| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited
condensed financial statements and related notes included in Part I, Item 1 of this Quarterly Report. This discussion and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as statements of
our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to,
those discussed in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 15, 2024.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact
included in this Quarterly Report on Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy
and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to
identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual
events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2024 and the risk factors disclosed under “Risk Factors” in this Quarterly
Report. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise
any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company on February 11, 2021. We were incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase,
reorganization or similar business combination with one or more businesses that we have not yet identified (a “Business Combination”).
The registration statement for our Initial Public Offering was declared effective on November 17, 2021. On November 22, 2021, we consummated the Initial Public Offering of 27,600,000 Units, including the issuance
of 3,600,000 Units as a result of the underwriters’ full exercise of their over-allotment option, at $10.00 per Unit, generating gross proceeds of $276.0 million, and incurring offering costs of approximately $16.3 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 of 7,520,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant to the Sponsor,
generating 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 net proceeds, including the net proceeds of the Initial Public Offering and certain of the proceeds of
the Private Placement, were placed in a 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
of 1940, as amended, or 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 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 any deferred underwriters fees and taxes payable on the income earned on the trust account) at the time we signed 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.
If we are unable to complete a Business Combination before November 22, 2024 or during any Extension Period, if applicable, 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 earned on the funds held
in the trust account (less taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders
(including the right to receive further liquidating 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 the case of clauses (ii) and (iii), 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. In such event, the Rights and warrants
will expire and be worthless.
On January 2, 2024, we held an extraordinary general meeting of shareholders at which our shareholders approved proposals to Amended and Restated Memorandum and Articles of
Association to (i) extend the date by which we have to consummate a Business Combination from February 22, 2024 to November 22, 2024 or such earlier date as our board of directors may approve in accordance with the Amended and Restated
Memorandum and Articles of Association and (ii) to provide for the right of a holder of the our Class B ordinary shares, par value $0.0001 per share, to convert their Class B ordinary shares into Class A ordinary shares, par value $0.0001 per
share, on a one-for-one basis at any time and from time to time prior to the closing of a Business Combination at the election of the holder.
Offers to Sponsor
Our sponsor has received and is considering a number of offers for the purchase of a portion of its ownership interest in us. While our board of directors has not approved any of these offers and we cannot assure you
that any of these transactions will occur on the proposed terms or at all, certain of these offers, if consummated, could result in a change in our ownership (including in certain cases, a potential change in control of the Company) and involve
other economic and governance changes, including board designation rights in favor of the potential purchaser and the replacement of certain directors on our board.
Letter Agreement Amendment
On April 15, 2024, we have entered into an amendment to that certain letter agreement dated November 17, 2021, entered into by
and among the Company, its officers, directors and senior advisors at the time of the initial public offering and the sponsor (the “Letter Agreement Amendment”). Pursuant to the Letter Agreement Amendment, the sponsor vesting provisions
that would cause certain shares held by the sponsor following the consummation of an initial business combination to be considered to be newly unvested shares subject to vesting based on the price of our Class A common shares have been
eliminated. In addition, the lock-up provision has been amended such that transfers of the founder shares, Private Placement Warrants and ordinary shares issued or issuable upon the exercise or conversion of the Private Placement Warrants
or the founder shares, directly or indirectly, to a transferee or its controlled affiliate(s) pursuant to any definitive agreement with respect to such transfer duly executed by and between the sponsor and such transferee shall not be
restricted. The Letter Agreement Amendment is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q.
Liquidity and Going Concern
As of March 31, 2024, we had approximately $41,000 in cash, working capital deficit of approximately $978,000 and the ability to borrow up to an aggregate of approximately $300,000 remaining under the 2022 Note (as
defined below).
Our liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to cover certain expenses on our behalf in exchange for issuance of our
Class B ordinary shares, and loan proceeds from the Sponsor of approximately $167,000 under a promissory note (the “2021 Note”). We partially repaid approximately $166,000 of the 2021 Note upon closing of the Initial Public Offering and repaid
the remaining balance of approximately $1,000 on November 24, 2021. Subsequent to the consummation of the Initial Public Offering, our liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and
the Private Placement held outside of the trust account and from the 2022 Note.
On April 1, 2022, we entered into a convertible promissory note with our Sponsor the (“2022 Note”). Pursuant to the 2022 Note, we may borrow from the Sponsor, from time to time, up to an aggregate of $1,500,000.
