IVANHOE CAPITAL ACQUISITION CORP. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

References to the “Company,” “Ivanhoe Capital Acquisition Corp.,” “Ivanhoe
Capital
,” “our,” “us” or “we” refer to Ivanhoe Capital Acquisition Corp. The
following discussion and analysis of the Company’s financial condition and
results of operations should be read in conjunction with the unaudited interim
condensed consolidated financial statements and the notes thereto contained
elsewhere in this 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 on Form 10-Q (this “Quarterly Report”) includes
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Exchange Act. We have based
these forward-looking statements on our current expectations and projections
about future events. These forward-looking statements are subject to known and
unknown risks, uncertainties and assumptions about us that may cause our actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as “may,”
“should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,”
“estimate,” “continue,” or the negative of such terms or other similar
expressions. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other SEC filings.

Overview

We are a blank check company incorporated as a Cayman Islands exempted company
on July 8, 2020. We were formed for the purpose of effecting a merger, share
exchange, asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses (the “Business Combination”). We are an
emerging growth company and, as such, we are subject to all of the risks
associated with emerging growth companies.

Our sponsor is Ivanhoe Capital Sponsor LLC, a Cayman Islands limited liability
company (“Sponsor”). The registration statement for our Initial Public Offering
was declared effective on January 6, 2021. On January 11, 2021, we consummated
its Initial Public Offering of 27,600,000 units (the “Units” and, with respect
to the Class A ordinary shares included in the Units being offered, the “Public
Shares”), including 3,600,000 additional Units to cover over-allotments (the
“Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of
$276.0 million, and incurring offering costs of approximately $15.8 million, of
which approximately $9.7 million was for deferred underwriting commissions.

Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement (“Private Placement”) of 5,013,333 warrants (each, a
“Private Placement Warrant” and collectively, the “Private Placement Warrants”),
at a price of $1.50 per Private Placement Warrant with the Sponsor, generating
gross proceeds of approximately $7.5 million.

Upon the closing of the Initial Public Offering and the Private Placement,
$276.0 million ($10.00 per Unit) of the net proceeds of the Initial Public
Offering and certain of the proceeds of the Private Placement were placed in
a trust account (“Trust Account”) with Continental Stock Transfer & Trust
Company
acting as trustee and invested in United States “government securities”
within the meaning of Section 2(a)(16) of the Investment Company Act having a
maturity of 185 days or less or in money market funds meeting certain conditions
under Rule 2a-7 promulgated under the Investment Company Act of 1940, as
amended, or the Investment Company Act, which invest only in direct U.S.
government treasury obligations, as determined by us, until the earlier of:
(i) the completion of a Business Combination and (ii) the distribution of the
Trust Account as described below.

Our management has broad discretion with respect to the specific application of
the net proceeds of its Initial Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating a Business Combination. Our initial
Business Combination must be with one or more operating businesses or assets
with a fair market value equal to at least 80% of the net assets held in the
Trust Account (excluding the amount of any deferred underwriting discount held
in Trust) at the time we sign a definitive agreement in connection with the
initial Business Combination. However, we will only complete a Business
Combination if the post-transaction company owns or acquires 50% or more of the
outstanding voting securities of the target or otherwise acquires a controlling
interest in the target sufficient for it not to be required to register as an
investment company under the Investment Company Act.

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If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or January 11, 2023 (the “Combination
Period”), we will (i) cease all operations except for the purpose of winding up,
(ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the Public Shares, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the Trust Account, including
interest (which interest shall be net of taxes payable and up to $100,000 of
interest to pay dissolution expenses), divided by the number of then issued and
outstanding Public Shares, which redemption will completely extinguish Public
Shareholders’ rights as shareholders (including the right to receive further
liquidation distributions, if any) and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the remaining shareholders
and the board of directors, liquidate and dissolve, subject, in each case to our
obligations under Cayman Islands law to provide for claims of creditors and in
all cases subject to the other requirements of applicable law.

Proposed Business Combination

On July 12, 2021, we entered into a Business Combination Agreement (as the same
may be amended, supplemented or otherwise modified from time to time, the
“Agreement”), with Wormhole Merger Sub Pte. Ltd., a Singapore private company
limited by shares and our wholly owned subsidiary (“Amalgamation Sub”), and SES
Holdings Pte. Ltd.
, a Singapore private company limited by shares (“SES”), and
certain related agreements, as further described in Note 1 to the condensed
consolidated financial statements included in Item 1 of this Quarterly Report.

Liquidity and Capital Resources

As of June 30, 2021, we had approximately $501,000 in our operating bank account
and working capital of approximately $1.2 million.

