Risks Related to Liabilities and Fair Value Fluctuations Associated with Cellebrite’s De-SPAC
First written in FY2022-Q2. 5 of 10 entries say "Materialised", first in FY2022-Q3. Latest entry: FY2025-H1.
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- FY2025-H1MaterialisedAnnual report
「The conditions of USD 12.5 on 14 August 2024 and USD 15 on 13 September 2024 were met. … All warrant liabilities were redeemed on 16 September 2024.」
The USD 12.5 and USD 15 share-price conditions under Cellebrite's price adjustment provisions were actually met, and the conditions for issuing additional shares proceeded. Meanwhile, all warrant liabilities were redeemed on 16 September 2024. - FY2024-Q2MaterialisedAnnual report
「This was primarily because valuation losses on derivatives at Cellebrite affected results, and the company recorded a ¥4,498 million loss on investments accounted for under the equity method.」
The risk of changes in the fair value of Cellebrite's price adjustment provisions and other items associated with the De-SPAC actually affected the current quarter's ordinary loss as a ¥4,498 million loss on investments accounted for under the equity method. - FY2024-Q1MaterialisedAnnual report
「This was primarily due to the Company recording an equity-method investment loss of ¥2,787 million, reflecting the impact of valuation losses on derivatives at Cellebrite.」
The risk of changes in the fair value of Cellebrite's price adjustment provisions and other items associated with the De-SPAC actually affected results as a ¥2,787 million loss on investments accounted for under the equity method. - FY2023ReframedAnnual report
「Under the price adjustment provisions, investment securities classified as Level 3 amounted to ¥4,304,673 thousand. As fair value is calculated using inputs that cannot be observed in the market, the estimates are subject to uncertainty.」
Although the derivative liabilities were removed from the consolidated balance sheet following Cellebrite's exclusion from consolidation, investment securities related to the price adjustment provisions were recorded at Level 3 in the amount of ¥4,304.673 million, shifting the risk focus to uncertainty in fair value measurement. - FY2023-Q3MitigatedAnnual report
「During the nine months ended the third quarter of the current consolidated fiscal year, a derivative valuation gain of ¥12,107,269 thousand was recorded as the fair value of these liabilities declined due to changes in fair value caused by fluctuations in Cellebrite's share price and other factors. As these liabilities affect the group's results and financial position through changes in fair value caused by fluctuations in Cellebrite's share price and other factors, depending on movements in Cellebrite's share price and other factors from the following fiscal year onward, the group may record a loss on investments accounted for under the equity method as a non-operating expense as the fair value of these liabilities increases.」
Although the derivative liabilities were removed from the company's consolidated balance sheet following Cellebrite's exclusion from consolidation, the company continued to disclose the possibility that changes in fair value caused by share-price movements could lead to a loss on investments accounted for under the equity method. A derivative valuation gain of ¥12,107 million was recorded for the nine months ended the third quarter. - FY2023-Q2MitigatedAnnual report
「At the end of the second quarter of the current consolidated fiscal year, derivative liabilities of ¥8,124,005 thousand were recorded. During the six months ended the second quarter of the current consolidated fiscal year, a derivative valuation gain of ¥8,974,378 thousand was recorded as the fair value of these liabilities declined due to changes in fair value caused by fluctuations in Cellebrite's share price and other factors.」
Derivative liabilities declined from ¥14,388 million at the end of the previous fiscal year to ¥8,124 million, and a valuation gain of ¥8,974 million was recorded as fair value declined. As a result, both the liability balance and the burden for the period decreased. However, the possibility of future valuation losses due to a rise in the share price and other factors continued to be disclosed. - FY2023-Q1MitigatedAnnual report
「At the end of the first quarter of the current consolidated fiscal year, derivative liabilities of ¥10,617,720 thousand were recorded. During the first quarter of the current consolidated fiscal year, a derivative valuation gain of ¥4,693,014 thousand was recorded as the fair value of these liabilities declined due to changes in fair value caused by fluctuations in Cellebrite's share price and other factors.」
Derivative liabilities declined from ¥14,388 million at the end of the previous fiscal year to ¥10,618 million, and a valuation gain of ¥4,693 million was recorded as fair value declined. However, the company continued to disclose the possibility of future valuation losses due to a rise in the share price and other factors. - FY2022MaterialisedAnnual report
「At the end of the consolidated fiscal year, derivative liabilities of ¥14,388,763 thousand were recorded. As these liabilities affect the group's results and financial position through changes in fair value caused by fluctuations in Cellebrite's share price and other factors, depending on movements in Cellebrite's share price and other factors from the following fiscal year onward, the group may record a derivative valuation loss as a non-operating expense as the fair value of these liabilities increases.」
Debt instruments associated with the De-SPAC were recorded as derivative liabilities of ¥14,388 million, and a derivative valuation gain of ¥4,730 million was recorded for the period. The company also explicitly stated that valuation losses could arise from share-price movements in subsequent periods. - FY2022-Q3MaterialisedAnnual report
「Non-current liabilities amounted to ¥18,922 million, an increase of ¥17,843 million from the end of the previous consolidated fiscal year. The main factor behind the increase was a ¥17,794 million increase in derivative liabilities recognized at TWC Tech Holdings II Corp. and Cellebrite. For details, see "Part 4. Financial Information, 1. Quarterly Consolidated Financial Statements, Notes (Additional Information)."」
Derivative liabilities associated with the De-SPAC were actually recognized, with ¥17,794 million recorded under non-current liabilities. The risk that changes in fair value caused by share-price movements and other factors would affect results and financial position materialized together with a specific liability balance. - FY2022-Q2First statedAnnual report
「Risks have arisen in connection with liabilities and other items recognized at TWC Tech Holdings II Corp. and Cellebrite.」
In connection with Cellebrite's De-SPAC, the company newly disclosed the risk that liabilities related to TWC's derivative warrant liabilities, price adjustment provisions and restricted shares could be recognized. The impact on results for the fiscal year ended March 2022 from changes in fair value was undetermined at that point, and the price adjustment provisions included conditions for the issuance of up to 15 million additional shares.