| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2023
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2021 Fillmore St. #2089 San Francisco, California | 94115 | |
(Address of principal executive offices) | (Zip Code) | |
12(b)12( Large accelerated filer ☐ Accelerated filer ☐ ☒ Smaller reporting company ☒ Emerging growth company ☒ June 4, 2021, 31,921,364May 15, 2023, 5,228,218 Class A ordinary shares, par value $0.0001, and 7,980,409 Class B ordinary shares, par value $0.0001, were issued and outstanding.
PLUM ACQUISITION CORP. I
Quarterly Report on Form 10-Q
MARCH 31, 2021
(Unaudited)
Assets: | ||||
Cash on hand | $ | 2,276,205 | ||
Prepaid expenses | 898,277 | |||
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Total current assets | 3,174,482 | |||
Cash held in Trust Account | 300,000,501 | |||
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Total assets | $ | 303,174,983 | ||
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Liabilities and Shareholders’ Equity | ||||
Due to related party | $ | 25,000 | ||
Accrued offering costs and expenses | 993,415 | |||
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Total current liabilities | 1,018,415 | |||
Warrant liability | 16,680,000 | |||
Deferred underwriters’ discount | 10,500,000 | |||
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Total liabilities | 28,198,415 | |||
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Commitments | ||||
Class A Ordinary shares subject to possible redemption 26,997,657 at $10.00 | 269,976,567 | |||
Shareholders’ Equity: | ||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding | — | |||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 3,002,343 issued and outstanding, excluding 26,997,657 shares subject to possible redemption | 301 | |||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 8,625,000 shares issued and outstanding | 863 | |||
Additional paid-in capital | 4,656,281 | |||
Retained earnings | 342,556 | |||
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Total shareholders’ equity | 5,000,001 | |||
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Total Liabilities and Shareholders’ Equity | $ | 303,174,983 | ||
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SHEETS
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
unaudited | ||||||||
ASSETS | ||||||||
| Cash | $ | 97,811 | $ | 86,401 | ||||
| Prepaid expenses | 102,980 | 43,631 | ||||||
Total current assets | 200,791 | 130,032 | ||||||
| Investments held in Trust Account | 54,368,297 | 323,911,642 | ||||||
TOTAL ASSETS | $ | 54,569,088 | $ | 324,041,674 | ||||
LIABILITIES, REDEEMABLE ORDINARY SHARES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Accounts payable and accrued expenses | $ | 3,584,797 | $ | 2,640,756 | ||||
| Due to related party | 265,000 | 235,000 | ||||||
| Convertible promissory note – related party | 1,000,000 | 1,000,000 | ||||||
| Promissory Note—related party | 250,000 | — | ||||||
| Subscription liability | 800,746 | — | ||||||
| Forward Purchase Agreement liability | 633,205 | — | ||||||
Total current liabilities | 6,533,748 | 3,875,756 | ||||||
| Warrant liabilities | 2,401,703 | 379,217 | ||||||
| Deferred underwriting commissions liabilities | — | 11,172,572 | ||||||
TOTAL LIABILITIES | 8,935,451 | 15,427,545 | ||||||
COMMITMENTS AND CONTINGENCIES (NOTE 8) | ||||||||
| Class A Ordinary shares subject to possible redemption, 5,228,218 and 31,921,634 shares at $10.40 and $10.15 redemption value as of March 31, 2023 and December 31, 2022, respectively | 54,368,296 | 323,911,642 | ||||||
SHAREHOLDERS’ DEFICIT | ||||||||
| Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
| Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; no shares issued and outstanding (excluding 5,228,218 and 31,921,634 shares subject to possible redemption) as of March 31, 2023 and December 31, 2022, respectively | — | — | ||||||
| Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 7,980,409 shares issued and outstanding as of March 31, 2023 and December 31, 2022 | 799 | 799 | ||||||
Additional paid-in capital | 7,275,132 | — | ||||||
| Accumulated deficit | (16,010,590 | ) | (15,298,312 | ) | ||||
TOTAL SHAREHOLDERS’ DEFICIT | (8,734,659 | ) | (15,297,513 | ) | ||||
TOTAL LIABILITIES, REDEEMABLE ORDINARY SHARES AND SHAREHOLDERS’ DEFICIT | $ | 54,569,088 | $ | 324,041,674 | ||||
FOR THE PERIOD FROM JANUARY 11, 2021 TO MARCH 31, 2021
Formation and operating expenses | $ | 89,565 | ||
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Loss from operations | (89,565 | ) | ||
Other income/(expense) | ||||
Change in fair value of warrants | 960,000 | |||
Transaction costs | (528,382 | ) | ||
Interest income – operating account | 2 | |||
Interest income – trust account | 501 | |||
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Total other income | 432,121 | |||
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Net Income | $ | 342,556 | ||
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Redeemable Class A Ordinary share, Basic and Diluted | 4,718,379 | |||
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Basic and Diluted net income per share, Redeemable Class A Ordinary share | $ | — | ||
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Basic and diluted weighted average shares outstanding, Ordinary share | 7,718,330 | |||
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Basic and diluted net income per share, Ordinary share | $ | 0.04 | ||
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For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
| Formation and operating expenses | $ | 1,153,282 | $ | 509,076 | ||||
Loss from operations | (1,153,282 | ) | (509,076 | ) | ||||
Other income (expense): | ||||||||
| Change in fair value of warrant liabilities | (2,022,486 | ) | 3,854,102 | |||||
| Change in fair value of subscription liability | (18,277 | ) | — | |||||
| Change in fair value of Forward Purchase Agreement | (325,091 | ) | — | |||||
| Issuance of Forward Purchase Agreement | (308,114 | ) | — | |||||
| Reduction of deferred underwriter fee payable | 328,474 | — | ||||||
| Interest Expense—Debt Discount | (302,469 | ) | — | |||||
| Interest income – trust account | 3,088,967 | 26,053 | ||||||
Total other income, net | 441,004 | 3,880,155 | ||||||
Net (loss) income | $ | (712,278 | ) | $ | 3,371,079 | |||
| Weighted average shares outstanding, Class A ordinary shares subject to possible redemption | 26,286,357 | 31,921,634 | ||||||
Basic and diluted net (loss) income per ordinary share, Class A ordinary shares subject to possible redemption | $ | (0.02 | ) | $ | 0.08 | |||
| Weighted average shares outstanding, Class B ordinary shares | 7,980,409 | 7,980,409 | ||||||
Basic and diluted net (loss) income per ordinary share, Class B ordinary shares | $ | (0.02 | ) | $ | 0.08 | |||
DEFICIT
(Unaudited)
| Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-In Capital | Retained Earnings | Shareholders’ Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance as of January 11, 2021 (Inception) | — | $ | — | — | $ | $ | — | $ | — | $ | — | |||||||||||||||||
Class B ordinary shares issued to sponsor | — | — | 8,625,000 | 863 | 24,137 | $ | — | 25,000 | ||||||||||||||||||||
Sale of 30,000,000 Units net of Warrant fair value | 30,000,000 | 3,000 | — | — | 291,357,000 | — | 291,360,000 | |||||||||||||||||||||
Offering costs | — | — | — | — | (16,750,988 | ) | — | (16,750,988 | ) | |||||||||||||||||||
Class A ordinary shares subject to possible redemption | (26,997,657 | ) | (2,699 | ) | — | — | (269,973,868 | ) | — | (269,976,567 | ) | |||||||||||||||||
Net income | 342,556 | 342,556 | ||||||||||||||||||||||||||
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Balance as of March 31, 2021 | 3,002,343 | $ | 301 | 8,625,000 | $ | 863 | $ | 4,656,281 | $ | 342,556 | $ | 5,000,001 | ||||||||||||||||
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2023
Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-In | Accumulated | Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance as of January 1, 2023 | — | $ | — | 7,980,409 | $ | 799 | $ | — | $ | (15,298,312 | ) | $ | (15,297,513 | ) | ||||||||||||||
| Reduction of deferred underwriter fees | — | — | — | — | 10,844,098 | — | 10,844,098 | |||||||||||||||||||||
| Accretion of Class A ordinary shares to redemption value | — | — | — | — | (3,568,966 | ) | — | (3,568,966 | ) | |||||||||||||||||||
| Net loss | — | — | — | — | — | (712,278 | ) | (712,278 | ) | |||||||||||||||||||
Balance as of March 31, 2023 | — | $ | — | 7,980,409 | $ | 799 | $ | 7,275,132 | $ | (16,010,590 | ) | $ | (8,734,659 | ) | ||||||||||||||
FOR THE THREE MONTHS ENDED MARCH 31, 2022 | ||||||||||||||||||||||||||||
Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-In | Accumulated | Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance as of January 1, 2022 | — | $ | — | 7,980,409 | $ | 799 | $ | — | $ | (21,181,135 | ) | $ | (21,180,336 | ) | ||||||||||||||
| Net income | — | — | — | — | — | 3,371,079 | 3,371,079 | |||||||||||||||||||||
Balance as of March 31, 2022 | — | $ | — | 7,980,409 | $ | 799 | $ | — | $ | (17,810,056 | ) | $ | (17,809,257 | ) | ||||||||||||||
FOR THE PERIOD JANUARY 11, 2021 (INCEPTION) TO MARCH 31, 2021
| For the Period January 11, 2021 (inception) to March 31, 2021 | ||||
Cash Flows from Operating Activities: | ||||
Net Income | $ | 342,556 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Interest earned on cash held in Trust Account | (501 | ) | ||
Change in fair value of warrant liabilities | (960,000 | ) | ||
Transaction costs | 528,382 | |||
Changes in operating assets and liabilities | ||||
Prepaid expense | (898,277 | ) | ||
Due to related party | 25,000 | |||
Accounts payable and accrued expenses | 993,415 | |||
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Net cash provided by operating activities | 30,575 | |||
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Cash flows from investing activities: | ||||
Investments and marketable securities held in Trust | (300,000,000 | ) | ||
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Net cash used in investing activities | (300,000,000 | ) | ||
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Cash flows from financing activities: | ||||
Proceeds from sale of ordinary shares to initial shareholders | 25,000 | |||
Proceeds from sale of Units, net of offering costs | 293,220,630 | |||
Proceeds from issuance of Private Placement Warrants | 9,000,000 | |||
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Net cash provided by financing activities | 302,245,630 | |||
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Net Change in Cash | 2,276,205 | |||
Cash, beginning of the period | — | |||
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Cash, end of period | $ | 2,276,205 | ||
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Supplemental Disclosure of Non-cash Financing Activities: | ||||
Deferred underwriting commissions payable charged to additional paid in capital | $ | 10,500,000 | ||
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Class A ordinary shares subject to possible redemption | $ | 269,976,567 | ||
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Initial classification of warrant liabilities | $ | 17,640,000 | ||
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For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash Flows from Operating Activities: | ||||||||
| Net (loss) income | $ | (712,278 | ) | $ | 3,371,079 | |||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
| Interest earned on investments held in Trust Account | (3,088,967 | ) | (26,053 | ) | ||||
| Change in fair value of warrant liabilities | 2,022,486 | (3,854,102 | ) | |||||
| Reduction of deferred underwriter fees | (328,474 | ) | — | |||||
| Issuance of Forward Purchase Agreement | 308,114 | — | ||||||
| Change in fair value of Forward Purchase Agreement | 325,091 | — | ||||||
| Change in fair value of subscription liability | 18,277 | |||||||
| Interest expense—debt discount | 302,469 | — | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expense | (59,349 | ) | 104,527 | |||||
| Due to related party | 30,000 | 30,000 | ||||||
| Accounts payable and accrued expenses | 944,041 | 35,043 | ||||||
Net cash used in operating activities | (238,590 | ) | (339,506 | ) | ||||
Cash Flows from Investing Activities: | ||||||||
| Extension payment deposit in Trust | (480,000 | ) | — | |||||
| Cash withdrawn for redemptions | 273,112,312 | — | ||||||
Net cash provided by investing activities | 272,632,312 | — | ||||||
Cash Flows from Financing Activities: | ||||||||
| Proceeds from the subscription liability | 480,000 | — | ||||||
| Redemption of ordinary shares | (273,112,312 | ) | — | |||||
| Proceeds from promissory note – related party | 250,000 | 500,000 | ||||||
Net cash (used in) provided by financing activities | (272,382,312 | ) | 500,000 | |||||
Net Change in Cash | 11,410 | 160,494 | ||||||
| Cash – Beginning of period | 86,401 | 107,224 | ||||||
Cash – End of period | $ | 97,811 | $ | 267,718 | ||||
Non-Cash investing and financing activities: | ||||||||
| Accretion of Class A ordinary shares subject to possible redemption | $ | 3,568,966 | $ | — | ||||
(unaudited)
Note2023
ORGANIZATION AND BUSINESS OPERATIONS
3.
4.
consolidated statements of changes in shareholders’ deficit.
shall not be entitled to funds from the Trust Account upon the subsequent completion of an initial Business Combination or liquidation if the Company has not consummated an initial Business Combination within the Combination Period, with respect to such Class A ordinary shares so redeemed. 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 Public Shareholders.
Shareholders (as defined below).