Our liquidity needs to date have been satisfied through a contribution of
$25,000 from Sponsor to cover certain expenses in exchange for the issuance of
the Founder Shares, a loan of $500,000 from the Sponsor pursuant to the Note,
and the proceeds from the consummation of the Private Placement not held in the
Trust Account. We repaid the Note in full on January 15, 2021. In addition, in
order to finance transaction costs in connection with a Business Combination,
the Sponsor or an affiliate of the Sponsor, or certain of our officers and
directors may, but are not obligated to, provide us Working Capital Loans. As of
June 30, 2021, $500,000 was drawn under the Working Capital Loan.

Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity from our Sponsor or an affiliate of our Sponsor,
or certain of our officers and directors to meet its needs through the earlier
of the consummation of a Business Combination or one year from this filing. Over
this time period, we will be using these funds for paying existing accounts
payable, identifying and evaluating prospective initial Business Combination
candidates, performing due diligence on prospective target businesses, paying
for travel expenditures, selecting the target business to merge with or acquire,
and structuring, negotiating and consummating the Business Combination.

Management continues to evaluate the impact of the COVID-19 pandemic on the
industry and has concluded that while it is reasonably possible that the virus
could have a negative effect on our financial position, results of our
operations and/or search for a target company, the specific impact is not
readily determinable as of the date of the unaudited condensed consolidated
financial statements. The unaudited condensed consolidated financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

Results of Operations

Our entire activity since inception up to June 30, 2021 was in preparation for
our formation and the Initial Public Offering, and since the closing of the
Initial Public Offering, the search for a business combination target, including
activities in connection with the proposed acquisition of SES. We have neither
engaged in any operations nor generated any revenues to date. We will not
generate any operating revenues until after completion of our initial business
combination. We will generate non-operating income in the form of interest
income on the investments held in the trust account from the proceeds of the
Initial Public Offering. We incur 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 searching for, and completing, a
business combination.

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For the three months ended June 30, 2021, we had net loss of approximately $10.4
million
, which consisted of general and administrative expenses of approximately
$3.2 million, general and administrative expenses to related party of $30,000,
change in fair value of derivative liabilities of approximately $7.1 million and
change in fair value of convertible note to related party of approximately
$131,000, partially offset by investment income on the Trust Account of
approximately $3,000.

For the six months ended June 30, 2021, we had net loss of approximately $8.9
million
, which consisted of general and administrative expenses of approximately
$3.5 million, general and administrative expenses to related party of $60,000,
change in fair value of derivative liabilities of approximately $4.5 million,
change in fair value of convertible note to related party of approximately
$131,000 and offering costs to derivative warrant liabilities of approximately
$855,000, partially offset by investment income on the Trust Account of
approximately $48,000.

Contractual Obligations

Registration and Shareholder Rights

The holders of the Founder Shares, Private Placement Warrants, and warrants that
may be issued upon conversion of Working Capital Loans (and any Class A ordinary
shares issuable upon the exercise of the Private Placement Warrants and warrants
that may be issued upon conversion of Working Capital Loans) were entitled to
registration rights pursuant to a registration and shareholder rights agreement
signed upon the effective date of the Initial Public Offering. The holders of
these securities were entitled to make up to three demands, excluding short form
demands, that we register such securities. In addition, the holders have certain
“piggy-back” registration rights with respect to registration statements filed
subsequent to the completion of the initial Business Combination. We will bear
the expenses incurred in connection with the filing of any such registration
statements.

Underwriting Agreement

We granted the underwriters a 45-day option from the date of the Initial Public
Offering prospectus to purchase up to 3,600,000 additional Units at the Initial
Public Offering price less the underwriting discounts and commissions. On
January 11, 2021, the underwriter fully exercised its over-allotment option.

The underwriters were entitled to an underwriting discount of $0.20 per unit, or
approximately $5.5 million in the aggregate, paid upon the closing of the
Initial Public Offering. In addition, $0.35 per unit, or approximately
$9.7 million in the aggregate will be payable to the underwriters for deferred
underwriting commissions. The deferred fee will become payable to the
underwriters from the amounts held in the Trust Account solely in the event that
we complete a Business Combination, subject to the terms of the underwriting
agreement.

Critical Accounting Policies

Derivative warrant liabilities

We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC Topic
480 “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC Subtopic 815-15
“Derivatives and Hedging – Embedded Derivatives” (“ASC 815”). The classification
of derivative instruments, including whether such instruments should be recorded
as liabilities or as equity, is re-assessed at the end of each reporting period.

