UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
March 31, 2021☐
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
Commission File Number: 001-40167
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(Exact name of registrant as specified in its charter) |
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Delaware |
| 85-3901431 | ||
(State or other jurisdiction of
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| (I.R.S. Employer
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3rd Floor Zephyr House 122 Mary Street, George Town PO Box 10085 Grand Cayman KY1-1001, |
(Address of principal executive offices) (Zip Code) |
9714 3966949 |
(Registrant’s telephone number, including area |
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
Units, each consisting of one share of Class A Common Stock and one-fourth of one Redeemable Warrant | |
| | The Nasdaq Capital Market LLC |
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Class A Common Stock, par value $0.0001 per share | |
| | The Nasdaq |
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Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 | |
| | The Nasdaq |
Indicate by check mark whether the registrantRegistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrantRegistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧☒ No ☐
Indicate by check mark whether the registrantRegistrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrantRegistrant was required to submit such files). Yes ⌧☒ No ☐
Indicate by check mark whether the registrantRegistrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitionsdefinition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” company”and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
Emerging growth company | ☒ |
If an emerging growth company, indicate by the check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
As of January 12, 2024, there were 7,306,609 shares of the registrant’s Class A common stock, par value $0.0001 per share, issued and outstanding, and 0 shares of the registrant’s Class B common stock, par value $0.0001 per share, issued and outstanding.
IRIS ACQUISITION CORP
TABLE OF CONTENTS
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| Condensed Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022 | 1 |
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| Unaudited Condensed Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 | 4 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 | |
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PART I—FINANCIAL INFORMATION
Item 1. CONDENSED FINANCIAL STATEMENTS
IRIS ACQUISITION CORP
CONDENSED BALANCE SHEETS
The accompanying notes are an integral part of these unaudited condensed financial statements. |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ⌧ No ☐
As of July 22, 2021, there were 27,600,000 shares of Class A common stock and 6,900,000 shares of Class B common stock of the registrant issued and outstanding.
1
TRIBE CAPITAL GROWTHIRIS ACQUISITION CORP I
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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| | Three Months Ended | | Three Months Ended | | Nine Months Ended | | Nine Months Ended | ||||
| | September 30, | | September 30, | | September 30, | | September 30, | ||||
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| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||
Formation and operating costs | | $ | (676,321) | | $ | (258,685) | | $ | (1,943,512) | | $ | (1,135,308) |
Forgiveness of unrelated vendor payables | | | — | | | 579,989 | | | 275,000 | | | 579,989 |
(Loss) income from operations | | | (676,321) | | | 321,304 | | | (1,668,512) | | | (555,319) |
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Other income (expense): | | | | | | | | | | | | |
Unrealized (loss) gain on fair value of warrant liabilities | | | (45,822) | | | 1,261,428 | | | 442,726 | | | 9,866,638 |
Interest income on marketable securities held in Trust Account | | | 421,853 | | | 36,037 | | | 506,550 | | | 203,947 |
Unrealized gain on investments held in Trust Account | | | — | | | 1,256,457 | | | — | | | 888,375 |
Total other income, net | | | 376,031 | | | 2,553,922 | | | 949,276 | | | 10,958,960 |
(Loss) income before provision for income taxes | | | (300,290) | | | 2,875,226 | | | (719,236) | | | 10,403,641 |
Provision for income taxes | | | (23,601) | | | (143,750) | | | (20,387) | | | (143,750) |
Net (loss) income | | $ | (323,891) | | $ | 2,731,476 | | $ | (739,623) | | $ | 10,259,891 |
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Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption | |
| 1,977,122 | |
| 27,600,000 | |
| 1,603,176 | | | 27,600,000 |
Basic and diluted net income (loss) per share, Class A common stock subject to possible redemption | | $ | (0.04) | | $ | 0.08 | | $ | (0.09) | | $ | 0.30 |
Basic and diluted weighted average shares outstanding, Class B common stock | |
| 6,150,000 | |
| 6,900,000 | |
| 6,647,253 | |
| 6,900,000 |
Basic and diluted net income (loss) per share, Class B common stock | | $ | (0.04) | | $ | 0.08 | | $ | (0.09) | | $ | 0.30 |
The accompanying notes are an integral part of these unaudited condensed financial statements.
i2
IRIS ACQUISITION CORP
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(UNAUDITED)
PART I—FINANCIAL INFORMATION
Item 1. Financial Information
TRIBE CAPITAL GROWTH CORP I
BALANCE SHEETFOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
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| March 31, 2021 | | December 31, 2020 | ||
| | (Unaudited) | | (Audited) | ||
ASSETS | | | | | | |
Current assets | | | | | | |
Cash | | $ | 999,748 | | $ | — |
Prepaid expenses and other current assets | | $ | 438,691 | |
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Deferred offering costs | | $ | 1,061 | | | 298,962 |
Total current assets | | $ | 1,439,500 | | | 298,962 |
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Marketable securities held in Trust Account | | | 276,000,000 | | | — |
Total Assets | | $ | 277,439,500 | | $ | 298,962 |
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LIABILITIES AND STOCKHOLDERS' EQUITY | |
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Current liabilities | | | | | | |
Accrued offering costs | | $ | — | | $ | 262,764 |
Accounts payable and accrued expenses | | | 173,464 | | $ | — |
Due to related party | | | 38,252 | | | 12,500 |
Franchise tax payable | | | 50,000 | | | — |
Total current liabilities | | | 261,716 | | | 275,264 |
Deferred underwriting fee payable | |
| 9,660,000 | |
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Warranty liability | |
| 18,981,991 | |
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Total Liabilities | | $ | 28,903,707 | |
| 275,264 |
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Commitments | |
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Class A common stock subject to possible redemption, 24,353,579 and 0 shares at $10.00 redemption value at March 31, 2021 and December 31, 2020, respectively | | | 243,535,790 | | | — |
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Stockholders' Equity | |
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Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | |
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Class A common stock, $0.0001 par value; 280,000,000 shares authorized; 3,246,421 and 0 shares issued and outstanding (excluding 24,353,579 and 0 shares subject to possible redemption) at March 31, 2021 and December 31, 2020, respectively | |
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Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 6,900,000 shares issued and outstanding at both March 31, 2021 and December 31, 2020 | |
| 690 | |
| 690 |
Additional paid-in capital | |
| 6,963,704 | |
| 24,310 |
Accumulated deficit | |
| (1,964,715) | |
| (1,302) |
Total Stockholders’ Equity | |
| 5,000,003 | |
| 23,698 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 277,439,500 | | $ | 298,962 |
The accompanying notes are an integral part of the financial statement.
1
TRIBE CAPITAL GROWTH CORP I
CONDENSED STATEMENTS OF OPERATIONS
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| | For the three months | |
| | ended March 31, 2021 | |
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| (Unaudited) | |
Formation and operating costs | | $ | 398,021 |
Loss from operations | | | (398,021) |
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Other income/(expense) | | | |
Unrealized loss on change in fair value of warrants | | | (659,945) |
Transaction costs | | | (606,622) |
Excess of fair value of Private Warrants | | | (298,825) |
Total other expense | | | (1,565,392) |
Net Loss | | $ | (1,963,413) |
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Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption(1) | |
| 27,600,000 |
Basic and diluted net income per share, Class A common stock subject to possible redemption | | $ | 0.00 |
Basic and diluted weighted average shares outstanding, common stock | |
| 6,900,000 |
Basic and diluted net loss per share, common stock(2) | | $ | (0.28) |
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| | Class A Common Stock | | Class B Common Stock | | Additional | | Accumulated | | Total Stockholders' | |||||||||||
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| Amount |
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| Paid-in Capital |
| Deficit |
| Deficit | |||||||
Balance as of January 1, 2023 | | $ | — | | $ | — | | | 6,900,000 | | $ | 690 | | $ | 140,000 | | $ | (13,974,105) | | $ | (13,833,415) |
Remeasurement of Class A common stock to redemption amount |
| | — | | | — | | | — | | | — | |
| — | |
| 298,845 | |
| 298,845 |
Net loss | | | — | | | — | | | — | | | — | | | — | | | (648,716) | | | (648,716) |
Balance as of March 31, 2023 |
| | — | | | — | | | 6,900,000 | | $ | 690 | | $ | 140,000 | | $ | (14,323,976) | | $ | (14,183,286) |
Remeasurement of Class A common stock to redemption amount | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Net income | | | — | | | — | | | — | | | — | | | — | | | 232,984 | | | 232,984 |
Balance at June 30, 2023 | | | — | | | — | | | 6,900,000 | | $ | 690 | | $ | 140,000 | | $ | (14,090,992) | | $ | (13,950,302) |
Remeasurement of Class A common stock to redemption amount | | | — | | | — | | | — | | | — | | | — | | | 180,526 | | | 180,526 |
Excise tax payable attributable to redemption of common stock | | | — | | | — | | | — | | | — | | | — | | | (103,587) | | | (103,587) |
Conversion of Class B common stock to Class A common stock | | | 6,900,000 | | | 690 | | | (6,900,000) | | | (690) | | | — | | | — | | | — |
Net loss | | | — | | | — | | | — | | | — | | | — | | | (323,891) | | | (323,891) |
Balance at September 30, 2023 |
| | 6,900,000 | | $ | 690 | | | — | | $ | — | | $ | 140,000 | | $ | (14,337,944) | | $ | (14,197,254) |
2
TRIBE CAPITAL GROWTH CORP I
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2021SEPTEMBER 30, 2022
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| | Common Stock | | Additional | | | | | Total | ||||||||||
| | Class A | | Class B | | Paid-In | | Accumulated | | Stockholders’ | |||||||||
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| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity | |||||
Balance—December 31, 2020 (Audited) | | — | | $ | — | | 6,900,000 | | $ | 690 | | $ | 24,310 | | $ | (1,302) | | $ | 23,698 |
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Sale of 27,600,000 Units on March 9, 2021 net of warrant fair value | | 27,600,000 | | | 2,760 | | — | | | — | | | 265,494,019 | | | — | | | 265,496,779 |
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Offering costs | | — | | | — | | — | | | — | | | (15,021,271) | | | — | | | (15,021,271) |
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Net loss | | — | | | — | | — | | | — | | | — | | | (1,963,413) | | | (1,963,413) |
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The maximum number of redeemable shares | | (24,353,579) | | | (2,436) | | — | | | — | | | (243,533,354) | | | — | | | (243,535,790) |
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Balance as of March 31, 2021 (Unaudited) |
| 3,246,421 | | $ | 324 | | 6,900,000 | | $ | 690 | | $ | 6,963,704 | | $ | (1,964,715) | | $ | 5,000,003 |
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| | | Class B Common Stock | | Additional | | Accumulated | | Total Stockholders’ | ||||||
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| Amount | | Paid-in Capital | | Deficit | | Deficit | ||||
Balance as of January 1, 2022 | | | 6,900,000 | | $ | 690 |
| $ | — |
| $ | (21,131,825) |
| $ | (21,131,135) |
Net income | | | — | | | — | | | — | | | 3,815,727 | | | 3,815,727 |
Balance at March 31, 2022 |
| | 6,900,000 | | | 690 | | | — | | | (17,316,098) | | $ | (17,315,408) |
Forgiveness of payable due to an affiliate of the Sponsor | | | — | | | — | | | 140,000 | | | — | | | 140,000 |
Remeasurement of Class A common stock to redemption amount | | | — | | | — | | | — | | | 183,329 | | | 183,329 |
Net income | | | — | | | — | | | — | | | 3,712,688 | | | 3,712,688 |
Balance at June 30, 2022 | | | 6,900,000 | | $ | 690 | | $ | 140,000 | | $ | (13,420,081) | | $ | (13,279,391) |
Remeasurement of Class A common stock to redemption amount | | | — | | | — | | | — | | | (1,292,494) | | | (1,292,494) |
Net income |
| | — | | | — | |
| — | |
| 2,731,476 | |
| 2,731,476 |
Balance at September 30, 2022 |
| | 6,900,000 | | $ | 690 | | $ | 140,000 | | $ | (11,981,099) | | $ | (11,840,409) |
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
TRIBE CAPITAL GROWTHIRIS ACQUISITION CORP I