Combination.
and Going Concern
After the IPO, asAs of March 31, 2021,2023 and December 31, 2022, the Company had approximately $2.28 million$1,000,000 outstanding under Working Capital Loans.
Based on$6,332,957.
mandatory liquidation date.
Note 2-Restatement
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 18, 2021 | ||||||||||||
Warrant liability | $ | — | $ | 17,640,000 | $ | 17,640,000 | ||||||
Total Liabilities | 11,533,415 | 17,640,000 | 29,173,415 | |||||||||
Class A ordinary shares subject to possible redemption, | 286,732,260 | (17,640,000 | ) | 269,092,260 | ||||||||
Class A ordinary shares | 133 | 176 | 309 | |||||||||
Additional paid-in capital | 5,012,374 | 528,206 | 5,540,580 | |||||||||
Accumulated deficit | (13,364 | ) | (528,382 | ) | (541,746 | ) | ||||||
Note 3
SIGNIFICANT ACCOUNTING POLICIES
Cash2023 and December 31, 2022.
Account include $54,368,297
Ordinary shares subject to possible redemption, December 31, 2022 | $ | 323,911,642 | ||
| Less: | ||||
| Redemptions | (273,112,312 | ) | ||
| Plus: | ||||
| Accretion adjustment of carrying value to redemption value | 3,568,966 | |||
Ordinary shares subject to possible redemption, March 31, 2023 | $ | 54,368,296 | ||
sheets.
Liabilities
| Level 1 — | Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. |
| Level 2 — | Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. | ||
| Level 3 — | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. | ||
See Note 7 for additional information on assets and liabilities measured at fair value.
Net
The Company’s statement of operations include a presentation of net income
For the Three Months Ended March 31, | ||||||||||||||||
2023 | 2022 | |||||||||||||||
Class A ordinary share subject to possible redemption | Class B | Class A ordinary share subject to possible redemption | Class B | |||||||||||||
Numerator | ||||||||||||||||
| Allocation of net (loss) income | $ | (546,395 | ) | $ | (165,883 | ) | $ | 2,696,863 | $ | 674,216 | ||||||
Denominator | ||||||||||||||||
| Weighted average shares outstanding | 26,286,357 | 7,980,409 | 31,921,634 | 7,980,409 | ||||||||||||
| Basic and diluted net (loss) income per share | $ | (0.02 | ) | $ | (0.02 | ) | $ | 0.08 | $ | 0.08 | ||||||
| For the Period January 11, 2021 (Inception) to March 31, 2021 | ||||
Ordinary share subject to possible redemption | ||||
Numerator: Net income allocable to Class A Ordinary share subject to possible redemption | ||||
Accretion of interest income on marketable securities held in trust | $ | 503 | ||
Less: interest available to be withdrawn for payment of taxes | (503 | ) | ||
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Net income allocable to Class A Ordinary share subject to possible redemption | $ | — | ||
Denominator: Weighted Average Redeemable Class A Ordinary share | ||||
Redeemable Class A Ordinary share, Basic and Diluted | 4,718,379 | |||
Basic and Diluted net income per share, Redeemable Class A Ordinary share | $ | 0.00 | ||
Non-Redeemable Ordinary share | ||||
Numerator: Net Income minus Redeemable Net Earnings | ||||
Net Income | $ | 342,556 | ||
Redeemable Net Earnings | — | |||
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Non-Redeemable Net Income | $ | 342,556 | ||
Denominator: Weighted Average Non-Redeemable Ordinary share | ||||
Basic and diluted weighted average shares outstanding, Ordinary share | 7,718,330 | |||
Basic and diluted net income per share, Ordinary share | $ | 0.04 | ||
Note 4statements.
INITIAL PUBLIC OFFERING
Note 5
PRIVATE PLACEMENTS
If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company in all redemption scenarios and exercisable by the holders on the same basis as the warrants included in the units being sold in the IPO.
Note 6
RELATED PARTY TRANSACTIONS
underwriter. On April 14, 2021 the underwriter partially exercised its over-allotment option buying 1,921,634 Units thus reducing the total number of share subject to forfeiture to 644,591. On May 2, 2021 the underwriter’s over-allotment option expired and 644,591 Founder Shares were forfeited to the Company.
Borrowings under this note are no longer available.
Note 7 — Recurring Fair Value Measurements
Investments Held in Trust Account
As of March 31, 2021, the investments in the Company’s Trust Account consisted of $ 300,000,501 in U.S. Money Market funds. The Company considers all investments with original maturities of more than three months but less than one year to be short-term investments.
Fair values of the Company’s investments are classified as Level 1 utilizing quoted prices (unadjusted) in active markets for identical assets.
Recurring Fair Value Measurements
The Company’s permitted investments consist of U.S. Money Market funds. 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 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 value of the Warrant liability is classified within Level 3 of the fair value hierarchy. For the period ending March 31, 2021 there were no transfers into or out of Level 3 classification.
The following table presents fair value information as of March 31, 2021 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.
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | ||||||||||||||||
Investments held in Trust Account - U.S. Money Market | $ | 300,000,501 | $ | 300,000,501 | $ | — | $ | — | ||||||||
Liabilities | ||||||||||||||||
Public warrant liability | (8,340,000 | ) | — | — | (8,340,000 | ) | ||||||||||
Private warrant liability | (8,340,000 | ) | — | — | (8,340,000 | ) | ||||||||||
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| $ | 283,320,501 | $ | 300,000,501 | $ | — | $ | (16,680,000 | ) | ||||||||
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Measurement
On March 31, 2021, the Company used a Monte Carlo simulation model to value the Warrants. The key inputs into the model were as follows at March 18, 2021 (initial measurement) and March 31, 2021:
Input | March 18, 2021 (Initial | March 31, 2021 | ||||
Risk-free interest rate | 1.09% | 1.12 | % | |||
Expected term (years) | 5.0 | 5.0 | ||||
Expected volatility | 24.0% | 23.0 | % | |||
Dividend yield | 0.0% | 0.0 | % | |||
Exercise price | $11.50 | $ | 11.50 | |||
The following table provides a reconciliation of changes in the Level 3 fair value classification:
Fair value at January 11, 2021 | $ | — | ||
Initial value at March 18, 2021 | 17,640,000 | |||
Change in fair value | (960,000 | ) | ||
Fair Value at March 31, 2021 | $ | 16,680,000 |
Note 8 — Commitments and Contingencies
Registration Rights
The holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) will be entitled to registration rights pursuant to a registration and shareholder rights agreement to be signed prior to or on the effective date of the IPO. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent toCompany reimburses the Company’s completionSponsor for the reasonable costs of its initial Business Combination. However, the registration and shareholder rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable Lock-up period, which occurs (i) in the case of the Founder Shares, as described in Note 6, and (ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares underlying such warrants, 30 days after the completion of the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day option from March 18, 2021 to purchase up to an additional 4,500,000 Units to cover over-allotments, if any, at the IPO price less the underwriting discounts and commissions.