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The warrants issued in connection with the Initial Public Offering (the “Public
Warrants”) and the Private Placement Warrants (as defined in Note 4)
(collectively, the “Warrant”) are recognized as derivative liabilities in
accordance with ASC 815-40. Accordingly, the Company recognizes the warrant
instruments as liabilities at fair value and adjusts the carrying value of the
instruments to fair value at each reporting period until they are exercised, and
any change in fair value is recognized in the Company’s statement of operations.
The fair value of the Public Warrants issued in connection with the Initial
Public Offering and Private Placement Warrants were initially measured at fair
value using a Monte Carlo simulation model and subsequently, the fair value of
the Private Placement Warrants have been estimated using a Monte Carlo
simulation model each measurement date. The fair value of Public Warrants issued
in connection with the Initial Public Offering have subsequently been measured
based on the listed market price of such warrants. The determination of the fair
value of the warrant liability may be subject to change as more current
information becomes available and accordingly the actual results could differ
significantly. Derivative warrant liabilities are classified as non-current
liabilities as their liquidation is not reasonably expected to require the use
of current assets or require the creation of current liabilities.

Offering Costs Associated with the Initial Public Offering

Offering costs consisted of legal, accounting, underwriting fees and other costs
incurred through the Initial Public Offering that were directly related to the
Initial Public Offering. Offering costs are allocated to the separable
financial instruments issued in the Initial Public Offering based on a relative
fair value basis, compared to total proceeds received. Offering costs
associated with warrant liabilities are expensed as incurred and presented as
non-operating expenses in the statement of operations. Offering costs
associated with the Class A ordinary shares were charged to shareholders’ equity
(deficit) upon the completion of the Initial Public Offering. Deferred
underwriting commissions are classified as non-current liabilities as their
liquidation is not reasonably expected to require the use of current assets or
require the creation of current liabilities.

Class A ordinary shares subject to possible redemption

We account for our 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 (if any) are
classified as liability instruments and are measured at fair value.
Conditionally redeemable Class A ordinary shares (including Class A 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 our control) are classified as temporary equity. At all other
times, Class A ordinary shares are classified as shareholders’ equity. Our Class
A ordinary shares feature certain redemption rights that are considered to be
outside of our control and subject to the occurrence of uncertain future events.
Accordingly, as of June 30, 2021, 23,247,527 Class A ordinary shares subject to
possible redemption are presented as temporary equity, outside of the
shareholders’ equity (deficit) section of our condensed consolidated balance
sheet. As of December 31, 2020, there were no Class A ordinary shares subject to
possible redemption.

Net Income (Loss) Per Ordinary Share

Our condensed consolidated statements of operations include a presentation of
net income (loss) per ordinary share for Class A ordinary shares subject to
possible redemption in a manner similar to the two-class method of net income
(loss) per ordinary share. Net income (loss) per ordinary share, basic and
diluted, for Class A ordinary shares is calculated by dividing the interest
income earned on the Trust Account, less interest available to be withdrawn for
the payment of taxes, by the weighted average number of Class A ordinary shares
outstanding for the periods. Net income (loss) per ordinary share, basic and
diluted, for Class B ordinary shares is calculated by dividing the net income
(loss), adjusted for income attributable to Class A ordinary shares, by the
weighted average number of Class B ordinary shares outstanding for the periods.
Class B ordinary shares include the Founder Shares as these ordinary shares do
not have any redemption features and do not participate in the income earned on
the Trust Account.

The calculation of diluted net income (loss) per ordinary share does not
consider the effect of the warrants issued in connection with the Initial Public
Offering and the Private Placement since the exercise price of the warrants is
in excess of the average ordinary share price for the period and therefore the
inclusion of such warrants would be anti-dilutive.

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Recent Accounting Pronouncements

In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06,
Debt –debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging –Contracts in Entity’ Own Equity (Subtopic 815-40): Accounting for
Convertible Instruments and Contracts in an Entity’ Own Equity (“ASU 2020-06”),
which simplifies accounting for convertible instruments by removing major
separation models required under current GAAP. The ASU also removes certain
settlement conditions that are required for equity-linked contracts to qualify
for the derivative scope exception, and it simplifies the diluted earnings per
share calculation in certain areas. We adopted ASU 2020-06 on January 1, 2021
using the modified retrospective method for transition. Adoption of the ASU did
not impact our financial position, results of operations or cash flows.

Our 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 accompanying unaudited condensed consolidated 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.

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 unaudited condensed
consolidated 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 auditor’s attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (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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