CONDENSED STATEMENTSTATEMENTS OF CASH FLOWS
(UNAUDITED)
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| | For the three months | |
| | ended March 31, | |
| | 2021 | |
Cash Flows from Operating Activities: |
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Net loss | | $ | (1,963,413) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
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Excess of fair value of Private Warrants | | | 298,825 |
Change in fair value of warrant liabilities | | | 659,945 |
Transaction costs | | | 606,622 |
Changes in operating assets and liabilities | | | |
Prepaid assets | |
| (438,691) |
Due from Sponsor | | | (1,061) |
Taxes payable | |
| 50,000 |
Due to related party | | | 25,752 |
Accounts payable and accrued expenses | | | 209,662 |
Net cash used in operating activities | |
| (552,359) |
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Cash flows from investing activities: | | | |
Investments and marketable securities held in Trust | | | (276,000,000) |
Net cash used in investing activities | | | (276,000,000) |
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Cash flows from financing activities: | |
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Proceeds from sale of Units, net of offering costs | |
| 275,552,107 |
Proceeds from issuance of Private Warrants | | | 7,520,000 |
Payment of underwriter discount | | | (5,520,000) |
Net cash provided by financing activities | |
| 277,552,107 |
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Net Change in Cash | |
| 999,748 |
Cash, beginning of the period | |
| — |
Cash, end of period | | $ | 999,748 |
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Supplemental Disclosure of Non-cash Operating and Financing Activities: | |
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Warrant liability | | $ | 18,322,046 |
Class A ordinary shares subject to possible redemption | | $ | 243,535,790 |
Deferred underwriters’ discount payable charged to additional paid in capital | | $ | 14,000,000 |
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| | Nine Months | | Nine Months | ||
| | Ended | | Ended | ||
| | September 30, | | September 30, | ||
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| 2023 |
| 2022 | ||
Cash Flows from Operating Activities: |
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Net income (loss) | | $ | (739,623) | | $ | 10,259,891 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |
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Unrealized gain on fair value of warrant liability | | | (442,726) | | | (9,866,638) |
Interest income on marketable securities held in Trust Account | | | (506,550) | | | (203,947) |
Unrealized gain on Investments held in Trust Account | | | — | | | (888,375) |
Deferred taxes | | | — | | | 141,518 |
Forgiveness of unrelated vendor payables | | | (275,000) | | | (579,989) |
Changes in operating assets and liabilities: | | | | | | |
Prepaid expenses and other current assets | |
| 61,253 | |
| (122,397) |
Franchise tax payable | |
| (390,733) | |
| 150,829 |
Income taxes payable | | | (173,458) | | | 2,232 |
Due to related party | | | — | | | 125,000 |
Accounts payable and accrued expenses | | | 1,004,758 | | | (63,687) |
Net cash used in operating activities | |
| (1,462,079) | |
| (1,045,563) |
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Cash Flows from Investing Activities: | | | | | | |
Proceeds from Trust Account for redemptions | | | 10,657,185 | | | — |
Proceeds from Trust Account for tax payments | | | 853,261 | | | — |
Advances to Trust Account | | | (77,821) | | | — |
Net cash provided by investing activities | | | 11,432,625 | | | — |
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Cash Flows from Financing Activities: | |
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Redemption of Class A Common Stock | | | (10,657,185) | | | — |
Proceeds from related party loan | |
| 400,000 | |
| — |
Repayment of related party loan | | | (400,000) | | | — |
Proceeds from promissory note - related party | | | 393,720 | | | 840,000 |
Proceeds from promissory note - Liminatus | | | 350,000 | | | — |
Net cash (used in) provided by financing activities | |
| (9,913,465) | |
| 840,000 |
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Net Change in Cash | |
| 57,081 | |
| (205,563) |
Cash, beginning of period | |
| 280,640 | |
| 336,228 |
Cash, end of period | | $ | 337,721 | | $ | 130,665 |
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Supplemental disclosure of cash and non - cash operating and financing activities: | |
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Income taxes paid | | $ | 193,845 | | $ | — |
Excise tax payable | | $ | 103,587 | | $ | — |
Conversion of Class B common stock to Class A common stock | | $ | 690 | | $ | — |
Accretion of Class A common stock subject to redemption value | | $ | 479,371 | | $ | 1,109,165 |
Forgiveness of payable due to an affiliate of the Sponsor | | $ | — | | $ | 140,000 |
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
TRIBE CAPITAL GROWTH CORP I
NOTES TO THE FINANCIAL STATEMENTNOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
March 31, 2021
Note 1 — Organization and Business Operations
Iris Acquisition Corp (the “Company” or “Iris”) formerly known as Tribe Capital Growth Corp I (the “Company”)(name of the Company changed on July 27, 2022), is a blank check company incorporated as ain Delaware corporation on November 5, 2020. The Company was incorporated for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company has not selected any specific Business Combination target and it has not, nor has anyone on its behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with the Company.
As of March 31, 2021,September 30, 2023, the Company had not commenced any operations. All activity for the period from December 31,November 5, 2020 (inception) through March 31, 2021September 30, 2023 relates to the Company’s formation and the initial public offering described below (the “IPO”)., and subsequent to the IPO identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generategenerates non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO and unrealized gains and losses onand the change in fair value of its warrants. The Company has selected December 31 as its fiscal year end.
The Company’s sponsor is Iris Acquisition Holdings LLC (formerly known as Tribe Arrow Holdings I LLC,LLC), a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s IPO was declared effective on March 4, 2021 (the “Effective Date”). On March 9, 2021, the Company consummated the IPO of 27,600,000 units (the “Units”), which includes the full exercise by the underwriters of the over-allotment option to purchase an additional 3,600,000 Units, at $10.00 per Unit, generating gross proceeds of $276,000,000, which is discussed in Note 3.
Simultaneously with the closing of the IPO, the Company consummated the sale of 5,013,333 warrants (the “Private Warrants”) to the Sponsor and Cantor Fitzgerald & Co. (“Cantor”), the representative of the underwriters of the IPO, at a price of $1.50 per Private Warrant, generating gross proceeds of $7,520,000, which is discussed in Note 4. Each warrant (including the Private Warrants and the warrants included as part of the Units) entitles the holder to purchase 1one share of common stock at a price of $11.50 per share.
Transaction costs for the IPO amountedamounting to $15,627,893 consisting(consisting of $5,520,000 of underwriting discount, $9,660,000 of deferred underwriting discount, and $447,893 of other offering costs. Ofcosts ) were recognized, of which $606,622 was (i) allocated to the transaction costs, $606,622 ispublic warrants and Private Warrants and (ii) included in transaction costs on the statementstatements of operations, and $15,021,271 is included inwas charged directly to stockholders’ equity.
Following the closing of the IPO on March 9, 2021, $276,000,000 (approximately $10.00 per Unit) from the net proceeds of the sale of the Units in the IPO, including the proceeds from the sale of the Private Warrants, was deposited in a trust account (“Trust Account”), located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and will be invested only in U.S. government securities, within the meaning set forth in 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 which invest only in direct U.S. government treasury obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay franchise taxes, the proceeds from the IPO and the sale of the Private Warrants will not be released from the Trust Account until the earliest of (i) the completion of initial Business Combination, (ii) the redemption of the Company’s public shares if the Company does not complete an initial Business Combination within 24 months from the closing of the IPO, subject to applicable law, or (iii) the redemption of the Company’s public shares properly submitted in connection with a stockholder vote to amend its amended and restated certificate of incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of its public shares if the Company has not consummated an initial Business Combination within 24 months from the closing of the IPO or with respect to any other material provisions relating to stockholders’ rights or pre-initial Business Combination activity. The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders.
The Company will provide its public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) without a stockholder vote by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed Business Combination or conduct a tender offer will be made by the Company, in its sole discretion. The stockholders will be entitled to redeem their shares for a pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of
the initial Business Combination, including interest earned on the funds held in the Trust Account (which interest shall be net of income taxes payable), divided by the number of then outstanding public shares, subject to the limitations and on the conditions described herein. The amount in the Trust Account is initially approximately $10.00 per public share. The per share amount the Company will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the representative of the underwriters.
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The shares of common stock subject to redemption will beare recorded at a redemption value and classified as temporary equity upon the completion of the IPO, in accordance with Accounting Standards Codification (“ASC”) Topic 480, “DistinguishingDistinguishing Liabilities from Equity.”Equity (“ASC 480”). In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business Combination.
The Company will have onlyhad 24 months from the closing of the IPO to complete the initial Business Combination which has been extended to March 9, 2024 as described below (the “Combination Period”). However, if the Company is unable to complete the initial Business Combination within the Combination Period, the Company 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 (which interest shall be net of income 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 the public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, liquidate and dissolve, subject, in each case, to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The Sponsor, officers and directors have agreed to (i) waive their redemption rights with respect to any Founder Shares and public shares they hold in connection with the completion of the initial Business Combination, (ii) waive their redemption rights with respect to their Founder Shares and public shares in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation, (iii) waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares they hold if the Company fails to complete the initial Business Combination within the Combination Period, and (iv) vote any Founder Shares held by them and any public shares purchased during or after the IPO in favor of the initial Business Combination.
The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share, due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and the Company believes that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure that the Sponsor would be able to satisfy those obligations. None of the Company’s officers or directors will indemnify the Company for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Business Combination Agreement
On November 30, 2022, Iris Acquisition Corp, Iris Parent Holding Corp., a Delaware corporation (“ParentCo”), Liminatus Pharma, LLC, a Delaware limited liability company (“Liminatus”), Liminatus Pharma Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of ParentCo (“Liminatus Merger Sub”), and SPAC Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of ParentCo (“SPAC Merger Sub” and together with Liminatus Merger Sub, the “Merger Subs”), entered into a business combination agreement (as it may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”): (a) Liminatus Merger Sub will merge with and into Liminatus (the “Liminatus Merger”), with Liminatus surviving the Liminatus Merger as a direct wholly-owned subsidiary of ParentCo, and (b) simultaneously with the Liminatus Merger, SPAC Merger Sub will merge with and into Iris (the “SPAC Merger” and, together with the Liminatus Merger, the “Mergers”), with Iris surviving the SPAC Merger (the “SPAC Surviving Subsidiary”) as a direct wholly-owned subsidiary of ParentCo (the transactions contemplated by the foregoing clauses (a) and (b) the “Business Combination,” and together with the other transactions contemplated by the Business Combination Agreement, the “Transactions”).
