AlTi (ALTI) - 2021 Q1 - Quarterly Report

Part I. Financial Information This section presents the unaudited financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the quarter ended March 31, 2021 Item 1. Financial Statements (Unaudited) The company's post-IPO financial position as of March 31, 2021, reflects a significant trust account balance and a net loss primarily due to warrant liability reclassification Condensed Balance Sheets As of March 31, 2021, the company held $345 million in a trust account, with total assets of $346.4 million and total liabilities of $40.0 million, including warrant liabilities Condensed Balance Sheet Summary (as of March 31, 2021) | Category | Amount (USD) | | :--- | :--- | | Assets | | | Cash | $895,838 | | Cash and securities held in Trust Account | $345,007,153 | | Total Assets | $346,381,364 | | Liabilities & Equity | | | Warrant liability | $27,879,000 | | Deferred underwriting fee | $12,075,000 | | Total Liabilities | $39,963,439 | | Ordinary Share subject to possible redemption | $301,417,916 | | Total Shareholders' Equity | $5,000,009 | Unaudited Condensed Statement of Operations For the three months ended March 31, 2021, the company reported a net loss of $4.9 million, primarily from non-cash warrant-related expenses Statement of Operations Summary (For the Three Months Ended March 31, 2021) | Metric | Amount (USD) | | :--- | :--- | | Loss from Operations | ($87,220) | | Change in fair value of warrant liability | ($874,300) | | Offering costs allocated to warrants | ($849,993) | | Excess of Private Placement Warrants fair value | ($3,097,200) | | Net Loss | ($4,901,560) | | Basic and diluted net loss per ordinary share | ($0.51) | Unaudited Condensed Statement of Changes in Shareholders' Equity Shareholders' equity increased to $5.0 million by March 31, 2021, driven by IPO proceeds, offset by net loss and reclassification of redeemable shares - Total shareholder's equity increased to $5,000,009 as of March 31, 2021, from $17,052 as of January 1, 2021[12] - Key activities impacting equity include the sale of 34,500,000 units, the sale of 8,900,000 private warrants, a net loss of $4.9 million, and the reclassification of $301.4 million of common stock subject to possible redemption[12] Unaudited Condensed Statement of Cash Flows Net cash provided by financing activities was $346.5 million, primarily from IPO proceeds, with $345.0 million invested in the Trust Account Cash Flow Summary (For the Three Months Ended March 31, 2021) | Category | Amount (USD) | | :--- | :--- | | Net cash used in operating activities | ($569,102) | | Net cash used in investing activities | ($345,000,000) | | Net cash provided by financing activities | $346,464,940 | | Net change in cash | $895,838 | | Cash, end of the period | $895,838 | Notes to Unaudited Condensed Financial Statements These notes detail the company's SPAC formation, IPO proceeds, warrant accounting restatement, related party transactions, and fair value measurement methodologies - The company was incorporated on December 18, 2020, for the purpose of effecting a business combination and consummated its IPO of 34,500,000 units on February 26, 2021, generating gross proceeds of $345 million[18][19] - Following an SEC Staff statement on April 12, 2021, the company re-evaluated its accounting for warrants and concluded they should be classified as liabilities measured at fair value, leading to a restatement of its February 26, 2021 balance sheet[29][30][31] - The fair value of warrant liabilities was determined to be $27.9 million as of March 31, 2021, calculated using a Level 3 Monte Carlo simulation model[88][89] - The Sponsor is paid $10,000 per month for administrative services. The company also has a deferred underwriting commission of $12,075,000 payable upon completion of a business combination[78][80] Management's Discussion and Analysis of Financial Condition and Results of Operations The blank check company reported a $4.9 million net loss for the quarter, primarily due to non-cash warrant accounting expenses, with $345 million in its trust account - The company is a blank check company incorporated in December 2020, with activities to date limited to organizational tasks and the IPO[95][97] - For the three months ended March 31, 2021, the company had a net loss of approximately $4.9 million, which included non-cash expenses such as $0.8 million in offering costs allocated to warrants, $3.1 million for the excess fair value of Private Warrants, and a $0.9 million loss from the change in fair value of warrant liabilities[98] - As of March 31, 2021, the company had approximately $0.9 million in cash available for working capital needs, with $345 million held in the Trust Account[100][101] - The company has a contractual obligation to pay its Sponsor a monthly fee of $10,000 for administrative support and has a deferred underwriting commission of $12,075,000 payable upon completion of a business combination[107] Quantitative and Qualitative Disclosures Regarding Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk[115] Controls and Procedures Management concluded disclosure controls were ineffective due to a material weakness in warrant accounting, with plans to enhance accounting standard evaluation - Management concluded that disclosure controls and procedures were not effective as of the end of the fiscal quarter ended March 31, 2021[117] - A material weakness was identified in internal control over financial reporting due to the improper accounting classification of warrants, a mistake highlighted by an SEC staff statement on April 12, 2021[117] - The company plans to remediate the material weakness by enhancing its system of evaluating and implementing accounting standards, including increased use of personnel and third-party professionals[118] Part II. Other Information This section covers legal proceedings, new risk factors related to warrant accounting, details of unregistered equity sales, and other required disclosures Legal Proceedings The company reported no legal proceedings for the period - There are no legal proceedings to report[120] Risk Factors New material risks include financial impact from warrant fair value fluctuations, adverse effects of internal control material weakness, and potential litigation - A new risk factor is that warrants are accounted for as liabilities, and changes in their fair value could have a material, non-cash effect on financial results each reporting period[120][121][122] - The company has identified a material weakness in its internal control over financial reporting related to warrant accounting, which could adversely affect its ability to report financial results accurately and in a timely manner[122][123] - The company may face litigation and other risks as a result of the material weakness in its internal control over financial reporting[128] Unregistered Sales of Equity Securities and Use of Proceeds Details the issuance of Founder Shares, IPO proceeds of $345 million from units, and $8.9 million from private warrants, with $345 million placed in the Trust Account - On February 26, 2021, the company consummated its IPO of 34,500,000 units at $10.00 per unit, generating gross proceeds of $345,000,000[130] - Simultaneously with the IPO, the company sold 8,900,000 Private Warrants to the Sponsor at $1.00 per warrant, generating total proceeds of $8,900,000[132] - Total net proceeds from the IPO and Private Placement were $346 million, with $345 million placed in the Trust Account[134] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[134] Mine Safety Disclosures This item is not applicable to the company's operations - Not Applicable[134] Other Information The company reported no other information for this period - None[134] Exhibits This section lists all exhibits filed with the quarterly report, including key agreements and certifications - The report includes exhibits such as the Underwriting Agreement, Amended and Restated Memorandum and Article of Association, Warrant Agreement, and various other agreements related to the company's formation and IPO[137]