On March 18, 2021, the Company paid the underwriters’ fee of $6,000,000 upon the closing of the IPO.
In addition, $10,500,000 will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Note 9 — Stockholder’s Equity
Preference Shares — The Company is authorized to issue 5,000,000 preference shares at par value of $0.0001, with such designations, votingsalaries and other rights and preferences as may be determined from time to time by the Company’s board of directors. At March 31, 2021, there were no preference shares issued or outstanding.
Class A Ordinary Shares — The Company is authorized to issue a total of 500,000,000 Class A Ordinary Shares at par value of $0.0001 per share. At March 31, 2021, there were 3,002,343 shares of Class A Ordinary Shares outstanding, excluding 26,997,657 shares of Class A Ordinary Shares subject to possible redemption.
Class B Ordinary Shares — The Company is authorized to issue a total of 50,000,000 Class B Ordinary Shares at par value of $0.0001 per share. Holders are entitled to one vote for each Class B ordinary share. As of March 31, 2021, there were 8,625,000 shares of Class B Ordinary Shares issued or outstanding. Of the 8,625,000 Class B ordinary shares, an aggregate of up to 1,125,000 shares are subject to forfeitureservices provided to the Company for no consideration toby the extent that the underwriters’ over-allotment option is not exercised in fullemployees, consultants and or in part, so that the initial shareholders will collectively own 20%members of the Company’s issuedSponsor or its affiliates. For the three months ended March 31, 2023, the Company incurred $30,000, in fees for office space, secretarial and outstanding ordinary shares after the IPO.
Holdersadministrative services, of the Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders, except as required by law. Unless specifiedwhich such amounts are included in the Company’s amended and restated memorandum and articles of association, or as required by applicable provisions ofdue to related party in the Companies Act or applicable stock exchange rules,accompanying
The Class B ordinary shares will automatically convert into Class A ordinary shares (which such Class A ordinary shares delivered upon conversion will not have redemption rights or be entitled to liquidating distributions from the Trust Account ifthree months ended March 31, 2022, the Company does not consummate an initial Business Combination) at the timeincurred $30,000, in fees for office space, secretarial and administrative service, of the initial Business Combination or earlier at the option of the holders thereof at a ratiowhich such that the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal,amounts are included in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding upon completion of the IPO, plus (ii) the total number of Class A ordinary shares 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 relationdue to the consummation of the initial Business Combination, excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any sellerrelated party in the initial Business Combination and any Private Placement Warrants issued to the Sponsor, its affiliates or any memberaccompanying
effectiveness of such registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement, provided that if the Class A ordinary shares 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, but the Company will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th 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, but the Company will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In such event, each holder would pay the exercise price by surrendering the warrants for that number of Class A ordinary shares equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the warrants, multiplied by the excess of the “fair market value” (as defined below) less the exercise price of the warrants by (y) the fair market value and (B) 0.361. The “fair market value” as used in this paragraph shall mean the volume weighted average price of the Class A ordinary shares for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent.
if the closing price of the Class A ordinary shares for any 20 trading days within
March 31, 2023 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets | ||||||||||||||||
| Investments held in Trust Account—U.S. Money Market | $ | 54,368,297 | $ | 54,368,297 | $ | — | $ | — | ||||||||
Liabilities | ||||||||||||||||
| Public warrant liability | 1,213,022 | 1,213,022 | — | — | ||||||||||||
| Private warrant liability | 1,188,681 | — | 1,188,681 | — | ||||||||||||
| Subscription liability | 800,746 | — | — | 800,746 | ||||||||||||
| FPA liability | 633,205 | — | — | 633,205 | ||||||||||||
| Total | $ | 3,835,654 | $ | 1,213,022 | $ | 1,188,681 | $ | 1,433,951 | ||||||||
December 31, 2022 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets | ||||||||||||||||
| Investments held in Trust Account—U.S. Money Market | $ | 323,911,642 | $ | 323,911,642 | $ | — | $ | — | ||||||||
Liabilities | ||||||||||||||||
| Sponsor Loan Conversion Option | — | — | — | — | ||||||||||||
| Public warrant liability | 191,529 | 191,529 | — | — | ||||||||||||
| Private warrant liability | 187,687 | — | 187,687 | — | ||||||||||||
| Total | $ | 379,216 | $ | 191,529 | $ | 187,687 | $ | — | ||||||||
March 1, 2023 | March 31, 2023 | |||||||
Probability of business combination | 80 | % | 80 | % | ||||
Underlying common stock price | $ | 10.21 | $ | 10.31 | ||||
Public Warrant price | $ | 0.048 | $ | 0.190 | ||||
Weighted term | 1.31 | 1.13 | ||||||
Risk free rate | 5.15 | % | 4.89 | % | ||||
Implied volatility | 4.7 | % | 9.5 | % | ||||
FPA | ||||
Fair value as of January 1, 2023 | $ | — | ||
Issuance of FPA liability | 308,114 | |||
Change in fair value | 325,091 | |||
Fair value as of March 31, 2023 | $ | 633,205 | ||
March 17, 2023 | March 31, 2023 | |||||||
Restricted term | 1.12 | 1.09 | ||||||
Risk free rate | 4.60 | % | 4.89 | % | ||||
Volatility | 7.79 | % | 9.46 | % | ||||
Stock price | $ | 10.22 | $ | 10.31 | ||||
Strike price | $ | 10.00 | $ | 10.00 | ||||
Term of debt conversion | 0.62 | 0.59 | ||||||
Probability of business combination | 80 | % | 80 | % | ||||
| SPA | ||||
| Fair value as of December 31, 2022 | $ | — | ||
| Issuance of subscription liability | 480,000 | |||
| Discount on issuance of subscription liability | 2,722,222 | |||
| Change in fair value | 18,277 | |||
| Unamortized debt discount | (2,419,753 | ) | ||
| Fair value as of March 31, 2023 | $ | 800,746 | ||
| (a) | from time to time, the Company will request funds from the Sponsor for working capital purposes or for the Sponsor to fund an extension payment pursuant to the Company’s Amended and Restated Memorandum and Articles of Association (each a “Drawdown Request”). The Sponsor, upon on at least five (5) calendar days’ prior written notice (“Capital Notice”), may require a drawdown against the Investor’s Capital Commitment under a Drawdown Request (each a “Capital Call”); |
| (b) | in consideration of the Capital Calls, Sponsor will transfer 0.75 of a Class A ordinary share for each dollar the Investor funds pursuant to the Capital Call(s) (the “Subscription Shares”) to the Investor at the closing of the Business Combination (the “Business Combination Closing”). The Subscription Shares shall be subject to the Lock-Up Period as defined in section 5 of the Sponsor Letter Agreement dated March 2, 2023 (the “Letter Agreement”). The Subscription Shares shall not be subject to any additional transfer restrictions or anyadditional lock-up provisions, earn outs, or other contingencies and shall promptly be registered pursuant to the first registration statement filed by the Company or the surviving entity in relation to the Business Combination; |
