transaction costs in connection with an initial Business Combination, our sponsor, officers, directors, or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete our initial Business Combination, we would repay such loaned amounts. In the event that the initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000of such loans may be convertible into private placement warrants of the post Business Combination entity at a price of $1.50per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Prior to the completion of the initial Business Combination, the Company does not expect to seek loans from parties other than the Sponsor or an affiliate of the Sponsor as the Company does not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in the Company's Trust Account. If we are unable to complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. Results of Operations We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception through June 30, 2021were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of income earned on marketable securities held in the Trust Account after the Initial Public Offering and will recognize other income and expense related to the change in fair value of warrant liabilities. We are incurring expenses as a result of being a public company (for legal, financial reporting, accounting, and auditing compliance), as well as for due diligence expenses in connection with completing a Business Combination. For the period from February 8, 2021(inception) through June 30, 2021, we had net income of approximately $ $6,280,159, which consisted of $6,782of income earned on marketable securities held in the Trust Account and operating account and unrealized gains on warrant liabilities of $7,354,160, offset by operating costs of $331,302and offering costs allocated to warrants of $749,481. For the three months ended June 30, 2021, we had net income of approximately $6,296,163, which consisted of $6,782of income earned on marketable securities held in the Trust Account and operating account and unrealized gains on warrant liabilities of $7,354,160, offset by operating costs of $315,298and offering costs allocated to warrants of $749,481. Critical Accounting Policies The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of Americarequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies: Class A Ordinary Shares Subject to Possible Redemption We account for our ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, ordinary shares are classified as shareholders' equity. Our ordinary 17
Table of Contents Shares carry certain redemption rights which are considered beyond our control and subject to the occurrence of uncertain future events. Consequently, ordinary shares liable to be redeemed are presented as temporary equity, outside the equity section of our unaudited condensed balance sheets.
Founder shares awarded to
• The Grant can will take place upon the consummation of the Company's Business Combination • The Grant can only take place if the Subscriber holds a contractually specified number of IPO shares on the date of the consummation of the Business Combination • If the Company liquidates or dissolves, the Anchor Investor Agreement terminates ASC 470 defines issuance costs as incremental or direct costs incurred with parties other than the investor. The excess fair value above the purchase price would only come into effect if transferred by the Sponsor, which is contingent upon consummation of the Business Combination. Additionally, it requires that the
Anchor Investorshold the prescribed number of shares on the date of the Business Combination. As long as the Sponsor, who provides services for the Company, holds the Founder Shares there is no excess fair value. As a result of the foregoing facts, the Company does not believe that the excess fair value of the Founder Shares should be accounted for until such date as their grant becomes certain. Net Income Per Ordinary Share We apply the two-class method in calculating earnings per share. Ordinary shares subject to possible redemption which is not currently redeemable and is not redeemable at fair value, has been excluded from the calculation of basic net income per ordinary share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. Our net income is adjusted for the portion of income that is attributable to ordinary shares subject to possible redemption, as these shares only participate in the earnings of the Trust Account and not our income or losses. 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." For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. 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 effective January 1, 2022and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows. Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed interim financial statements. Off-Balance Sheet Arrangements As of June 30, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K. Commitments and Contractual Obligations We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities as of June 30, 2021. The Underwriter is entitled to a deferred fee of $0.35per Unit, or $9.45 million, in aggregate. The Underwriter's deferred commissions will be paid to the Underwriter from the funds held in the Trust Account upon and concurrently with the completion of our initial Business Combination. The deferred underwriting fees will be waived by the Underwriter solely in the event that we do not complete a Business Combination, subject to the terms of the underwriting agreement. JOBS Act The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an "emerging growth company" and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an "emerging growth company," we choose to rely on such exemptions we may not be required to, among other things, (i) provide an independent registered public accounting firm's attestation 18
Table of Contents report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO's compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an "emerging growth company," whichever is earlier.
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