Liminatus is a clinical stage life sciences and pre-revenue company developing Guanylyl Cyclase C (“GCC”) chimeric antigen receptor (“CAR”)-T products and a GCC cancer vaccine, known as Ad5.F35-hGCC-PADRE (“Ad5hGCC-PADRE”), which it has licensed from
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TRIBE CAPITAL GROWTHIRIS ACQUISITION CORP I
NOTES TO THEUNAUDITED CONDENSED FINANCIAL STATEMENT
MARCH 31, 2021STATEMENTS
LiquidityTargeted Diagnostics & Therapeutics, Inc. (“TDT”). The Company is developing GCC CAR-T cell therapies to treat metastatic gastrointestinal cancers. The safety of Ad5hGCC-PADRE was established in a successful U.S. Food and Capital ResourcesDrug Administration (“FDA”) phase I clinical trial in November 2015 and the vaccine began an FDA phase IIa clinical trial in the fourth calendar quarter of 2019.
The aggregate consideration to be paid in the Transactions to the direct or indirect owners of Liminatus will consist of 25.0 million shares of ParentCo’s common stock. The number of shares of the equity consideration was determined based on $10.00 per share value for ParentCo’s common stock.
Concurrently with the execution of the Business Combination Agreement, ParentCo and Iris have entered into an equity subscription agreement (the “PIPE Equity Subscription Agreement”) with one accredited investor (the “PIPE Investor”) pursuant to which the PIPE Investor has committed to purchase 1,500,000 shares of ParentCo Common Stock at a purchase price per share of $10.00 (the “PIPE Shares”), for an aggregate purchase price of $15,000,000 (the “PIPE Equity Investment”). The obligations to consummate the transaction contemplated by the PIPE Equity Subscription Agreement are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Business Combination Agreement.
Simultaneously with the PIPE Equity Subscription Agreement, ParentCo and Iris have entered into a convertible note subscription agreement (the “Convertible Note Subscription Agreement”) with one accredited investor (the “PIPE Subscriber”) pursuant to which the PIPE Subscriber has committed to subscribe for and purchase 8% convertible notes (the “Convertible Notes”) of and from ParentCo in an aggregate principal amount of $25,000,000 (the “Convertible Notes Investment”) due three years after the Closing of the Business Combination, with an initial conversion price of $11.50 per share of ParentCo Common Stock, which is subject to future downward adjustment based upon the market price of the publicly traded ParentCo Common Stock. The obligations to consummate the transactions contemplated by the Convertible Note Subscription Agreement are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Business Combination Agreement.
On December 20, 2022, the Company, filed with the Secretary of State of the State of Delaware an amendment (the “Extension Amendment”) to the Company’s liquidity needs upamended and restated certificate of incorporation to change the date by which the Company must consummate a business combination from March 9, 2023 to June 9, 2023 (subject to an additional three month extension at the discretion of the Board of Directors of the Company (the “Board”)). The Company’s stockholders approved the Extension Amendment at a special meeting of stockholders of the Company (the “Special Meeting”) on December 20, 2022.
In connection with the Special Meeting, stockholders holding 26,186,896 Public Shares properly exercised their right to redeem their shares (and did not withdraw their redemption) for cash at a redemption price of approximately $10.08 per share, for an aggregate redemption amount of $263,963,913. Following such redemptions, 1,413,104 Public Shares remained outstanding in the trust. During the nine months ended September 30, 2023, the redemption price was adjusted which resulted in the net payment of $298,431 of the second tranche redemption payment.
On May 30, 2023, the Board held a meeting and extended the date by which the Company must consummate a Business Combination for a three month period from June 9, 2023 to September 9, 2023. Consistent with this extension by the Board, the parties to the Business Combination Agreement amended the Business Combination Agreement on June 1, 2023, to extend the date by which the parties thereto can terminate the Business Combination Agreement if the transaction has not closed by that date (the “Outside Date”) from June 7, 2023, to September 30, 2023.
On August 16, 2023, the Company filed a preliminary proxy statement with the SEC containing a proposal to stockholders to amend the Company’s amended and restated certificate of incorporation to, among other things, extend the date by which the Company must consummate a business combination from September 9, 2023, to March 9, 2021 (the date2024. On August 14, 2023, the parties to the Business Combination Agreement amended the Business Combination Agreement to extend the Outside Date from September 30, 2023 to March 9, 2024.
On September 7, 2023, the Company filed with the Secretary of State of the IPO) had been satisfied throughState of Delaware an amendment to the Company's amended and restated certificate of incorporation to: (i) to change the date by which the Company must consummate a capital contributionbusiness combination to December 9, 2023 (the “Second Extension Amendment”) (subject to an additional three month extension at the discretion of the Board); (ii) to remove from the Sponsorcharter the limitation on share repurchases prior to the consummation of $25,000 (see Note 5)a business combination that would cause the Company's net tangible assets to be less than $5,000,001 following such repurchases, and the limitation that the Company shall not consummate a business combination if it would cause the Company's net tangible assets to be less than $5,000,001 either immediately prior or subsequent to the consummation of such business combination (the “NTA Amendment”); and (iii) to amend the charter to
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provide for the Founder Sharesright of a holder of shares of the Class B common stock of the Company, par value $0.0001 per share, to convert such shares into shares of the Company's Class A common stock on a one - for - one basis prior to the closing of a business combination (the “Founder Share Amendment” and, together with the Extension Amendment and the loan underNTA Amendment, the “Charter Amendments”).
The Company's stockholders approved the Charter Amendments at a special meeting of stockholders of the Company (the “ Second Special Meeting”) on September 7, 2023.
In connection with the Second Special Meeting, stockholders holding 1,006,495 Public Shares properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.29 per share, subject to adjustment for applicable taxes, including, but not limited to, franchise tax, excise tax and income tax, for an unsecured promissory note from the Sponsor for $300,000 (see Note 5). aggregate redemption amount of $10,358,754. Following such redemptions, 406,609 Public Shares remained outstanding.
Liquidity, Capital Resources and Going Concern
The promissory note from the Sponsor was fully repaidCompany consummated its IPO on March 9, 2021,2021. As of September 30, 2023 and December 31, 2022, the Company had $337,721 and $280,640 in its operating bank account, and a working capital deficit of $4,191,415 and $2,783,636, respectively, which excludes $56,400 and $447,133 of franchise taxes payable which may be paid from interest earned on the amount of $300,000.Trust Account. In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company with Working Capital Loans (see Note 5). At MarchAs of September 30, 2023 and December 31, 2021,2022, there was $38,252 outstanding under thewere no Working Capital Loans.Loans outstanding.
The Company consummated its IPO on March 9, 2021. AsIn connection with the Company’s assessment of March 31, 2021, the Company had approximately $1.0 milliongoing concern considerations in its operating bank account, and working capitalaccordance with FASB Accounting Standards Update (“ASU”) 2014-15, Disclosures of approximately $1.2 million.
Based on the foregoing,Uncertainties about an Entity’s Ability to Continue as a Going Concern, management believeshas determined that the Company has and will continue to incur significant costs in pursuit of its acquisition plans which raises substantial doubt about the Company’s ability to continue as a going concern. Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial Business Combination. If we are unable to complete our initial Business Combination because we do not have sufficient working capitalfunds available to us, we will be forced to cease operations and borrowing capacityliquidate the Trust Accounts. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet its needs throughour obligations.
In connection with the earlierCompany’s assessment of going concern considerations in accordance with FASB ASC 205-40, Presentation of Financial Statements—Going Concern, management has determined that if the consummation ofCompany is unable to complete a Business Combination or one year from this filing. Over this time period,by March 9, 2024, then the Company will cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution as well as the Company’s working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be using these funds for paying existing accounts payable, identifying and evaluating prospective initialrequired to liquidate after the Combination Period. The Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selectingAgreement provides that if the target business to merge with or acquire, and structuring, negotiating and consummatingtransaction is not closed by March 9, 2024, either party can terminate the Business Combination.Combination Agreement.
Note 2 — Revision of Financial Statements
On April 12, 2021, the Staff of the Securities and Exchange Commission issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled "Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies ("SPACs")" (the "SEC Statement"). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a Business Combination, which terms are similar to those contained in the warrant agreement between the Company and Continental Stock Transfer & Trust Company, as warrant agent (the "Warrant Agreement"). As a result of the SEC Statement, the Company reevaluated the accounting treatment of (i) the 6,900,000 public warrants that were included in the Units issued by the Company in its IPO and (ii) the 5,013,333 Private Warrants (see Note 4, Note 5 and Note 8). The Company previously accounted for the public warrants and the Private Warrants as components of equity.
In further consideration of the guidance in Accounting Standards Codification ("ASC") 815-40, Derivatives and Hedging; Contracts in Entity's Own Equity, the Company concluded that a provision in the Warrant Agreement related to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants should be recorded as derivative liabilities on the Company’s balance sheet and measured at fair value at inception (on the date of the IPO) and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the statement of operations in the period of change. In the Company’s 8-K dated March 15, 2021 the Company reported the value of the warrants in equity.
After consultation with the Company's independent registered public accounting firm, the Company's management and the audit committee of the Company's Board of Directors concluded that it is appropriate to revise the accounting of the Company’s public warrants and the Private Warrants.
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The following tables summarize the effect had the financial statements been restated on each financial statement line item as of the date indicated:
| | | | | | | | | |
|
| As Previously |
| | |
| | | |
| | Reported | | Adjustment | | As restated | |||
Balance Sheet at March 9, 2021 |
| |
|
| |
|
| |
|
Warrant liability | | $ | — | | $ | 18,322,046 | | $ | 18,322,046 |
Total Liabilities | |
| 10,412,720 | |
| 18,322,046 | |
| 28,734,766 |
Class A common stock subject to possible redemption, | |
| 262,680,960 | |
| (18,322,050) | |
| 244,358,910 |
Class A common stock | |
| 133 | |
| 183 | |
| 316 |
Additional paid-in capital | |
| 5,002,908 | |
| 918,674 | |
| 5,921,582 |
Accumulated deficit | |
| (3,728) | |
| (918,853) | |
| (922,581) |
Total Stockholders’ Equity | | $ | 5,000,003 | |
| 4 | |
| 5,000,007 |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Note 3 — Significant Accounting Policies
Basis of Presentation
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 10 of Regulation S-X. 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 presentation of the financial position, operating results and cash flows for the periods presented.
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The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s final prospectus related to the IPO dated March 4, 2021 andAnnual Report on Form 10-K as filed with the SEC on March 8, 2021, which contains the Company’s December 31, 2020 audited financial statements and notes thereto.April 18, 2023, as amended. The interim results for the three and nine months ended March 31, 2021September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 20212023 or for any future interim periods.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
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Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s condensed financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of condensed financial statements in conformity with US GAAP requires 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 revenues and expenses during the reporting period.periods. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liabilities. Actual results could differ from those estimates.
Cash and 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 had approximately $1.0 million in cash and did not have any cash equivalents as of MarchSeptember 30, 2023 and December 31, 2021.
Cash Held in Trust Account
At March 9, 2021,2022. As of September 30, 2023 and December 31, 2022, the Company had $276,000,000 inoperating cash (i.e. cash held outside the Trust Account) of $337,721 and $280,640, respectively.