Borrowings under the 2022 Note do not bear interest. The 2022 Note will mature on the earlier to occur of (i) 18 months from the closing of the Initial Public Offering (or up to any extension period, if applicable) or (ii) the effective date of
our initial Business Combination. If we complete a Business Combination, we will repay the 2022 Note out of the proceeds of the trust account released to us. Otherwise, the 2022 Note will be repaid only out of funds held outside the trust
account. Up to $1,500,000 of such loans may be converted into Private Placement Warrants of the post-Business Combination entity at a price of $1.00 per warrant at the option of the Sponsor. The 2022 Note contains customary events of default,
including those relating to our failure to repay the principal amount due upon maturity of the 2022 Note and certain bankruptcy events. In July 2022, March 2023, October 2023, December 2023 and March 2024, we borrowed approximately $300,000,
$474,000, $25,000, $100,000 and $200,000 under the 2022 Note, respectively. As of March 31, 2024 and December 31, 2023 and 2022, approximately $1.2 million and $899,000 was outstanding under the 2022 Note, respectively.
In connection with our assessment of going concern considerations in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements - Going Concern,” we have determined that the liquidity issue, mandatory liquidation and subsequent dissolution raises substantial doubt about our ability to continue as a
going concern and that we will need additional funds to raise the additional capital we need to fund our business operations and complete any Business Combination prior to November 22, 2024. No adjustments have been made to the carrying amounts
of assets or liabilities should we be required to liquidate after November 22, 2024. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our entire activity since inception up to March 31, 2024 related to our formation, the preparation for the Initial Public Offering, and
since the closing of the Initial Public Offering, the search for a prospective initial Business Combination. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We generate
non-operating income in the form of investment income from the trust account. We will continue to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for
due diligence expenses. Additionally, we recognize non-cash gains and losses within other income (expense) related to changes in recurring fair value measurement of our derivative liabilities at each reporting period.
For the three months ended March 31, 2024, we had net loss of approximately $371,000, which consisted of an approximately $437,000 in general and administrative expenses and $30,000 in related party general and
administrative expenses, offset by approximately $96,000 gain from investments held in the trust account.
For the three months ended March 31, 2023, we had net income of approximately $2.8 million, which consisted of approximately $3.1 million gain from investments held in the trust account, partially offset by
approximately $218,000 in general and administrative expenses and $30,000 in related party general and administrative expenses.
Commitments and Contingencies
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 and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a registration rights agreement dated November 17, 2021
requiring us to register such securities for resale (in the case of the Founder Shares, only after conversion to Class A ordinary shares). The holders of these securities are entitled to make up to three demands, excluding short form demands,
that we registered 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 November 17, 2021 to purchase up to 3,600,000 additional Units at the Initial Public Offering price less the underwriting discounts and commissions. On November 22,
2021, the underwriters consummated the exercise in full of the 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.
Related Party Loans
On April 1, 2022, we entered into a convertible promissory note (the “2022 Note”) with our Sponsor. Pursuant to the 2022 Note, we may borrow from the Sponsor, from time to time, up to an aggregate of $1,500,000.
Borrowings under the 2022 Note do not bear interest. The 2022 Note will mature on the earlier to occur of (i) 18 months from the closing of our Initial Public Offering (or up to any Extension Period, if applicable) or (ii) the effective date of
an initial Business Combination. If we complete a Business Combination, we will repay the 2022 Note out of the proceeds of the trust account released to us. Otherwise, the 2022 Note will be repaid only out of funds held outside the trust account.
Up to $1,500,000 of such loans may be converted into Private Placement Warrants of the post-Business Combination entity at a price of $1.00 per warrant at the Sponsor’s option. The 2022 Note contains customary events of default, including those
relating to our failure to repay the principal amount due upon maturity of the 2022 Note and certain bankruptcy events. On October 19, 2023 and December 20, 2023 and March 21, 2024, we drew additional $25,000, $100,000 and $350,000 under the
Promissory Note, respectively. As of March 31, 2024 and December 31, 2023, approximately $1.2 million and $899,000 was outstanding under the 2022 Note, respectively.
Administrative Services Agreement
On November 17, 2021, we agreed to pay an affiliate of the Sponsor $10,000 per month for office space, secretarial and administrative support services provided to members of the management team through the earlier
of consummation of the initial Business Combination and the liquidation. For the three months ended March 31, 2024 and 2023, we incurred expenses of $30,000 and $30,000, respectively, under this agreement. As of March 21, 2024 and December 31,
2023, there was $95,000 and $65,000 in accrued expenses for services in connection with such agreement, respectively.