| (c) | each member of the Sponsor has the right to contribute any amount requested under each Drawdown Request (“Sponsor Capital Contribution”), provided that such Sponsor Capital Contributions will be made on terms no more favorable than the Investor’s Capital Commitment. In addition, the Company and Sponsor maintain the ability to enter into other agreements with each other or with other parties which shall provide for funding of the Company (through the issuance of equity, entry into promissory notes, or otherwise) outside of Drawdown Requests, provided that the terms of any such agreement between the Company or Sponsor with each other or any party or parties will be no more favorable than the terms under this Agreement; |
| (d) | any amounts funded by the Sponsor to the Company under a Drawdown Request shall not accrue interest and shall be promptly repaid by the Company to the Sponsor upon the Business Combination Closing. Following receipt of such sums from the Company, and in any event within 5 business days of the Business Combination Closing, the Sponsor or Company shall pay to the Investor, an amount equal to all Capital Calls funded under the Subscription Agreement (the “Business Combination Payment”). The Investor may elect at the Business Combination Closing to receive such Business Combination Payment in cash or Class A ordinary shares at a rate of 1Class A ordinary share for each $10 of the Capital Calls funded under the Subscription Agreement. If the Company liquidates without consummating the Business Combination, any amounts remaining in the Sponsor or Company’s cash accounts, not including monies held in Trust Account, will be paid to the Investor within five (5) days of the liquidation; and |
| (e) | on the Business Combination Closing, the Sponsor will pay the Investor an amount equal to the reasonable attorney fees incurred by the Investor in connection with the Subscription Agreement not to exceed $5,000. |
SHAREHOLDERS’ DEFICIT
On April 9, 2021, the underwriters partially exercised the over-allotment option, and the closing of the issuance and sale of the additional 1,921,634 Units occurred on April 14, 2021. On April 14, 2021, simultaneously with the issuance and sale of the Over-Allotment Units, the Company consummated the sale of an additional 256,218 Private Placement Warrants
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 Plum Acquisition Corp. I. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Plum Partners, 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 on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of 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-Q including 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. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company on January 11, 2021 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. We intend to consummate an initial business combination using cash from the proceeds of our Public Offering (the “Public Offering”) that closed on March 18, 2021 (the “Closing Date”) and the Private Placement, and from additional issuances of, if any, our equity and our debt, or a combination of cash, equity and debt.
Recent Developments
The Business Combination Agreement provides that (a) on the day of the closing of the Business Combination (the “Closing”), Plum will change its jurisdiction of incorporation by deregistering and transferring by way of continuation as a Cayman Islands exempted company limited by shares and domesticating as a corporation incorporated under the laws of the State of Delaware (“Domestication”), change its name to “Sakuu Holdings, Inc.”, and amend its governing documents to become the Post-Closing Certificate of Incorporation and Post-Closing Bylaws (as such terms are defined in the Business Combination Agreement), (b) following the Domestication and upon the filing of the Certificate of First Merger (as defined in the Business Combination Agreement), Merger Sub I will merge with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of Plum (“First Merger”), and (c) immediately following the First Merger and upon the filing of the Certificate of Second Merger (as defined in the Business Combination Agreement), the Company will merge with and into Merger Sub II, with Merger Sub II surviving the merger as a wholly owned subsidiary of Plum (“Second Merger”).
The Business Combination is subject to customary closing conditions, including the satisfaction of the minimum available cash condition, the receipt of certain governmental approvals and the required approval by the stockholders of Plum and Sakuu. There is no assurance that the Business Combination will be completed.
Subject to, and in accordance with the terms and conditions of the Business Combination Agreement, on the day of Closing each Plum Class A ordinary share and Plum Class B ordinary share issued and outstanding immediately prior to the Domestication shall, by virtue of the Domestication, be automatically converted on a one-for-one basis into a share of Class A common stock, par value $0.0001 per share, of Plum (“New Plum Common Shares”).
Subject to, and in accordance with the terms and conditions of the Business Combination Agreement, Sakuu’s equity holders will receive a number of shares of Common Stock (or rights to acquire such Common Stock) of Plum in the aggregate equal to $600,000,000.00 plus the aggregate exercise prices of Sakuu’s options and warrants, divided by $10.00.
Results of Operations
For the period from January 11, 2021 (inception) tothree months ended March 31, 2021,2023, we incurredhad a loss from operations of $89,565, including insurance expenses of $25,841 and other general operation expenses totaled $63,724.$1,153,282. In addition to the loss from operations, we recognized other netincome $441,004 consisting of an unrealized loss on our warrant liabilities of $2,022,486, change in fair value of FPA of $325,091 issuance of FPA of $308,114 change in fair value of SPA of $18,277 reduction of deferred underwriter fee payable of $328,474, interest expense – debt discount of $302,469 and interest earned on cash held in the Trust Account of $3,088,967.
For the three months ended March 31, 2022, we had a loss from operations of $509,076. In addition to the loss from operations, we recognized other income of $432,119$3,880,155 consisting of an unrealized gain on our warrant liabilityliabilities of $960,000$3,854,102, and interest incomeearned on cash held in the Trust Account of $503 partially offset by transaction costs related to our IPO of $528,382. $26,053.
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Through March 31, 2021,2023, our efforts have been limited to organizational activities, activities relating to identifying and evaluating prospective acquisition candidates and activities relating to general corporate matters. We have not generated any realized revenues,income, other than interest income earned on the proceeds held in the Trust Account.income. The unrealized gain on the warrant liability resulted from the change in fair value of our warrant liability andliabilities had no impact on cash. As of March 31, 2021, $300,000,5012023, $54,368,297 was held in the Trust Account. We hadAccount, cash outside of trustTrust Account of $2,276,205 in March 31, 2021$97,811 and $993,415$3,584,797 accounts payable and accrued expenses as of March 31, 2021.expenses.