Cash and Cash Equivalents Held in the Trust Account.Account
As of September 30, 2023, the Company had a total of $4,201,546 in the Trust Account held in cash equivalents. As of December 31, 2022, the Company had a total of $15,127,621 in the Trust Account held in cash.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the federal depository insurance coverage of $250,000. TheAs of September 30, 2023 and December 31, 2022, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
On May 1, 2023, JPMorgan Chase & Co. acquired all deposit accounts and substantially all the assets and assumed certain of the liabilities of First Republic Bank (“FRB”) following a seizure by the U.S. Federal Deposit Insurance Corporation. The Company maintained cash deposits with FRB. The Company experienced no material impact on its condensed financial statements or day-to-day operations as a result of these developments.
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Forgiveness of Unrelated Vendor Payables
The Company negotiated and certain vendors agreed to forgive outstanding payables. For the nine months ended September 30, 2023, the outstanding balance totaled $350,000 was settled for cash payments totaling $75,000. For the nine months ended September 30, 2022, the outstanding payables totaled $829,989 and was settled for cash payments totaled $250,000. As the Company was unable to provide payment in full, a compromise for a one - time lump - payment was agreed upon for each vendor. For the nine months ended September 30, 2023 and 2022, the amount forgiven of the outstanding payables totaled $275,000 and $579,989, respectively, and were recorded in the statements of operations.
Common Stock Subject to Possible Redemption
The Company accounts for its shares of common stock subject to possible redemption in accordance with the guidance in FASB ASC Topic 480 “Distinguishing Liabilities from Equity.”480. Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features 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) is classified as a component of temporary equity. At all other times, shares of common stock are classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value of $9.82 and $10.71 as of September 30, 2023 and December 31, 2022, respectively, as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.sheets.
Net (Loss) Income Per Common Stock
The Company complies with accounting and disclosure requirements of ASC Topic 260, Earnings Per Share. The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock. Earnings and losses are shared pro rata between the two classes of shares. The Company has not considered the effect of the warrants sold in the IPO and the Private Placement to purchase an aggregate of 11,913,333 of the Company’s Class A common stocks in the calculation of diluted income per share, since their exercise is contingent upon future events. As a result, diluted net (loss) income per share of common stock is the same as basic net income per share of common stock for the periods. Accretion of the carrying value of Class A common stocks to redemption value is excluded from net income per common stock because the redemption value approximates fair value. The table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income per share for each class of common stock:
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TRIBE CAPITAL GROWTHIRIS ACQUISITION CORP I
NOTES TO THEUNAUDITED CONDENSED FINANCIAL STATEMENT
MARCH 31, 2021STATEMENTS
Net Loss Per Share
Net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding for each of the periods. The calculation of diluted net loss per share of common stock does not consider the effect of the warrants issued in connection with the IPO since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.
The Company’s statements of operations include a presentation of net income per share for Class A Common Stock subject to possible redemption in a manner similar to the two-class method of loss per share of common stock. Net income per share of Class A common stock, basic and diluted, for redeemable Class A Common Stock is calculated by dividing the interest income earned on the Trust Account, by the weighted average number of shares of redeemable Class A Common Stock outstanding since original issuance. Net loss per share of common stock, basic and diluted, for non-redeemable Class A and Class B Common Stock is calculated by dividing the net loss, adjusted for income attributable to redeemable Class A Common Stock, by the weighted average number of shares of non-redeemable Class A and Class B Common Stock outstanding for the periods. Non-redeemable Class B Common Stock includes the Founder Shares as such shares of common stock does not have any redemption features and does not participate in the income earned on the Trust Account.
| | | |
| | For the three months ended | |
| | March 31, 2021 | |
Common stock subject to possible redemption | | | |
Numerator: Net income allocable to Class A common stock subject to possible redemption | | | |
Accretion of interest income on cash held in trust | | $ | 0 |
Less: interest available to be withdrawn for payment of taxes | | | (0) |
Net income allocable to Class A common stock subject to possible redemption | | $ | — |
Denominator: Weighted Average Redeemable Class A common stock | | | |
Redeemable Class A Common Stock, Basic and Diluted | | | 27,600,000 |
Basic and Diluted net income per share, Redeemable Class A Common Stock | | $ | 0.00 |
| | | |
Non-Redeemable Common Stock | | | |
Numerator: Net Income minus Redeemable Net Earnings | | | |
Net Loss | | $ | (1,963,413) |
Redeemable Net Earnings | | | 0 |
Non-Redeemable Net Loss | | $ | (1,963,413) |
Denominator: Weighted Average Non-Redeemable Common Stock | | | |
Basic and diluted weighted average shares outstanding, common stock | | | 6,900,000 |
Basic and diluted net loss per share, common stock | | $ | (0.28) |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| Three Months Ended | | Three Months Ended |
| Nine Months Ended | | Nine Months Ended | ||||||||||||||||
| | September 30, 2023 | | September 30, 2022 | | September 30, 2023 | | September 30, 2022 | ||||||||||||||||
|
| Class A |
| Class B |
| Class A |
| Class B |
| Class A |
| Class B |
| Class A |
| Class B | ||||||||
Basic and diluted net income per share | | | | | | | | | | | | | | | | | | | | | | | | |
Numerator: | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | | (78,794) | | | (245,097) | | | 2,185,181 | | | 546,295 | | | (143,719) | | | (595,904) | | | 8,207,913 | | | 2,051,978 |
Denominator: | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted weighted average shares outstanding | | | 1,977,122 | | | 6,150,000 | | | 27,600,000 | | | 6,900,000 | | | 1,603,176 | | | 6,647,253 | | | 27,600,000 | | | 6,900,000 |
Basic and diluted net income (loss) per common share | | $ | (0.04) | | $ | (0.04) | | $ | 0.08 | | $ | 0.08 | | $ | (0.09) | | $ | (0.09) | | $ | 0.30 | | $ | 0.30 |
Offering Costs
The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A—“Expenses of Offering”Offering. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the IPO. Offering costs are charged to stockholders’ equity or the statement of operations based on the relative value of the Public Warrants to the proceeds received from the Units sold upon the completion of the IPO. Accordingly, as of March 31, 2021, offeringOffering costs totalingtotaled $15,627,893 (consisting of $5,520,000 of underwriting discount, $9,660,000 of deferred underwriting discount, and $447,893 of other offering costs) were recognized, withof which $606,622 which was (i) allocated to the public warrants and Private Warrants and included in the statement of operations and $15,627,893 included in(ii) $15,021,271 was charged directly to stockholders’ equity.
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Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), approximates the carrying amounts represented in the accompanying balance sheet,sheets, excluding the warrants, primarily due to their short-term nature.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “DerivativesDerivatives and Hedging”Hedging (“ASC 815”). Derivative instruments are recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the condensed statements of operations. Derivative assets and liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company has determined that the warrants are a derivative instrument.
FASB ASC Topic 470-20, Debt with Conversion and Other Options, addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The Company applies this guidance to allocate IPO proceeds from the Units between Class A common stock and warrants, using the residual method by allocating IPO proceeds first to fair value of the warrants and then the Class A common stock.
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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. |
Income Taxes
The Company accounts for income taxes underin accordance with ASC Topic 740, Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the condensed financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards.carryforwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. The deferred tax assets were deemed to be immaterial as of March 31, 2021.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s condensed financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.There were no tax accruals relating to uncertain tax positions.
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The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 9, 2021.September 30, 2023 and December 31, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company has identified the United States as its only “major” tax jurisdiction. The Company is subject to income tax examinations by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
The provision forCompany files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions, and is subject to examination by the various taxing authorities. The Company was incorporated in the State of Delaware and is required to pay franchise taxes was deemed to be immaterial for the period from December 31, 2020 through March 31, 2021.State of Delaware on an annual basis.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, “Debt -- Debt --debt with Conversion and Other OptionsOptions” (Subtopic 470-20) and Derivatives“Derivatives and Hedging --Contracts- Contracts in Entity'Entity’s Own EquityEquity” (Subtopic 815-40): Accounting“Accounting for Convertible Instruments and Contracts in an Entity'Entity’s Own EquityEquity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU 2020-06 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. The Company adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU 2020-06 did not impact the Company'sCompany’s financial position, results of operations or cash flows.
The Company'sCompany’s 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 condensed financial statements.
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Risks and Uncertainties
Management is currently evaluatingcontinues to evaluate the impact of the COVID-19COVID - 19 pandemic on the Company's business objectives and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’sCompany's financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these condensed financial statements. The condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Additionally, as a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related economic sanctions, the Company’s ability to consummate a Business Combination, or the operations of a target business with which the Company ultimately consummates a Business Combination, may be materially and adversely affected. Further, the Company’s ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of this action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations and/or ability to consummate a Business Combination are not yet determinable. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
On December 27, 2022, the Treasury published Notice 2023-2, which provided clarification on some aspects of the application of the excise tax. The notice generally provides that if a publicly traded U.S. corporation completely liquidates and dissolves, distributions in such complete liquidation and other distributions by such corporation in the same taxable year in which the final distribution in complete liquidation and dissolution is made are not subject to the excise tax. Although such notice clarifies certain aspects of the excise tax, the interpretation and operation of aspects of the excise tax (including its application and operation with respect to SPACs) remain unclear and such interim operating rules are subject to change.
Because the application of this excise tax is not entirely clear, any redemption or other repurchase effected by us, in connection with a business combination, extension vote or otherwise, may be subject to this excise tax. Because any such excise tax would be payable by us and not by the redeeming holder, it could cause a reduction in the value of our Class A common stock, cash available with which to effectuate a business combination or cash available for distribution in a subsequent liquidation. Whether and to what extent we would be subject to the excise tax in connection with a business combination will depend on a number of factors, including (i) the structure of the business combination, (ii) the fair market value of the redemptions and repurchases in connection with the business combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with the business combination (or any other equity issuances within the same taxable year of the business combination) and (iv) the content of any subsequent regulations, clarifications, and other guidance issued by the Treasury. Further, the application of the excise tax in respect of distributions pursuant to a liquidation of a publicly traded U.S. corporation is uncertain and has not been addressed by the Treasury in regulations, and it is possible that the proceeds held in the trust account could be used to pay any excise tax owed by us in the event we are unable to complete a business combination in the required time and redeem 100% of our remaining Class A common stock in accordance with our amended and restated certificate of incorporation, in which case the amount that would otherwise be received by our public stockholders in connection with our liquidation would be reduced.
On September 7, 2023, the Company's stockholders redeemed 1,006,495 shares of Class A shares of common stock for a total of $10,358,754. As of September 30, 2023, the Company recorded $103,587 of excise tax liability calculated as 1% of the fair market value of the shares redeemed on September 7, 2023.
Note 4 — Initial Public Offering13
NOTE 3. INITIAL PUBLIC OFFERING
On March 9, 2021, the Company sold 27,600,000 units, which includes 3,600,000 units issued pursuant to the full exercise by the underwriters of their over-allotment option, at a purchase price of $10.00 per Unit, generating gross proceeds of $276,000,000. Each Unit consists of 1one share of Class A common stock, and one-fourth of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The warrants will become exercisable on the later of 30 days after the completion of the initial Business Combination or 12 months from the closing of the IPO, March 9, 2021, and will expire five years after the completion of the initial Business Combination, or earlier upon redemption or liquidation (see Note 7).