In addition, the Sponsor, officers and directors, or their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential
target businesses and performing due diligence on suitable Business Combinations. Our audit committee will review on a quarterly basis all payments that were made by us to the Sponsor, executive officers or directors, or their affiliates. Any
such payments prior to an initial Business Combination will be made using funds held outside the trust account.
Critical Accounting Policies and Estimates
The preparation of unaudited condensed financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements, and the reported amounts of income and expenses during the periods reported. Actual results could materially differ from
those estimates. We have identified the following as our critical accounting policies and estimates:
Derivative 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 FASB ASC Topic 480 “Distinguishing Liabilities from Equity” and FASB ASC Topic 815, “Derivatives and Hedging” (“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.
We accounted for the Rights as equity-classified instruments based on an assessment of the Rights’ specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considered whether the
Rights were freestanding financial instruments pursuant to ASC 480, met the definition of a liability pursuant to ASC 480, and whether the Rights met all the requirements for equity classification under ASC 815, including whether the Rights were
indexed to our own ordinary shares, among other conditions for the equity classification.
We classify the warrants issued in connection with its Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants in accordance with the guidance contained in ASC 480 and ASC 815. Such
guidance provides that the warrants are not precluded from equity classification. Equity-classified contracts were initially measured at fair value (or allocated value). Subsequent changes in fair value will not be recognized as long as the
contracts continue to be classified in equity in accordance with ASC 480 and ASC 815.
Class A Ordinary Shares Subject to Possible Redemption
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. The Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, all
outstanding Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ deficit section of our balance sheets.
Under ASC 480, we have elected to recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the redemption value at the end of each reporting period.
This method would view the end of the reporting period as if it were also the redemption date for the security. Immediately upon the closing of the Initial Public Offering, we recognized the remeasurement from initial book value to redemption
amount value. The change in the carrying value of the redeemable Class A ordinary shares resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.
Non-Redemption Agreement
In May 2023, we and the Sponsor entered into non-redemption agreements (the “Non-Redemption Agreements”) with ten unaffiliated third parties (the “Non-Redeeming Shareholders”), pursuant to which such Non-Redeeming
Shareholders agreed not to redeem (or to validly rescind any redemption requests with respect to) a portion of their ordinary shares, in an aggregate amount equal to 1,500,000 ordinary shares (the “Non-Redeemed Shares”) in connection with the
First Extension Meeting held on May 19, 2023, but such Non-Redeeming Shareholders retained their right to require us to redeem such Non-Redeemed Shares in connection with the closing of the Business Combination. In exchange for the foregoing
commitment, the Sponsor agreed to transfer to such Non-Redeeming Shareholders an aggregate of 375,000 Founder Shares held by the Sponsor immediately following the consummation of an initial Business Combination. We estimated the aggregate fair
value of such 375,000 Founder Shares transferrable to the Non-Redeeming Shareholders pursuant to the Non-Redemption Agreements to be $363,750 or approximately $0.97 per share. The fair value was determined using the probability of a successful
Business Combination of 9.98%, a volatility of 26.2%, a discount for lack of marketability of 6.5%, and the average value per share as of the valuation date of $10.42 derived from an option pricing model for publicly traded warrants. Each
Non-Redeeming Shareholder acquired from the Sponsor an indirect economic interest in such Founder Shares. The excess of the fair value of such Founder Shares was determined to be an offering cost in accordance with Staff Accounting Bulletin Topic
5A. Accordingly, in substance, it was recognized by us as a capital contribution by the Sponsor to induce the Non-Redeeming Shareholders not to redeem the Non-Redeemed Shares, with a corresponding charge to additional paid-in capital to recognize
the fair value of the Founder Shares subject to transfer as an offering cost.