Except with respect to interest earned on the funds held in the Trust Account that may be released to us to pay taxes, if any, the proceeds in the Trust will not be released from the Trust Account (1) to us, until the completion of our initial Business Combination, or (2) to the Public Shareholders, until the earliest of (i) the completion of our initial Business Combination, and then only in connection with those Class A ordinary shares that such shareholders properly elected to redeem, subject to the limitations, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial Business Combination or to redeem 100% of the public shares if we do not complete an initial Business Combination within 2427 months from the closing of the IPO (or up to 36 months from the closing of our initial public offering if we extend the period of time to consummate a business combination) (the “Combination Period”) or (B) with respect to any other provision relating to the rights of holders of the Class A ordinary shares, and (iii) the redemption of the public shares if we have not consummated a Business Combination within the Combination Period, subject to applicable law.
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Liquidity, and Capital Resources and Going Concern
As of March 31, 2021,2023, we had cash outside our Trust Account of $2,276,205,$97,811, available for working capital needs. We intend to use the funds held outside the Trust Account for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
OnIn March 18,and April 2021, we completed the sale of 30,000,000sold 31,921,634 units (the “Units” and, with respect to the shares of Class A ordinary shares included in the Units being offered, the “Public Shares”) at $10.00 per Unit, generating gross proceeds of $300,000,000.
Simultaneous$319,216,340. In connection with the closingvote to approve the Extension Amendment Proposal, the holders of the Public Offering,26,693,416 Class A ordinary shares properly exercised their right to redeem their shares for cash at a redemption price of $10.23 per share, for an aggregate redemption amount of $273,112,311.62.
Additionally, we completed the sale of 6,000,000sold 6,256,218 warrants (the “Private Warrants”), at a price of $1.50 per Private Warrant, generating gross proceeds of $9,000,000.
In connection with the Public Offering, the underwriters were granted a 45-day option from the date of the prospectus for the Public Offering to purchase up to 4,500,000 additional Units to cover over-allotments, if any. On April 9, 2021, the underwriters partially exercised the over-allotment option, and the closing of the issuance and sale of the additional 1,921,634 Units occurred on April 14, 2021. On April 14, 2021, simultaneously with the issuance and sale of the Over-Allotment Units, the Company consummated$9,384,327. Following the sale of an additional 256,218 Private Placement Warrants
Following our Initial Public OfferingUnits and the sale of the Private Warrants, a total of $300,000,000$319,216,340 ($10.00 per Unit) was placed in the Trust Account. We incurred $17,279,370$18,336,269 in Initial Public Offering related costs, including $6,000,000$6,384,327 of underwriting fees, $10,500,000$11,172,572 of deferred underwriting discount and $779,370 of other costs with $528,382$564,701 which was allocated to the Public Warrants and Private Warrants, included in the statementconsolidated statements of operations and $16,750,988$17,771,568 included in stockholders’temporary equity.
On January 31, 2022, the Company issued an unsecured promissory note (the “Dinsdale Note”) in the principal amount of $500,000 to Mike Dinsdale. The Dinsdale Note does not bear interest and is repayable in full upon consummation of a Business Combination. The Company may draw on the Dinsdale Note from time to time, in increments of not less than $50,000, until the earlier of March 18, 2023 or the date on which the Company consummates a Business Combination. If the Company does not complete a Business Combination, the Dinsdale Note shall not be repaid and all amounts owed under it will be forgiven. Upon the consummation of a Business Combination, the Mr. Dinsdale shall have the option, but not the obligation, to convert the principal balance of the Dinsdale Note, in whole or in part, into private placement warrants (as defined in that certain Warrant Agreement, dated March 18, 2021, by and between the Company and Continental Stock Transfer & Trust Company), at a price of $1.50 per private placement warrant. The Dinsdale Note is subject to customary events of default, the occurrence of which automatically trigger the unpaid principal balance of the Dinsdale Note and all other sums payable with regard to the Dinsdale Note becoming immediately due and payable. The Dinsdale Note was issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
On July 11, 2022, the Company issued an unsecured promissory note (the “Burns Note”) in the principal amount of $500,000 to Ursula Burns. The Burns Note does not bear interest and is repayable in full upon consummation of a Business Combination. Up to fifty percent (50%) of the principal of the Burns Note may be drawn down from time to time at the Company’s option prior to August 25, 2022 and any or all of the remaining undrawn principal of the Burns Note may be drawn down from time to time at the Company’s option after August 25, 2022, in each case in increments of not less than $50,000. If the Company does not complete a Business Combination, the Burns Note shall not be repaid and all amounts owed under it will be forgiven. Upon the consummation of a Business Combination, Ms. Burns shall have the option, but not the obligation, to convert the principal balance of the Burns Note, in whole or in part, into private placement warrants (as defined in that certain Warrant Agreement, dated March 18, 2021, by and between the Company and Continental Stock Transfer & Trust Company), at a price of $1.50 per private placement warrant. The Burns Note is subject to customary events of default, the occurrence of which automatically trigger the unpaid principal balance of the Burns Note and all other sums payable with regard to the Burns Note becoming immediately due and payable.
On March 16, 2023, the Company issued an unsecured promissory note in the total principal amount of up to $250,000 (the “Roy Note”) to Mr. Kanishka Roy, individually and as a member of Plum Partners LLC. Mr. Roy funded the initial principal amount of $250,000 on March 14, 2023. The Roy Note does not bear interest and matures upon the consummation of the Company’s initial business combination with one or more businesses or entities. In the event the Company does not consummate a business combination, the Roy Note will be repaid upon the Company’s liquidation only from amounts remaining outside of the Company’s trust account, if any. The Roy Note is subject to customary events of default, the occurrence of which automatically trigger the unpaid principal balance of the Roy Note and all other sums payable with regard to the Roy Note becoming immediately due and payable.
As of March 31, 2021,2023, we had marketable securitiesinvestments held in the Trust Account of $300,000,501$54,368,297 (including approximately $501$7,784,269 of income) consisting of money market funds. Income on the balance in the Trust Account may be used to pay taxes. Through March 31, 2021,2023, we did not withdrawwithdrew an amount of $273,112,312 any interest earned on the Trust Account to pay our taxes.in connection with redemption.
For three months ended March 31, 2021,2023, cash generated fromused in operating activities was $30,575.$238,590. Net loss of $712,278 was primarily offset by an unrealized loss on our warrant liabilities of $2,022,486, change in fair value of FPA of $325,091, issuance of FPA of $308,114, reduction of deferred underwriter fee payable of $328,474, change in fair value of SPA of $18,277 interest expense – debt discount of $302,469 and interest earned on cash held in the Trust Account of $3,088,967. Other operational activities including amounts due to related party generated $914,692.