The Company paid an underwriting fee at the closing of the IPO of $5,520,000. As of March 9, 2021, an additional fee of $9,660,000 (see Note 6)7) was deferred and will become payable upon the Company’s completion of an initial Business Combination. The deferred portion of the fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its initial Business Combination.
All of the 27,600,000 shares of Class A common stock sold as part of the units in the IPO contain a redemption feature which allows for the redemption of such shares of Class A common stock in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s certificate of incorporation. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity.
On December 20, 2022, the Company, filed with the Secretary of State of the State of Delaware the Extension Amendment to the Company’s amended and restated certificate of incorporation to change the date by which the Company must consummate a business combination from March 9, 2023 to June 9, 2023 (subject to an additional three month extension at the discretion of the Board). The Company’s stockholders approved the Extension Amendment at the Special Meeting on December 20, 2022.
In connection with the Special Meeting, stockholders holding 26,186,896 Public Shares properly exercised their right to redeem their shares (and did not withdraw their redemption) for cash at a redemption price of approximately $10.08 per share, for an aggregate redemption amount of $263,963,913. Following such redemptions, 1,413,104 Public Shares remained outstanding in the trust.
On May 30, 2023, the Board held a meeting and extended the date by which the Company must consummate a Business Combination for a three month period from June 9, 2023 to September 9, 2023. Consistent with this extension by the Board, the parties to the Business Combination Agreement amended the Business Combination Agreement on June 1, 2023, to extend the Outside Date from June 7, 2023, to September 30, 2023.
On August 16, 2023, the Company filed a preliminary proxy statement with the SEC containing a proposal to stockholders to amend the Company’s amended and restated certificate of incorporation to, among other things, extend the date by which the Company must consummate a business combination from September 9, 2023, to March 9, 2024. On August 14, 2023, the parties to the Business Combination Agreement amended the Business Combination Agreement to extend the Outside Date from September 30, 2023 to March 9, 2024.
On September 7, 2023, the Company filed with the Secretary of State of the State of Delaware an amendment to the Company’s amended and restated certificate of incorporation to: (i) to change the date by which the Company must consummate a business combination to December 9, 2023 (subject to an additional three month extension at the discretion of the Board); (ii) to remove from the charter the limitation on share repurchases prior to the consummation of a business combination that would cause the Company’s net tangible assets to be less than $5,000,001 following such repurchases, and the limitation that the Company shall not consummate a business combination if it would cause the Company’s net tangible assets to be less than $5,000,001 either immediately prior or subsequent to the consummation of such business combination; and (iii) to amend the charter to provide for the right of a holder of shares of the Class B common stock of the Company, par value $0.0001 per share, to convert such shares into shares of the Company’s Class A common stock on a one-for-one basis prior to the closing of a business combination.
The Company’s stockholders approved the Charter Amendments the Second Special Meeting on September 7, 2023.
1214
TRIBE CAPITAL GROWTHIRIS ACQUISITION CORP I
NOTES TO THEUNAUDITED CONDENSED FINANCIAL STATEMENT
MARCH 31, 2021STATEMENTS
In connection with the Second Special Meeting, stockholders holding 1,006,495 Public Shares properly exercised their right to redeem their shares for cash at a redemption price of $10.29 per share, subject to adjustment for applicable taxes, including, but not limited to, franchise tax, excise tax and income tax, for an aggregate redemption amount of $10,358,754. Following such redemptions, 406,609 Public Shares remained outstanding.
The Class A common stock is subject to SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company recognizes changes in redemption value immediately as they occur. Immediately upon the closing of the IPO, the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of redeemable common stock resulted in charges against additional paid-in capital and accumulated deficit.
As of September 30, 2023 and December 31, 2022, the common stock reflected on the condensed balance sheets are reconciled in the following table:
| | | |
Class A common stock subject to possible redemption as December 31, 2022 |
| $ | 15,127,621 |
Less: Remeasurement of carrying value to redemption value | | | (298,845) |
Less: Adjustment to share price for shares redeemed in December 2022 | | | (305,008) |
Class A common stock subject to possible redemption as March 31, 2023 | | | 14,523,768 |
Less: Adjustment to share price for shares redeemed in December 2022 | | | 6,577 |
Class A common stock subject to possible redemption as June 30, 2023 | | | 14,530,345 |
Less: Remeasurement of carrying value to redemption value | | | (180,526) |
Less: Shares redeemed in September 2023 | | | (10,358,754) |
Class A common stock subject to possible redemption as September 30, 2023 | | $ | 3,991,065 |
Warrants — Each whole warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as discussed herein. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company'sCompany’s board of directors and, in the case of any such issuance to the initial stockholders or their affiliates, without taking into account any Founder Shares held by the initial stockholders or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company'sCompany’s Class A common stock during the 20 trading day period starting on the trading day after the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The warrants will become exercisable on the later of 12 months from the closing of the IPO or 30 days after the completion of its initial Business Combination, and will expire five years after the completion of the Company’s initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
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The Company has agreed that as soon as practicable, but in no event later than fifteen (15) business days after the closing of the initial Business Combination, it will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth (60th)(60th) business day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Company’s Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Once the warrants become exercisable, the Company may call the warrants for redemption for cash:
| ● | in whole and not in part; |
| ● | at a price of $0.01 per warrant; |
| ● | upon not less than 30 days’ prior written notice of redemption to each warrant holder (the “30-day redemption period”); and |
| ● | if, and only if, the closing price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing once the warrants become exercisable and ending three business days before the Company sends to the notice of redemption to the warrant holders. |
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If and when the warrants become redeemable by the Company for cash, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Note 5 — Private PlacementNOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the IPO, the Sponsor and Cantor purchased an aggregate of 5,013,333 Private Warrants at a price of $1.50 per Private Warrant, for an aggregate purchase price of $7,520,000, in a private placement. Each Private Warrant entitles the holder to purchase 1one share of common stock at a price of $11.50 per share. A portion of the proceeds from the private placement was added to the proceeds from the IPO held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Warrants will expire worthless.
The Private Warrants are identical to the public warrants included as part of the Units sold in the IPO except that they will be non-redeemable and exercisable on a cashless basis for as long as the Private Warrants are held by the Sponsor or Cantor, Fitzgerald & Co. (“Cantor”) the representative of the underwriters, or its permitted transferees. Additionally, for so long as the Private Warrants are held by Cantor or its designees or affiliates, they may not be exercised after five years from the commencement of sales of the IPO.
Note 6 — Related Party TransactionsNOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In December 2020, the Sponsor paid $25,000, or approximately $0.004 per share, to cover certain offering costs in consideration for 5,750,000 Class B common stock, par value $0.0001 (the “Founder Shares”). In February 2021, the Company effected a stock dividend of 0.2 shares for each share of Class B common stock outstanding, resulting in the Sponsor holding an aggregate of 6,900,000 Founder Shares (up to an aggregate of 900,000 of which were subject to forfeiture depending on the extent to which the underwriters’ over-allotment option is exercised). All shares and associated amounts have been retroactively restated to reflect the stock dividend. As a result of the underwriters’ election to fully exercise their over-allotment option, the 900,000 shares were no longer subject to forfeiture.
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On September 20, 2023, the Sponsor converted all of its Class B common stock on a one-for-one basis into Class A common stock. The Sponsor will not have any redemption rights in connection with the Converted Shares, and the Converted Shares will be subject to the restrictions on transfer entered into by the Sponsor in connection with the IPO.
The Sponsor has agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination and (B) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction after the initial Business Combination that results in all of its stockholders having the right to exchange their Class A common stock for cash, securities or other property (the “lock-up”). Notwithstanding the foregoing, if the closing price of the Company'sCompany’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, the Founder Shares will be released from the lock-up.
Promissory Note — Related Party
On December 31, 2020,May 27, 2022, the Sponsor agreed to loan the Company up to $300,000 to be used for a portion of the expenses of the IPO.working capital purposes. These loans are non-interest bearing, unsecured and are due atby December 31, 2022. As of September 30, 2023 and December 31, 2022, the outstanding note was not repaid.
On October 10, 2022, the Company issued an unsecured promissory note in the aggregate principal amount up to $550,000 to Iris Acquisition Holdings LLC, the Company’s Sponsor. Pursuant to the Note, the Sponsor agreed to loan to the Company an aggregate amount up to $550,000 payable on March 1, 2023. The Note does not bear interest. In the event that the Company does not consummate a business combination, the Note will be repaid only from amounts remaining outside of the Company’s trust account, if any. The proceeds of the Note will be used by the Company for working capital purposes.As of September 30, 2023 and December 31, 2022, the Company’s outstanding balance was $540,000 under this loan.
On December 20, 2022, the Company issued an unsecured promissory note in the aggregate principal amount up to $750,000 to the Company’s Sponsor. Pursuant to the Note, the Sponsor agreed to loan to the Company an aggregate amount up to $750,000 payable on the earlier of June 30, 202122, 2023 or the consummation of a business combination. The Note does not bear interest. Upon the closing of a business combination, the Proposed Public Offering. The loan wasCompany shall pay an amount equal to 150% of the principal amount. In the event that the Company does not consummate a business combination, the Note will be repaid upon the closingonly from amounts remaining outside of the IPO outCompany’s trust account, if any. The proceeds of the $1,000,000 of offering proceeds that has been allocated toNote will be used by the payment of offering expenses.Company for working capital purposes. As of March 9, 2021,September 30, 2023 and December 31, 2022, the Company had fully repaid theCompany’s outstanding balance ofwas $593,720 and $200,000, respectively under this loan.
The total balance outstanding on the promissory note.
14
TRIBE CAPITAL GROWTH CORP I
NOTES TO THE FINANCIAL STATEMENT
MARCHnotes - related party is $1,433,720 and $1,040,000 at September 30, 2023 and December 31, 20212022, respectively.
Related Party Loans
In addition, in order to fund working capital deficiencies or finance transaction costs in connection with an intended Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required on a non-interest bearing basis (“Working Capital Loans”). If the Company completes the initial Business Combination, the Company would repay the Working Capital Loans. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans, but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Warrants. During the nine months ended September 30, 2023, the Company obtained proceeds of $400,000 from the Sponsor to use for the payment of vendors. Before these proceeds were disbursed to vendors, Management decided to repay the outstanding balance in full. As of MarchSeptember 30, 2023 and December 31, 2021,2022, the Company had $38,252 inno borrowings under the Working Capital Loans.
Administrative Service FeeSupport Agreement
Subsequent to the closing of the IPO, the Company will paybegan paying an affiliate of the Sponsor, Tribe Capital Markets LLC (“Tribe”) $10,000 per month for office space, secretarial and administrative services provided to members of the Company’s management team. Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees.
17
For the three and nine months ended September 30, 2023, the Company did not incur any expenses. For the three and nine months ended September 30, 2022, the Company incurred $0 and $50,000, respectively of administrative service fees, respectively, which are included in formation and operating costs on the condensed statements of operations. As of September 30, 2023 and December 31, 2022, $0 related to this agreement is recorded in due to related party on the condensed balance sheets. As of September 30, 2023 and December 31, 2022, the due to related party consists of $75,000 from the Sponsor to a vendor to pay for consulting services on behalf of the Company.