On December 22, 2023, December 27, 2023 and January 2, 2024, we and the Sponsor entered into non-redemption agreements (the “Non-Redemption Agreements”) with four unaffiliated third parties (the “Non-Redeeming
Shareholders”), pursuant to which such Non-Redeeming Shareholders agreed not to redeem (or to validly rescind any redemption requests with respect to) a portion of their ordinary shares of the Company, in an aggregate amount equal to 160,479
ordinary shares (the “Non-Redeemed Shares”) in connection with the Second Extension Meeting held on January 2, 2024, but such Non-Redeeming Shareholders retained their right to require the Company to redeem such Non-Redeemed Shares in connection
with the closing of the Business Combination. In exchange for the foregoing commitment, the Sponsor agreed to transfer to such Non-Redeeming Shareholders an aggregate of 534,929 Founder Shares held by the Sponsor immediately following the
consummation of an initial Business Combination. We estimated the aggregate fair value of such 160,479 Founder Shares transferrable to the Non-Redeeming Shareholders pursuant to the Non-Redemption Agreements to be $147,287 or approximately $0.92
per share. The fair value was determined using the probability of a successful Business Combination of 8.93%, a volatility of 24.3%, a discount for lack of marketability of 4.4%, and the average value per share as of the valuation date of $10.75
derived from an option pricing model for publicly traded warrants. Each Non-Redeeming Shareholder acquired from the Sponsor an indirect economic interest in such Founder Shares. The excess of the fair value of such Founder Shares was determined
to be an offering cost in accordance with Staff Accounting Bulletin Topic 5A. Accordingly, in substance, it was recognized by the Company as a capital contribution by the Sponsor to induce the Non-Redeeming Shareholders not to redeem the
Non-Redeemed Shares, with a corresponding charge to additional paid-in capital to recognize the fair value of the Founder Shares subject to transfer as an offering cost.
Net (Loss) Income Per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” We have two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income
and losses are shared pro rata between the two classes of shares. Net (loss) income per ordinary share is calculated by dividing the net (loss) income by the weighted average shares of ordinary shares outstanding for the respective period.
The calculation of diluted net (loss) income per ordinary shares does not consider the effect of the Public Warrants, the Private Placement Warrants and the Rights to purchase an aggregate of 23,045,000 Class A
ordinary shares since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net (loss) income per share is the same as basic net (loss) income per share for the three months ended March 31, 2024 and 2023.
Remeasurement associated with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
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)” (“ASU 2020-06”), to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and
simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are
indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the converted method for all convertible instruments. As a smaller reporting company, ASU 2020-06 is
effective beginning on January 1, 2024 for fiscal years beginning after December 15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. We are currently assessing the
impact, if any, that ASU 2020-06 would have on its financial position, results of operations and cash flows. We are currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its
position.
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments (“ASU 2016-13”). This update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information
about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Since June 2016, the FASB issued clarifying updates to the new standard
including changing the effective date for smaller reporting companies. The guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. We adopted ASU
2016-13 on January 1, 2023. The adoption of ASU 2016-13 did not have a material impact on its financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate
reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management does not believe
the adoption of ASU 2023-09 will have a material impact on its financial statements and disclosures.
Off-Balance Sheet Arrangements
As of March 31, 2024, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying
public companies. We qualify as an “emerging growth company” under the JOBS Act and are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We elected 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,
our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
As an “emerging growth company”, we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal control 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.
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
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We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, and are not required to provide the information otherwise required under this item.
| Item 4. |
Controls and Procedures
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Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be
disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial and accounting officer, to allow timely decisions regarding
required disclosure.
As of March 31, 2024, as required by Rules 13a-15 and 15d-15 under the Exchange Act, our principal executive officers and principal financial and accounting officer carried out an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures. Based upon their evaluation, our Co-Chief Executive Officers and Executive Director concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) were effective.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
| Item 1. |
Legal Proceedings
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None.
There have been no material changes to our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 15, 2024.
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
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Unregistered Sales
On February 12, 2021, the Company issued 8,625,000 Class B ordinary shares to the Sponsor (the “Founder Shares”) in exchange for the payment of $25,000 of the Company’s offering expenses. Shares and the associated
amounts reflect: (i) the surrender of 2,875,000 Class B ordinary shares to the Company at no consideration on October 25, 2021; and (ii) the share capitalization of Class B ordinary shares on November 17, 2021; resulting in a decrease in the
total number of Class B ordinary shares outstanding to 6,900,000 Class B ordinary shares. The holders of the Founder Shares agreed to forfeit and cancel up to an aggregate of 900,000 Founder Shares, on a pro rata basis, to the extent that the
option to purchase additional Units was not exercised in full by the underwriters, so that the Founder Shares would represent approximately 20% of the Company’s issued and outstanding shares after the Initial Public Offering. Such securities were
issued in connection with our incorporation pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Our Sponsor is an accredited investor for purposes of Rule 501 of Regulation D. On November 22, 2021, the
underwriters consummated the exercise in full of the over-allotment; thus, these 900,000 Founder Shares were no longer subject to forfeiture.