For three months ended March 31, 2022, cash used in operating activities was $339,506. Net income of $342,556$3,371,079 was primarily offset by an unrealized gain on the change in the fair value of our warrant liabilityliabilities of $960,000$3,854,102 and payments generating prepaid assetsinterest earned on investments held in Trust Account of $898,277. Partially offsetting the net income was $528,382 from IPO related transaction costs and increases in accounts payable and accrued expenses.$26,053. Other operational activities including amounts due to related partingparty generated $24,449$169,570.
We intend to use substantially all of the funds held in the Trust Account, to acquire a target business and to pay our expenses relating thereto. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
Further, our sponsor,Sponsor, officers and directors or their respective affiliates may, but are not obligatedhave committed to loan us funds as may be required (the “Working Capital Loans”). If we complete a business combination, we wouldwill repay the Working Capital Loans. In the event that a business combination does not close, we may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be
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used to repay the Working Capital Loans. Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a business combination, without interest, or, at the lender’s discretion, or converted upon consummation of a business combination into additional Private Warrants at a price of $1.50 per Private Warrant. As of March 31, 2021, no2023, $1,000,000 Working Capital Loans have been issued.issued (Note 5).
We do not believe weIn connection with the Company’s assessment of going concern considerations in accordance with FASB ASC205-40, Presentation of Financial Statements—Going Concern”, management has determined that the Company has and will needcontinue to raise additional fundsincur significant costs in orderpursuit of its acquisition plans which raises substantial doubt about the Company’s ability to meet the expenditures required for operating our business. However, if our estimate of the costs of identifyingcontinue as 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, in addition to the access to the Working Capital Loans, we may need to obtain otheradditional financing either to complete our business combinationinitial Business Combination or because we become obligated to redeem a significant number of our public sharesPublic Shares upon consummation of our business combination,initial Business Combination, in which case we may issue additional securities or incur debt in connection with such business combination.Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination.initial Business Combination. If we are unable to complete our business combinationinitial 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 business combination,initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Further, management has determined that if the Company is unable to complete a Business Combination by June 18, 2023, or March 18, 2024 if elected to extend the Termination Date up to nine times by an additional one month each time (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. The Company intends to complete a Business Combination before the mandatory liquidation date.
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Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of March 31, 2021.2023. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial agreements involving assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
Critical Accounting PoliciesEstimates
The preparation ofaccompanying unaudited condensed financial statements and related disclosuresof the Company are presented in conformity with accounting principles generally accepted in the United States requires our managementof America (“GAAP”) and pursuant to make estimatesthe rules and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dateregulations of the condensedU.S. Securities and Exchange Commission (“SEC”).
Warrant Liabilities
We account for the Warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the Warrants and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the Warrants are freestanding financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:
Warrant Liabilities
The Company’s Warrantsinstruments pursuant to ASC 480, meet the definition of a derivativeliability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the Warrants are indexed to the Company’s own ordinary shares and whether the holders of the Warrants could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the Warrants and as of each subsequent quarterly period end date while the Warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, such warrants are required to be recorded as derivative liabilitiesa component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, liability-classified warrants are required to be recorded at their initial fair value on the Balance Sheetdate of issuance, and measuredeach balance sheet date thereafter. Changes in the estimated fair value of such warrants are recognized as a non-cash gain or loss on the statements of operations. We account for the Public and Private warrants in accordance with guidance contained in ASC815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability.
Convertible Promissory Note
The Company accounts for its convertible promissory note under ASC 815, “Derivatives and Hedging” (“ASC 815”). Under 815-15-25, the election can be at fair value. At each reporting date changes inthe inception of a financial instrument to account for the instrument under the fair value option under ASC 825, “Financial Instruments” (“ASC 825”). The Company has made such election for its convertible promissory note. Using fair value option, the convertible promissory note is required to be recorded at its initial fair value on the date of issuance and each balance sheet date thereafter. Differences between the face value of the note and fair value at issuance are recognized as either an expense in the statementcondensed statements of operations (if issued at a premium) or as a capital contribution (if issued at a discount). Changes in the periodestimated fair value of change.the notes are recognized as non-cash gains or losses in the condensed statements of operations.
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Redeemable Shares of Class A Ordinary shares
All of the 30,000,00031,921,634 shares of Class A ordinary shares included in the Units sold as part of the Public Offering contain a redemption feature as described in the prospectus for the Public Offering. In accordance with FASB ASC 480, “Distinguishing Liabilities from Equity”, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. The Charter provides a minimum net tangible asset threshold of $5,000,001. The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security at the end of each reporting period. Increases or decreases in the carrying amount of redeemable shares will be affected by charges against additional paid-in capital.
Net Income Per Ordinary Share
Net income per ordinary share is computed by dividing net income by the weighted average numberThe Company has two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Earnings and losses are shared pro rata between the two classes of shares. The potential ordinary shares for outstanding warrants to purchase the Company’s shares were excluded from diluted earnings per share for each of the periods. The calculation ofthree months ended March 31, 2023 and 2022 because the warrants are contingently exercisable, and the contingencies have not yet been met. As a result, diluted net income per ordinary shares does not considercommon share is the effect of the warrants issued in connection with the (i) IPO, (ii) exercise of over-allotment and (iii) Private Placement 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 warrants are exercisable to purchase 12,000,000 shares of Class A ordinary shares in the aggregate.
Our statement of operations include a presentation ofsame as basic net income per common share for Class A ordinary shares subject to possible redemption in a manner similar to the two-class method of income per ordinary share. Net income per Class A ordinary share, basic and diluted, for redeemable Class A ordinary share is calculated by dividing the interest income earned on the Trust Account, by the weighted average number of redeemable Class A ordinary shares outstanding since original issuance. Net income per ordinary share, basic and diluted, for non-redeemable Class A and Class B ordinary shares is calculated by dividing the net income, adjusted for income attributable to redeemable Class A ordinary share, by the weighted average number of non-redeemable Class A and Class B Ordinary share outstanding for the periods. Non-redeemable Class B ordinary share include the Founder Shares as these ordinary shares do not have any redemption features and do not participate in the income earned on the Trust Account.
Recent accounting standards
Management does not believe that any recently issued, but not yet effective, accounting pronouncements,standards, if currently adopted, would have a material effect on ourthe Company’s unaudited condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
On April 12, 2021, the staff at the Securities and Exchange Commission (the “SEC”) issued a statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) (the “SEC Statement”). In the SEC Statement, the SEC staff noted that certain provisions in the typical SPAC warrant agreement may require that the warrants be classified as a liability measured at fair value, with changes in fair value reported each period in earnings, as compared to the historical treatment of the warrants as equity, which has been the practice of most SPACs, including us. We had previously classified our private placement warrants and public warrants as equity (for a full description of our private placement warrants and public warrants, refer to the registration statement on Amendment No.1 to Form S-1 (File No. 333- 253331), filed in connection with the Company’s initial public offering, declared effective by the SEC on March 15, 2021).