On June 1, 2022, Tribe withdrew as a member of the Sponsor. In conjunction with its withdrawal as a member, Tribe resigned as the managing member of the Sponsor effective June 1, 2022. Members holding a majority of the membership interest in the Sponsor appointed Arrow Multi Asset Fund – Arrow SP6 (“Arrow”) as the managing member of the Sponsor effective June 1, 2022. Following the withdrawal of Tribe as a member of the Sponsor, the $140,000 of administrative expense payable as of June 1, 2022 was forgiven and reclassified as a capital contribution.
NOTE 6. LOAN PAYABLE - LIMINATUS
On October 4, 2023, the Company issued an unsecured promissory note in the aggregate principal amount up to $1,500,000 to Liminatus. Pursuant to the Note, 7 — Commitmentsthe Sponsor agreed to loan to the Company an aggregate amount up to $1,500,000 payable following the earlier of (i) closing of the Business Combination, as defined in the Business Combination Agreement dated November 30, 2022, or (ii) thirty (30) days following the termination of the Business Combination Agreement; provided, however, in the event the Company commences liquidation proceedings, this Note shall be cancelled and Contingenciesall amounts due, including all principal and accrued interest, shall be forgiven. Interest on the Note compounds annually and accrues on each unpaid Advance made under this Note at the rate of 5% per annum. On August 2, 2023 and September 11, 2023, Liminatus advanced amounts totaling $350,000, which are acknowledged as principal under the Note. As of September 30, 2023, the Company's outstanding balance was $350,000 from the advances.
NOTE 7. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the (i) Founder Shares, which were issued in a private placement prior to the closing of the IPO, (ii) Private Warrants, which were issued in a private placement simultaneously with the closing of the IPO and the shares of Class A common stock underlying such Private Warrants and (iii) Private Warrants that may be issued upon conversion of Working Capital Loans will have registration rights to require the Company to register a sale of any of the Company’s securities held by them pursuant to a registration rights agreement to be signed prior to or on the Effective Date. The holders of these securities are entitled to make up to three demands, excluding Form S-3 demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s completion of its initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters are entitled to aan underwriting discount of 2% (or $5,520,000) of the gross proceeds of the IPO and deferred underwriting discount of 3.5% ($9,660,000)(or $9,660,000) of the gross proceeds of the IPO upon the completion of the Company’s initial Business Combination.
Note 8 — Stockholder’s EquityNOTE 8. STOCKHOLDERS’ DEFICIT
Preferred stock—The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 and with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of MarchAt both September 30, 2023 and December 31, 2021,2022, there were no shares of preferred stock issued or outstanding.outstanding.
Class A Common Stockcommon stock—The Company is authorized to issue 280,000,000 shares of Class A common stock with a par value of $0.0001 per share. At both March 31, 2021As of September 30, 2023 and December 31, 2020,2022, there were 3,246,4217,306,609 and 1,413,104 shares of Class A common stock outstandingexcluding 24,353,579issued and 0outstanding, and only 406,609 shares respectively, of Class A common stockare subject to possible redemption.
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Class B Common Stockcommon stock—The Company is authorized to issue 20,000,000 Class B common stock with a par value of $0.0001 per share. At both March 31, 2021September 30, 2023 and December 31, 2020,2022, there were 0 and 6,900,000 shares of Class B common stock outstanding.outstanding.
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Stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of the Company’s stockholders except as required by law. Unless specified in the Company'sCompany’s amended and restated certificate of incorporation, or as required by applicable provisions of the DGCLDelaware General Corporation Law or applicable stock exchange rules, the affirmative vote of a majority of the Company'sCompany’s shares of common stock that are voted is required to approve any such matter voted on by its stockholders.
The Class B common stock are convertible at any time and from time to time at the option of the holder thereof and will automatically convert into Class A common stock upon the consummation of the initial Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection with the initial Business Combination, the number of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20%83% of the total number of Class A common stock outstanding after such conversion, including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding (i) any shares of Class A common stock redeemed by public stockholders in connection with the initial Business Combination and (ii) any Class A common stock or equity-linked securities exercisable for or convertible into Class A common stock issued, or to be issued, to any seller in the initial Business Combination and any Private Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans; provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.
On September 20, 2023, the Sponsor converted all of its Class B common stock on a one - for - one basis into Class A common stock (such shares, the “Converted Shares”). The Sponsor will not have any redemption rights in connection with the Converted Shares, and the Converted Shares will be subject to the restrictions on transfer entered into by the Sponsor in connection with the IPO.
Note 9 —Recurring Fair Value MeasurementsNOTE 9. INCOME TAXES
Investment HeldThe Company’s effective tax rate for the nine months ended September 30, 2023 and 2022 was (2.8)% and 1.4%, respectively. The Company’s effective tax rate for the three months ended September 30, 2023 and 2022 was (7.9)% and 5.0%, respectively. The Company’s effective tax rate differs from the statutory income tax rate of 21% primarily due to the changes in Trust Accountthe fair value of warrant liabilities, non-deductible transaction costs, prior year return to provision adjustment, and change in the valuation allowance. The Company has used a discrete effective tax rate method to calculate taxes for the nine months ended September 30, 2023. The Company believes that, at this time, the use of the discrete method for the nine months ended September 30, 2023 is appropriate as the estimated annual effective tax rate method.
NOTE 10. RECURRING FAIR VALUE MEASUREMENTS
As of MarchSeptember 30, 2023 and December 31, 2021, the investments in2022, the Company’s Trust Account consisted of $276,000,000 in cash.
Fair values of its investments are classified as Level 1 utilizing quoted prices (unadjusted) in active markets for identical assets.
Warrant Liability
At March 31, 2021, the Company’s warrants liability waswarrant liabilities were valued at $18,981,991.$499,920 and $942,646, respectively. Under the guidance in ASC 815-40, the warrants do not meet the criteria for equity treatment. As such, the warrants must be recorded on the condensed balance sheetsheets at fair value. This valuation is subject to re-measurement at each balance sheet date. With each re-measurement, the warrant valuation will be adjusted to fair value, with the change in fair value recognized in the Company’s statementcondensed statements of operations.
Recurring Fair Value Measurements
All of the Company’s permitted investments consist of cash.are held in a money market fund. Fair values of these investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets. The Company’s warrant liability for the Private Placement Warrants is based on a valuation model utilizing management judgment and pricing inputs from observable and unobservable markets with less volume and transaction frequency than active markets. Significant deviations from these estimates and inputs could result in a material change in fair value. The fair valuesvalue of the Private Placement andWarrant liability is classified within Level 3 of the fair value hierarchy. The Company’s warrant liability for the Public Warrants is based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. The fair value of the Public Warrant liability is classified within Level 1 of the fair value hierarchy. During the year ended December 31, 2021, the Public Warrants were reclassified from a Level 3 to a Level 1 classification.
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TRIBE CAPITAL GROWTHIRIS ACQUISITION CORP I
NOTES TO THEUNAUDITED CONDENSED FINANCIAL STATEMENT
MARCH 31, 2021STATEMENTS
Warrant liabilities are classified within Level 3 of the fair value hierarchy. For the period ending March 31, 2021 there were to transfers into or out of Level 1, Level 2 or Level 3 classification.
The following table presents fair value information as of MarchSeptember 30, 2023 and December 31, 20212022 of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
| | | | | | | | | | | |
|
| |
| Quoted Prices in |
| Significant Other | | Significant Other | |||
| | Carrying | | Active Markets | | Observable Inputs | | Unobservable Inputs | |||
| | Value | | (Level 1) | | (Level 2) | | (Level 3) | |||
Assets: | | | | | | | | | | | |
Investments held in Trust Account – |
|
| | |
|
| |
| | |
|
U.S. Treasury Bills | | 0 | | $ | 276,000,000 | | $ | — | | $ | — |
Liabilities: | | | | | | | | | | | |
Private Warrants | | — | | | — | | | — | | | 8,092,670 |
Public Warrants | | 1 | | | — | | | — | | | 10,889,321 |
| | | | | | | | | | | | |
| | Amount at | | | | | | | | | | |
Description |
| Fair Value |
| Level 1 |
| Level 2 |
| Level 3 | ||||
September 30, 2023 (Unaudited) | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | |
Cash equivalents held in Trust Account: |
| $ | 4,201,546 | | $ | 4,201,546 |
| $ | — | | $ | — |
Liabilities: | | | | | | | | | | | | |
Public Warrants | | $ | 276,000 | | $ | 276,000 | | $ | — | | $ | — |
Private Warrants | | $ | 223,920 | | $ | — | | $ | — | | $ | 223,920 |
December 31, 2022 | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | |
Cash held in Trust Account: | | $ | 15,127,621 | | $ | 15,127,621 | | $ | — | | $ | — |
Liabilities: | | | | | | | | | | | | |
Public Warrants | | $ | 524,400 | | $ | 524,400 | | $ | — | | $ | — |
Private Warrants | | $ | 418,246 | | $ | — | | $ | — | | $ | 418,246 |
Measurement
-The Company established the initial fair value for the warrants on March 9, 2021, the date of the consummation of the IPO. On MarchSeptember 30, 2023 and December 31, 20212022, the fair value was remeasured. For both periods, neitherIn May 2021, the public warrants nor the PrivatePublic Warrants were separately traded in the open market and the valuation for the Public Warrants was based on an open market. As such,unadjusted quoted prices at September 30, 2023 and December 31, 2022. For September 30, 2023 and December 31, 2022, the Company used a Monte Carlo simulation model to value the warrants. The Company allocated the proceeds received from (i) the sale of Units (which is inclusive of one share of Class A common stock and one-fourth of one public warrant), (ii) the sale of Private Warrants, and (iii) the issuance of Class B common stock, first to the warrants based on their fair values as determined at initial measurement, with the remaining proceeds allocated to Class A common stock subject to possible redemption (temporary equity), Class A common stock (permanent equity) and Class B common stock (permanent equity) based on their relative fair values at the initial measurement date. The warrants were classified within Level 3 of the fair value hierarchy at the measurement dates due to the use of unobservable inputs.Placement Warrants.
The key inputs into the Monte Carlo simulation model for the Warrants were as follows at initial measurement, September 30, 2023 and at MarchDecember 31, 2021:2022:
| | March 9, 2021 (Initial | | | | | | | | | | |
Input |
| Measurement) |
| March 31, 2021 | | |||||||
| | | | | | |||||||
|
| September 30, 2023 |
| |
| |||||||
| | (Unaudited) | | December 31, 2022 | | |||||||
Risk-free interest rate | | | 1.09 | % | | 1.22 | % | | 5.48 | % | 4.75 | % |
Expected term (years) | | | 6.31 | | | 6.25 | | | 0.83 | | 0.69 | |
Expected volatility | | | 24.3 | % | | 24.4 | % | | 4.2 | % | 11.1 | % |
Exercise price | | $ | 11.50 | | $ | 11.50 | | |||||
Exercise Price | | 11.50 | | 11.50 | | |||||||
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The change in the fair value of the warrant liabilities classified as Level 3 for the periodthree and nine months ended March 31, 2021September 30, 2023 and the year ended December 31,2022 is summarized as follows:
| | | |
Fair value at issuance March 9 2021 |
| $ | 18,322,046 |
Change in fair value | |
| 659,945 |
Fair Value at March 31, 2021 | | $ | 18,981,991 |
| | | |
Fair value at January 1, 2022 |
| $ | 4,594,820 |
Change in fair value | | | (1,977,860) |
Fair value at March 31, 2022 | | | 2,616,960 |
Change in fair value | | | (1,789,760) |
Fair value at June 30, 2022 | | | 827,200 |
Change in fair value | | | (536,427) |
Fair value at September 30, 2022 | |
| 290,773 |
Change in fair value | | | 127,473 |
Fair value at December 31, 2022 | | | 418,246 |
Change in fair value | | | 42,015 |
Fair value at March 31, 2023 | | | 460,261 |
Change in fair value | | | (255,943) |
Fair value at June 30, 2023 | | | 204,318 |
Change in fair value | | | 19,602 |
Fair value at September 30, 2023 | | $ | 223,920 |
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Note 10 — Subsequent EventsIRIS ACQUISITION CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 11. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed financial statements were issued. Based upon this review, other than described below, the Company did not identify any subsequent events that have occurred that would have required adjustment or disclosure in the unaudited condensed financial statements.
