Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Note 10 – Fair Value Measurements

The fair value of the Company’s financial assets and liabilities reflects the Company’s 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 tables present information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022, including the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.


March 31, 2023
	Carrying Value		Level 1		Level 2		Level 3
Assets:
Investments held in the Trust Account	$	273,307,147	$	273,307,147	$	—	$	—

Liabilities:
Private placement warrants	$	1,563,819	$	—	$	1,563,819	$	—
Public warrants		1,310,569		—		1,310,569		—

Total liabilities measured at fair value	$	2,874,388	$	—	$	2,874,388	$	—


December 31, 2022
	Carrying Value		Level 1		Level 2		Level 3
Assets:
Investments held in the Trust Account	$	270,415,819	$	270,415,819	$	—	$	—

Liabilities:
Private placement warrants	$	1,543,750	$	—	$	1,543,750	$	—
Public warrants		1,293,750		—		1,293,750		—

Total liabilities measured at fair value	$	2,837,500	$	—	$	2,837,500	$	—

As of March 31, 2023 and December 31, 2022, the Company has $272,261,154 and $269,540,417 held in the Trust Account, respectively, which is primarily held in money market funds, which are invested primarily in U.S. Treasury securities. As of March 31, 2023 and December 31, 2022, the carrying value was $273,307,147 and $270,415,819, respectively. The difference between the carrying value and the fair value is the accrued dividend income. The fair values of the Company’s Level 1 instruments were derived from quoted market prices in active markets for these specific instruments.

The Warrants are accounted for as liabilities pursuant to ASC

815-40

and are measured at fair value as of each reporting date. Changes in the fair value of the Warrants are recorded in the statement of operations each period. Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs.

As of March 31, 2023, the Private Placement Warrants were not separately traded on an open market. The fair value was determined based on quoted prices for comparable instruments and are valued with a Level 2 classification.

As of March 31, 2023, the Public Warrants were traded on an open market. The fair value was determined based on the close price of the Public Warrant price however, due to low trading volume were classified as Level 2.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Sound Point Acquisition Corp I, Ltd 10-Q