SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

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 statement 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 Annual Report on Form 10-K for the period ended December 31, 2021, as filed with the SEC on March 28, 2022. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts and treasury notes in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage or Securities Investor Protection Coverage. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company held cash equivalents in short-term investments as of September 30, 2022 and December 31, 2021.

Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 825, “Financial Instruments”, approximates the carrying amounts represented in the balance sheets due to the short term nature of these amounts.

Marketable Securities Held in Trust Account

As of September 30, 2022 and December 31, 2021, the Company’s portfolio of investments held in the Trust Account are comprised solely of cash, U.S. Treasury bills, notes, and other obligations issued or guaranteed by the U.S. Treasury. These securities are presented on the condensed balance sheets at fair value at the end of each reporting period. Earnings on these securities are included in dividends and interest income in the accompanying statements of operations and are automatically reinvested. The fair value for these securities is determined using quoted market prices in active markets.

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

	•	Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
	•	Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
	•	Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

Class A Ordinary Shares Subject to Possible Redemption

The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares issued as part of the initial public offering contain certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Class A ordinary shares subject to possible redemption are classified as temporary equity and are accreted from the initial carrying amount to the redemption value over the period from the date of issuance to the earliest redemption date of the instrument using the effective interest method. For the nine months ended September 30, 2022 and for the period from January 27, 2021 (inception) through September 30, 2021, the accretion for the Class A ordinary shares subject to possible redemption was approximately $11.0 million and $5.2 million, respectively. For the three months ended September 30, 2022 and September 30, 2021, the accretion for the Class A ordinary shares subject to possible redemption was approximately $4.7 million and $2.9 million, respectively.

The reconciliation of Class A ordinary shares subject to possible redemption as of September 30, 2022 is as follows:

Gross proceeds	$	400,000,000
Issuance costs		(23,107,213	)
Accretion		19,119,647
	$	396,012,434

The reconciliation of Class A ordinary shares subject to possible redemption as of December 31, 2021 is as follows:

Gross proceeds	$	400,000,000
Issuance costs		(23,107,213	)
Accretion		8,084,527
	$	384,977,314

Use of Estimates

The preparation of condensed financial statements in conformity with GAAP requires the Company’s 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 condensed financial statements and the reported amounts of expenses during the reporting period.

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 condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. The change in the carrying value of redeemable Class A ordinary shares resulted in charges against additional paid-in capital.

Offering Costs

Offering costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to our initial public offering. Offering costs amounting to approximately $23.1 million were accounted for as a reduction to the Class A ordinary shares subject to possible redemption upon the completion of the Initial Public Offering.

Stock Based Compensation

Stock-based compensation expense associated with the Company’s equity awards is measured at fair value upon the grant date and recognized over the requisite service period. To the extent a stock-based award is subject to a performance condition, the amount of expense recorded in a given period, if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized once the event is deemed probable to occur. Forfeitures are recognized as incurred.

Net Income (Loss) per Ordinary Share

Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the period. Weighted average shares for January 27, 2021 (inception) through September 30, 2021, were reduced for the effect of an aggregate of 1,250,000 Class B ordinary shares that were subject to forfeiture until the overallotment option was exercised in full by the underwriters on April 16, 2021. The Company’s condensed statements of operations include a presentation of loss per ordinary share subject to redemption in a manner similar to the two-class method of loss per share. With respect to the accretion of the Class A Shares subject to possible redemption and consistent with ASC 480-10-S99-3A, the Company has elected to treat only the portion of the accretion that reflects a redemption in excess of fair value in the same manner as dividends in the calculation of net income (loss) per ordinary share.

As of September 30, 2022 and December 31, 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.

A reconciliation of net income (loss) per ordinary share is as follows:

For the three months ended September 30, 2022	Class A ordinary shares subject to possible redemption		Class A ordinary shares		Class B ordinary shares
Allocation of undistributable income (losses)	$	1,166,286	$	32,073	$	291,571
Redemption amount in excess of fair value		2,741,698		-		-
Net income (loss) per ordinary share	$	3,907,984	$	32,073	$	291,571

Weighted average shares outstanding, basic and diluted		40,000,000		1,100,000		10,000,000

Basic and diluted net income (loss) per ordinary share	$	0.10	$	0.03	$	0.03

For the nine months ended September 30, 2022	Class A ordinary shares subject to possible redemption		Class A ordinary shares		Class B ordinary shares
Allocation of undistributable income (losses)	$	1,118,069	$	30,747	$	279,517
Redemption amount in excess of fair value		4,012,434		-		-
Net income (loss) per ordinary share	$	5,130,503	$	30,747	$	279,517

Weighted average shares outstanding, basic and diluted		40,000,000		1,100,000		10,000,000

Basic and diluted net income (loss) per ordinary share	$	0.13	$	0.03	$	0.03

For the three months ended September 30, 2021	Class A ordinary shares subject to possible redemption			Class A ordinary shares			Class B ordinary shares
Allocation of undistributable income (losses)	$	(200,327	)	$	(5,509	)	$	(50,082	)

Net income (loss) per ordinary share	$	(200,327	)	$	(5,509	)	$	(50,082	)

Weighted average shares outstanding, basic and diluted		40,000,000			1,100,000			10,000,000

Basic and diluted net income (loss) per ordinary share	$	(0.01	)	$	(0.01	)	$	(0.01	)

For the period from January 27, 2021 (inception) through September 30, 2021	Class A ordinary shares subject to possible redemption			Class A ordinary shares			Class B ordinary shares
Allocation of undistributable income (losses)	$	(359,859	)	$	(9,896	)	$	(126,981	)

Net income (loss) per ordinary share	$	(359,859	)	$	(9,896	)	$	(126,981	)

Weighted average shares outstanding, basic and diluted		27,206,478			748,178			9,600,202

Basic and diluted net income (loss) per ordinary share	$	(0.01	)	$	(0.01	)	$	(0.01	)

Income taxes

The Company accounts for income taxes using the asset and liability approach. Deferred income tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

For tax 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. There were no unrecognized tax benefits for the three months ended September 30, 2022 and September 30, 2021 and for the nine months ended September 30, 2022 and for the period from January 27, 2021 (inception) through September 30, 2021. No amounts were accrued for interest and penalties as of September 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman federal income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements. As of September 30, 2022, the Company does not have, and does not expect to have, unrecognized tax benefits over the next twelve months.

Recent accounting standards

In August 2020, the 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) Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. This guidance changes how entities account for convertible instruments and contracts in an entity’s own equity and simplifies the accounting for convertible instruments by removing certain separation models for convertible instruments. This guidance also modifies the guidance on diluted earnings per share calculations. This new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023. The Company is currently evaluating the impact of this ASU on the financial statements.

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 condensed financial statements.

TCV Acquisition Corp. 10-Q