On October 11, 2023, the Company executed a Fee Reduction Agreement with the underwriters to reduce the deferred underwriting discount of $9,660,000 to $8,000,000 in the event that the business combination with Liminatus is consummated. Pursuant to the terms of the agreement, the reduced deferred underwriting discount shall be payable by the Company to the underwriters in amount $1,000,000 in cash and $7,000,000 of the common equity securities of the public entity that survives the transaction.
On November 27, 2023, December 11, 2023, December 21, 2023, and January 5, 2023, the Company obtained additional advances under the Liminatus unsecured promissory note totaling $1,168,500, which resulted in a total outstanding principal balance of $1,518,500.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Tribe Capital Growth Corp I.Iris Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Iris Acquisition Holdings LLC (formerly known as Tribe Arrow Holdings I LLC.LLC). The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
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 and Section 21E of the United States Securities Exchange Act of 1934 (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 Form 10-QQuarterly Report 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 U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov.www.sec.report. 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 on November 5, 2020 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (“businesses. On November 30, 2022, we executed a Business Combination”).Combination Agreement with Liminatus Pharma, LLC. We have not selected any specific target forintend to effectuate the business combination using cash from the proceeds of our initial Business Combinationpublic offering and the private placement of the private placement warrants, the proceeds of the sale of our shares in connection with our business combination (pursuant to forward purchase agreements or backstop agreements we have not, nor has anyone onmay enter into following the consummation of our behalf, engaged in any substantive discussions directlyinitial public offering or indirectly, with anyotherwise), shares issued to the owners of the target, with respectdebt issued to an initial Business Combination with us.bank or other lenders or the owners of the target, or a combination of the foregoing. The registration statement for the Company’s initial public offeringour IPO was declared effective by the U.S. Securities and Exchange CommissionSEC on March 4, 2021. On March 9, 2021, the Companywe consummated the IPO of 27,600,000 units including 3,600,000 units issued pursuant to the exercise(the “Units”) at a price of the underwriters’ over-allotment option in full,$10.00 per Unit, for total gross proceeds of $276,000,000. Each unitUnit consists of one share of classClass A common stock, of the Company,$0.0001 par value, $0.0001 per share, and one-fourth of one redeemable warrant of the Company, with each whole warrant entitling theits holder thereof to purchase one share of class A common stock for $11.50 per share. The units were sold at a price of $10.00$11.50 per Unit.share.
On March 9, 2021, simultaneouslySimultaneously with the closing of the IPO, pursuant to the CompanyWarrant Purchase Agreements, we completed the private sale of an aggregate of 5,013,333 warrantsWarrants (each a “Private Placement Warrant”) to the Sponsor and Cantor Fitzgerald & Co. at a purchase price of $1.50 per Private Warrant, generating gross proceeds to the Company of $7,520,000.
A total of $276,000,000, comprised of $268,480,000 of the proceeds from the IPO (which amount includes $9,660,000 of the underwriters’ deferred discount) and $7,520,000 of the proceeds of thePlacement Warrant. The sale of the Private Placement Warrants generated gross proceeds to us of $7,520,000.
On June 1, 2022, Tribe Capital Markets LLC (“Tribe”) withdrew as a member of our Sponsor. In connection with the withdrawal of Tribe as a member of our Sponsor: (1) on July 26, 2022 the following actions occurred: (i) Arjun Sethi resigned in his capacity as our Chairman and Chief Executive Officer, (ii) Henry Ward resigned from his role as an independent director of the Company, (iii) Omar Chohan resigned from his role as our Chief Financial Officer, and (v) Ted Maidenberg resigned from his role as our Secretary; and (2) on July 27, 2022 the following actions occurred (i) our Sponsor changed its name from Tribe Arrow Holdings I LLC, to Iris Acquisition Holdings LLC, and (ii) our strategy to identify a target business was placedrevised as described in a U.S.-based trust account (“Trust Account”) maintained by Continental Stock Transfer & Trust Company, acting as trustee.Item 8.01 of its Form 8-K filed on July 27, 2022. The director and officer departures were not the result of any disagreement between us and such individuals on any matter relating to our operations, policies, or practices.
1922
Effective July 26, 2022, the board of directors of the Company appointed (i) Sumit Mehta to serve as our Chief Executive Officer, (ii) Lisha Parmar to serve as our Chief Financial Officer, and (iii) Omkar Halady to serve as our Vice President. Also, Rohit Nanani was elevated from member to Chairman of the board of directors of the Company.
On August 30, 2022, the board appointed Manish Shah to serve as a director until our next annual meeting of stockholders.
On December 20, 2022, the Company, filed with the Secretary of State of the State of Delaware the Extension Amendment to the Company’s amended and restated certificate of incorporation to change the date by which the Company must consummate a business combination from March 9, 2023 to June 9, 2023 (subject to an additional three month extension at the discretion of the Board). The Company’s stockholders approved the Extension Amendment at the Special Meeting on December 20, 2022.
In connection with the Special Meeting, stockholders holding 26,186,896 Public Shares properly exercised their right to redeem their shares (and did not withdraw their redemption) for cash at a redemption price of approximately $10.08 per share, for an aggregate redemption amount of $263,963,913. Following such redemptions, 1,413,104 Public Shares remained outstanding in the trust.
On April 26, 2023, Dr. Borade, an Audit Committee member, notified the Company of his intent to resign as a member of the Board effective April 26, 2023. Dr. Borade's decision to resign was not the result of any dispute or disagreement with the Company on any matter relating to the Company's operation, policies (including accounting or financial policies) or practices.
On May 30, 2023, the Board appointed Nicholas Fernandez to serve as a director.
On May 30, 2023, the Board held a meeting and extended the date by which the Company must consummate a Business Combination for a three month period from June 9, 2023 to September 9, 2023. Consistent with this extension by the Board, the parties to the Business Combination Agreement amended the Business Combination Agreement on June 1, 2023, to extend the date by which the parties thereto can terminate the Business Combination Agreement if the transaction has not closed by that date (the “Outside Date”) from June 7, 2023, to September 30, 2023.
On August 16, 2023, the Company filed a preliminary proxy statement with the SEC containing a proposal to stockholders to amend the Company’s amended and restated certificate of incorporation to, among other things, extend the date by which the Company must consummate a business combination from September 9, 2023, to March 9, 2024. On August 14, 2023, the parties to the Business Combination Agreement amended the Business Combination Agreement to extend the Outside Date from September 30, 2023 to March 9, 2024.
On September 7, 2023, the Company filed with the Secretary of State of the State of Delaware an amendment to the Company’s amended and restated certificate of incorporation to: (i) to change the date by which the Company must consummate a business combination to December 9, 2023 (the “ Second Extension Amendment”) (subject to an additional three month extension at the discretion of the Board); (ii) to remove from the charter the limitation on share repurchases prior to the consummation of a business combination that would cause the Company’s net tangible assets to be less than $5,000,001 following such repurchases, and the limitation that the Company shall not consummate a business combination if it would cause the Company’s net tangible assets to be less than $5,000,001 either immediately prior or subsequent to the consummation of such business combination (the “NTA Amendment”); and (iii) to amend the charter to provide for the right of a holder of shares of the Class B common stock of the Company, par value $0.0001 per share, to convert such shares into shares of the Company’s Class A common stock on a one-for-one basis prior to the closing of a business combination (the “Founder Share Amendment” and, together with the Extension Amendment and the NTA Amendment, the “Charter Amendments”).
The Company’s stockholders approved the Charter Amendments at a special meeting of stockholders of the Company (the “ Second Special Meeting”) on September 7, 2023.
In connection with the Second Special Meeting, stockholders holding 1,006,495 Public Shares properly exercised their right to redeem their shares for cash at a redemption price of $10.29 per share, subject to adjustment for applicable taxes, including, but not limited to, franchise tax, excise tax and income tax, for an aggregate redemption amount of $10,358,754. Following such redemptions, 406,609 Public Shares remained outstanding.
On September 20, 2023, the Sponsor converted all of its Class B common stock on a one-for-one basis into Class A common stock. The Sponsor will not have any redemption rights in connection with the Converted Shares, and the Converted Shares will be subject to the restrictions on transfer entered into by the Sponsor in connection with the IPO.
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Results of Operations
We have neither engaged in any operations notnor generated any revenues to date. Our only activities for the period from November 5, 2020 (inception) through March 31, 2021September 30, 2023 were organizational activities, those necessary to prepare for theour IPO, and identifyingidentify a target company for our initial Business Combination. We generate non-operating interest income in the form offrom cash and cash equivalents and interest income on marketable securities held in the Trust Account.Account and changes in the value of warrant liabilities. We incur expenses as a result of being a public company (for legal, financial report,reporting, accounting and auditing compliance)auditing), as well as for due diligence expenses. We will not be generating any operating revenues until the closing and completion of our initial Business Combination.
For the three months ended March 31, 2021,September 30, 2023, we had a net loss of approximately $2.0 million,$323,891, which consisted of approximately $0.4 millionincome of $45,822 unrealized loss on fair value of warrants, $676,321 of formation and offering costs, and provision for income taxes of $23,601 and partially offset by $421,853 of interest income on marketable securities held in Trust Account.
For the three months ended September 30, 2022, we had a net income of $2,731,476, which consisted of income of $579,989 for the forgiveness of unrelated vendor payables, a $1,261,428 unrealized gain on fair value of warrants, unrealized gain on investments held in the Trust Account of $1,256,457 and interest income on investments held in the Trust Account of $36,037, partially offset by $258,685 of formation and operating costs $0.7 millionand provision for income taxes of $143,750.
For the nine months ended September 30, 2023, we had a net loss of $739,623, which consisted of $1,943,512 of formation and offering costs, offset by an unrealized lossgain on change in fair value of warrants, $0.6 millionwarrant liabilities of $442,726, forgiveness of unrelated payables for $275,000, interest income on marketable securities held in transaction costs,the Trust Account of $506,550 and $0.3 million in excessincome tax provision of $20,387.
For the nine months ended September 30, 2022, we had a net income of $10,259,891, which consisted of an unrealized gain on the fair value of Private Warrants.warrant of $9,866,638 and interest income on marketable securities held in the Trust Account of $203,947, unrealized gain on investments held in the Trust Account of $888,375, and forgiveness of unrelated vendor payables of $579,989 partially offset by $1,135,308 of formation and operating costs and provision of income taxes of $143,750.