The Sponsor agreed that upon and subject to the completion of the initial Business Combination, 25% of the Founder Shares then held by the Sponsor shall be considered to be newly unvested shares, one-half of which
(or 12.5% of the shares then held by the Sponsor) will vest only if the First Share Price Level is achieved on or after the first anniversary of the closing of the initial Business Combination but before the fifth anniversary; and one-half of
which (or 12.5% of the shares then held by the Sponsor) will vest only if the Second Share Price Level is achieved on or after the first anniversary of the closing of the initial Business Combination but before the fifth anniversary. The Sponsor
agreed, subject to exceptions, not to transfer any unvested Founder Shares prior to the date such securities become vested. Founder Shares, if any, that remain unvested at the fifth anniversary of the closing of the initial Business Combination
will be forfeited.
Simultaneously with the closing of the Initial Public Offering, pursuant to the Sponsor Warrants Purchase Agreement, the Company completed the private sale of an aggregate of 7,520,000 warrants (the “Private
Placement Warrants”) to the Sponsor at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company of $7,520,000. The Private Placement Warrants are identical to the warrants sold as part of the Units in the
Initial Public Offering, except that the Private Placement Warrants, so long as they are held by the Sponsor or its permitted transferees, (i) are not redeemable by the Company; (ii) may not (including the Class A ordinary shares issuable upon
exercise of such Private Placement Warrants), subject to certain limited exceptions, be transferred, assigned or sold by such holders until 30 days after the completion of the Company’s initial Business Combination; (iii) may be exercised by the
holders on a cashless basis; and (iv) will be entitled to registration rights (including the Class A ordinary shares issuable upon exercise of such Private Placement Warrants). The issuance of the Private Placement Warrants was made pursuant to
the exemption from registration contained in Section 4(a)(2) of the Securities Act.
No underwriting discounts or commissions were paid with respect to such sales.
Use of Proceeds
Upon the closing of the Initial Public Offering and the Private Placement, $276.0 million ($10.00 per Unit) of net proceeds, including the net proceeds of the Initial Public Offering and certain of the proceeds of
the Private Placement, was 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 of 1940, 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 which invest only in direct U.S. government treasury
obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the trust account.
The Company’s 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. The Company’s 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 any deferred underwriters fees and taxes payable on the income earned on the trust account) at the time the Company signs a definitive agreement in connection with the initial Business
Combination. However, the Company 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.
There has been no material change in the planned use of the proceeds from the Initial Public Offering and Private Placement as is described in the Company’s final prospectus related to the Initial Public Offering.
| Item 3. |
Defaults Upon Senior Securities
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None.
| Item 4. |
Mine Safety Disclosures
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Not applicable.
| Item 5. |
Other Information
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None of our directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1
trading arrangement during the three months ended March 31, 2024.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
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Exhibit
No.
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Description of Exhibit
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Amendment to the Amended and Restated Memorandum and Articles of Association (incorporated by reference to Exhibit
3.1 to the Current Report on Form 8-K of bleuacacia ltd filed with the SEC on January 5, 2024)
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Amendment to the Letter Agreement, dated April 15, 2024, by and among the Company, its officers, directors and bleuacacia
sponsor LLC (incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K of bleuacacia ltd filed with the SEC on April 15, 2024).
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Certification of Jide Zeitlin, Co-Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of Lew Frankfort, Co-Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of Thomas Northover, Executive Director of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of Jide Zeitlin, Co-Chief Executive Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Certification of Lew Frankfort, Co-Chief Executive Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Certification of Thomas Northover, Executive Director of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101.INS
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XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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Exhibit 104
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Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
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Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Date: May 20, 2024
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/s/ Jide Zeitlin
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Name:
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Jide Zeitlin
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Title:
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Co-Chief Executive Officer
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(Principal Executive Officer)
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Date: May 20, 2024
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/s/ Lew Frankfort
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Name:
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Lew Frankfort
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Title:
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Co-Chief Executive Officer
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(Principal Executive Officer)
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Date: May 20, 2024
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/s/ Thomas Northover
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Name:
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Thomas Northover
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Title:
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Executive Director
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(Principal Financial and Accounting Officer)
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28