Liquidity and Capital Resources
We consummated our IPO on March 9, 2021. As of MarchSeptember 30, 2023 and December 31, 2021, the Company2022, we had approximately $1.0 million$337,721 and $280,640 in itsour operating bank account, and working capital deficit of approximately $1.2 million.$4,191,415 and $2,783,636, which excludes franchise taxes payable which may be paid from interest earned on the Trust Account. In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, theour Sponsor or its affiliates,an affiliate of the Sponsor or certain of our officers and directors or their affiliates may, but are not obligated to, loanprovide us funds as may be required. If we completeWorking Capital Loans. As of September 30, 2023 and December 31, 2022, there were no Working Capital Loans outstanding.
For the nine months ended September 30, 2023, net cash used in operating activities was $1,462,079, which was due to our net loss of $739,623, unrealized gain on fair value of warranty liability of $442,726, forgiveness of unrelated vendor payables of $275,000, and interest earned on cash and Investments held in Trust Account of $506,550, partially offset by changes in operating assets and liabilities of $501,820.
For the nine months ended September 30, 2022, net cash used in operating activities was $1,045,563, which was due to a Business Combination, we would repay such loaned amounts. In the event that a Business Combination does not close, we may use a portionunrealized gain on fair value of the working capitalwarrant liability of $9,866,638, an unrealized gain on investments held outsidein the Trust Account to repay such loaned amounts but noof $888,375, interest earned on investments held in the Trust Account of $203,947, and forgiveness of unrelated vendor payables of $579,989, which was partially offset by our net income of $10,259,891, deferred taxes of $141,518, and a change in operating assets and liabilities of $91,977.
For the nine months ended September 30, 2023, there was cash provided by investing activities of $11,432,625, which was the result of cash proceeds from our Trust Account would befor tax payments and redemption adjustments of $11,510,446, offset by advances to the Trust Account of $77,821.
For the nine months ended September 30, 2022, there were no cash flows from investing activities.
For the nine months ended September 30, 2023, net cash used in financing activities was $9,913,465, which was a result of Class A Common Stock that was redeemed in December 2022 and September 2023 for such repayment. Up to $1,500,000$10,657,185, which was offset by proceeds from the promissory note from a related party for $393,720 and the proceeds from the promissory note from Liminatus for $350,000.
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For the nine months ended September 30, 2022, net cash provided by financing activities was $840,000 which was a result of the post-Business Combination entity atproceeds from the promissory note from a pricerelated party for $840,000.
In connection with the Company’s assessment of $1.50 per warrant at the optiongoing concern considerations in accordance with FASB Accounting Standards Update (“ASU”) 2014-15, Disclosures of the lender. Such warrants would be identicalUncertainties about an Entity’s Ability to the Private Warrants.
Based on the foregoing,Continue as a Going Concern, management believeshas determined that the Company has and will have sufficient working capital and borrowing capacitycontinue to meetincur significant costs in pursuit of its needs throughacquisition plans which raises substantial doubt about the earlier of the consummation ofCompany’s ability to continue as a Business Combination or one year from this filing.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business prior to our initial Business Combination. However, if the estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination.going concern. Moreover, we may need to obtain additional financing either to complete aour initial Business Combination or because we may become obligated to redeem a significant number of our public sharesPublic Shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial Business Combination. If we are unable to complete aour initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account.Accounts. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
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TableIn connection with the Company’s assessment of Contentsgoing concern considerations in accordance with FASB ASC 205-40, Presentation of Financial Statements—Going Concern, management has determined that if the Company is unable to complete a Business Combination by September 30, 2023 (the “Combination Period”), then the Company will cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution as well as the Company’s working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after the Combination Period. On August 14, 2023, the parties to the Business Combination Agreement amended the Business Combination Agreement to extend the Combination Period from September 30, 2023 to March 9, 2024.
Critical Accounting Policies and Estimates
This management’sManagement’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our unaudited condensed financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have identified the following as our critical accounting policies:
Investments HeldCommon Stock Subject to Possible Redemption
We account for shares of common stock subject to possible redemption in accordance with the Trust Account
Our portfolioguidance in FASB Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity. Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of investments held in the Trust Account will be invested only in U.S. government treasury obligations with a maturityholder or subject to redemption upon the occurrence of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 underuncertain events not solely within the Investment Company ActCompany’s control) is classified as temporary equity. At all other times, shares of 1940, as amended (the “Investment Company Act”), which invest only in direct U.S. government treasury obligations. The investments held in the Trust Accountcommon stock are classified as trading securities. Trading securitiesa component of stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the condensed balance sheets.
Derivative Financial Instruments
We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, Derivatives and Hedging. Derivative instruments are recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the condensed statements of operations. Derivative assets and liabilities are classified in the balance sheet at fair value atas current or non-current based on whether or not net-cash settlement or conversion of the endinstrument could be required within 12 months of each reporting period. Gainsthe balance sheet date. We have determined the warrants are a derivative instrument.
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ASC 470-20, Debt with Conversion and losses resultingOther Options, addresses the allocation of proceeds from the change inissuance of convertible debt into its equity and debt components. We apply this guidance to allocate IPO proceeds from the Units between Class A common stock and warrants, using the residual method by allocating IPO proceeds first to fair value of these securities is included in net gain on investments held in Trust Account in the accompanying unaudited condensed statement of operations. The estimated fair values of investments held inwarrants and then the Trust Account are determined using available market information.Class A common stock.
Recent Accounting Standards
Our management does not believe that any recently issued, but not yet effective, accounting pronouncements,standards if currently adopted would have a material effect on our unauditedthe accompanying condensed financial statements.
JOBS Act
On April 5, 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 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 IPO or until we are no longer an “emerging growth company,” whichever is earlier.
Off-Balance Sheet Arrangements
As of March 31, 2021, we did not have any off-balance sheet arrangements as described in Item 303(b) of Regulation S-K.
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Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of our Sponsor a monthly fee of $10,000 for office space, utilities and secretarial and administrative support. We began incurring these fees on November 5, 2020 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of March 31, 2021, we were not subject to any significant market or interest rate risk. The net proceeds of our IPO held in the Trust Account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.Risk.
We haveare a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not engaged in any hedging activities since our inception, and we do not expectrequired to engage in any hedging activities with respect toprovide the market risk to which we are exposed.
information otherwise required under this item.
Item 4. Controls and ProceduresProcedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision andDisclosure controls are procedures that are designed with the participationobjective of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended March 31, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concludedensuring that during the period covered by this report, our disclosure controls and procedures were effective at a reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in our reports filed under the Exchange Act, such as this quarterly report, is recorded, processed, summarized, and reported within the time periodsperiod specified in the SEC’s rules and forms.
Disclosure controls and procedures are also designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported withinwith the time periods specified in the SEC’s rules and forms, andobjective of ensuring that such information is accumulated and communicated to our management, including our principalthe chief executive officer and principalchief financial and accounting officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of September 30, 2023, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of September 30, 2023, our disclosure controls and procedures were not effective.
Specifically, management’s determination was based on the following material weakness which existed as of December 31, 2022. Our internal controls did not detect an error in the classification related to complex financial instruments. Also, there are not controls in place to ensure the timely and accurate filings of tax returns. The Company has begun to develop a remediation which is more fully described below.
After identifying the material weakness, we have commenced our remediation efforts by taking the following steps:
| ● | We have expanded and improved our review process for complex securities and related accounting standards. |
| ● | We have increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. |
| ● | We are establishing additional monitoring and oversight controls designed to ensure the accuracy and completeness of our financial statements and related disclosures. |
| ● | We plan to hire consultants to prepare and complete the filing of our tax returns. |
A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim condensed financial statements will not be prevented or detected on a timely basis. Notwithstanding the determination that our internal control over financial reporting was not effective, as of September 30, 2023 based on the material weakness described above, we believe that our condensed financial statements contained in this quarterly report fairly present our financial position, results of operations and cash flows for the years covered hereby in all material respects.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all
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our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
There waswere no changechanges in our internal control over financial reporting that occurred(as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter ended March 31, 2021 covered by this Quarterly Report on Form 10-Q that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.
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PART II -II. OTHER INFORMATION
Item 1. Legal ProceedingsProceedings.
None.
There are no material pending legal proceedings to which we or any of our subsidiaries is a party or to which any of our property is subject.
Item 1A. Risk Factors.
Our business, financial condition, resultsAs of operations, and cash flows may be impacted by a numberthe date of factors, many of which are beyond our control, including those set forth in our Prospectus and in our other filings with the SEC, the occurrence of any one of which could have a material adverse effect on our actual results. Therethis Quarterly Report, there have been no material changes to the Risk Factors previouslyrisk factors disclosed in the final prospectus related to our initial public offering (the “Prospectus”) and our other filingsCompany’s Annual Report on Form 10-K as filed with the SEC.
SEC on April 18, 2023, as amended.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Simultaneously with the closing of the IPO, the Company completed the private sale of an aggregate of 5,013,333 private placement warrants to the Sponsor and Cantor Fitzgerald & Co. at a purchase price of $1.50 per private placement warrant. The sale of the private placement warrants generated 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 our IPO, except as otherwise disclosed in the Prospectus. No underwriting discounts or commissions were paid with respect to such sale. The issuance and sale of the private placement warrants was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
Use of Proceeds
On March 9, 2021, the Company consummated its initial public offering of 27,600,000 units, including 3,600,000 units issued pursuant to the exercise of the underwriters’ over-allotment option in full. Each Unit consists of one share of Class A Common Stock and one-fourth of one Warrant, with each whole Warrant entitling the holder thereof to purchase one share of Class A Common Stock for $11.50 per share. The Units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $276,000,000.
On March 9, 2021, simultaneously with the closing of the IPO, the Company completed the private sale of an aggregate of 5,013,333 private placement warrants to the Sponsor and Cantor Fitzgerald & Co. at a purchase price of $1.50 per Private Placement Warrant, generating gross proceeds to the Company of $7,520,000.
A total of $276,000,000, comprised of $268,480,000 of the proceeds from the IPO (which amount includes $9,660,000 of the underwriters’ deferred discount) and $7,520,000 of the proceeds of the sale of the Private Placement Warrants, was placed in the Trust Account maintained by Continental Stock Transfer & Trust Company, acting as trustee.
There has been no material change in the planned use of the proceeds from the IPO and the sale of the Private Placement Warrants as is described in the Prospectus.
None.
Item 3. Defaults Upon Senior SecuritiesSecurities.
None.
Item 4. Mine Safety DisclosuresDisclosures.
Not applicable.
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Item 6. Exhibits.Exhibits, Financial Statement Schedules.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
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3.1*** | | |
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3.4*** | | Second Amendment to the Amended and Restated Certificate of Incorporation. |
3.5*** | | Amended and Restated |
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| XBRL Instance Document |
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| XBRL Taxonomy Extension Schema Document |
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| XBRL Taxonomy Extension Calculation Linkbase Document |
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| XBRL Taxonomy Extension Definition Linkbase Document |
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| XBRL Taxonomy Extension Label Linkbase Document |
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| XBRL Taxonomy Extension Presentation Linkbase Document |
| | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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***Previously filed
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SIGNATURES
Pursuant to the requirements of the 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: | By: | /s/ |
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| | Title: Chief Executive Officer |
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| | Title: Chief Financial Officer |
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