After considering the SEC Statement, we concluded that there were misstatements in the March 18, 2021 audited closing balance sheet we filed with the SEC on Form 8-K on March 24, 2021. Based on the guidance in Accounting Standards Codification (“ASC”) 815-40, “Derivatives and Hedging—Contracts in Entity’s Own Equity”, we concluded that provisions in the warrant agreement preclude 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 have been recorded as derivative liabilities on the balance sheet and measured at fair value at inception 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. Further, ASC 815 requires that upfront costs and fees related to items for which the fair value option is elected (our warrant liabilities) should have been recognized as expense as incurred.
We have corrected the accounting for the warrants in this Quarterly Report on Form 10-Q. The effect of the restatement on specific line has been discussed in the Notes to unaudited condensed Financial Statements.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under theSecurities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement ofAs required by Rules 13a-15 and 15d-15 under the Exchange Act, our annual or interim financial statements will not be prevented, or detectedChief Executive Officer and corrected on a timely basis. We became awareChief Financial Officer carried out an evaluation of the need to change the classification of our warrants when the SEC issued a statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” on April 12, 2021. As a result, our principal executive officer and principal financial concluded that there was a material weakness in internal control over financial reporting as of March 31, 2021. In lighteffectiveness of the material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements in this Quarterly Report on Form 10-Q were prepared in accordance with U.S. generally accepted accounting principles.
Our management evaluated, with the participation of our principal executive officerdesign and principal financial and accounting officer (our “Certifying Officers”), the effectivenessoperation of our disclosure controls and procedures as of March 31, 2021, pursuant to Rule 13a-15(b) under the Exchange Act2023. Based upon their evaluation, our Chief Executive Officer and determinedChief Financial Officer concluded that due solely to the material weakness in our internal control over financial reporting, our disclosure controls and procedures were not effective as of March 31, 2021.2023 due to the material weakness in our internal controls during the year ended 2022 over accounting and reporting complex financial instruments including the proper classification of warrants as liabilities and redeemable Class A ordinary shares as temporary equity and prepaid expenses between current and non-current, and under accrual of liabilities. These material weaknesses in our internal controls have not been remediated as of March 31, 2023. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited interim financial statements were prepared in accordance with U.S. generally accepted accounting principles. Management is implementing remediation stepsAccordingly, management believes that the financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the periods presented.
Regarding the restatement to address the September 30, 2021 quarterly financial statements included in the Company’s Form10-Q, as filed with the SEC on November 22, 2021, the change in fair value of warrants on the Company’s condensed statement of operations for the three months ended September 30 2021 and for the period from January 11, 2021 (inception) to September 30 2021 and warrant liability on the Company’s condensed balance sheet as of September 30, 2021 were misstated. The Company restated its financial statements in an amendment to the Q3 Form10-Q. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited interim financial statements were prepared in accordance with U.S. generally accepted accounting principles.
Regarding the restatements to the March 31, 2021, and June 30, 2021 quarterly financial statements included in the Company’s Form 10-Qs,as filed with the SEC on June 4, 2021 and August 16, 2021, respectively, as well as the Company’s balance sheet included on the Company’s Form8-K,as filed with the SEC on March 24, 2021, certain redemption provisions not solely within the control of the Company require ordinary shares subject to improveredemption to be classified outside of permanent equity. The Company had previously classified a portion of the Class A ordinary shares in permanent equity. The Company restated its financial statements to classify all Class A ordinary shares as temporary equity and any related impact, as the threshold in its charter would not change the nature of the underlying shares as redeemable and thus would be required to be disclosed outside of permanent equity. It is noted that the non-cash adjustments to the financial statements do not impact the amounts previously reported for our internal control overcash and cash equivalents or total assets. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited interim financial reporting. Specifically, we are expanding and improving our review process for complex securities and relatedstatements were prepared in accordance with U.S. generally accepted accounting standards.principles.
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Changes in Internal Control over Financial Reporting
There werewas no changeschange in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)that occurred during the most recent fiscal quarterthree months ended March 31, 2023 covered by this Quarterly Report on Form 10-Q that havehas materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting, as the circumstances that led to the restatement of our previously filed financial statements described above had not yet been identified.reporting. In light of the restatement of the previously filed financial statements,material weakness, we plan to enhancehave enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
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ThereFactors that could cause our actual results to differ materially from those in this report include the risk factors described in our Annual Report on Form 10-K filed with the SEC on April 17, 2023. As of the date of this Report, there have been no material changes fromto the risk factors previously disclosed in the Company’s final prospectus for the Initial Public Offering assuch Annual Report on Form 10-K and our Quarterly Report on Form 10-Q filed with the SEC on March 17, 2021, except for the below risk factors.May 16, 2022. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Our Warrants are accounted for as liabilities and the changes in value of our Warrants could have a material effect on our financial results.
On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together 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 warrants that have certain settlement terms and provisions related to certain tender offers or warrants which do not meet the criteria to be considered indexed to an entity’s own stock, which terms are similar to those contained in the warrant agreement governing our Warrants. As a result of the SEC Statement, we reevaluated the accounting treatment of our 6,000,000 Public Warrants and 6,000,000 Private Placement Warrants, and determined that the Warrants should be reclassified as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
As a result, included on our balance sheet as of March 31, 2021 contained elsewhere in this Form 10-Q are derivative liabilities related to embedded features contained within our Warrants. Accounting Standards Codification 815-40, “Derivatives and Hedging —Contracts on an Entity’s Own Equity”, provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of operations. As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly, based on factors, which are outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our Warrants each reporting period and that the amount of such gains or losses could be material.
We have identified a material weakness in our internal control over financial reporting. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
Following issuance of the SEC Staff Statement on April 12, 2021, and after consultation with our independent registered public accounting firm, our management and our audit committee concluded that, in light of the SEC Statement, it was appropriate to restate our previously issued audited balance sheet as of March 18, 2021 to account for the warrants as liabilities measured at fair value, rather than equity securities (the “Restatement”). See “—Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.” As a result of these events, which led to the Restatement, we have identified a material weakness in our internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. If we identify any new material weakness in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and the price of our securities may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
Unregistered SalesNone.
On January 13, 2021, our Sponsor paid an aggregate of $25,000 for certain of our expenses in exchange for issuance of 8,625,000 Class B ordinary shares (the “Founder Shares”). Our Sponsor agreed to forfeit up to an aggregate of 1,125,000 Founder Shares to the extent that the option to purchase additional Units is not exercised in full by the underwriters or is reduced, so that the Founder Shares will represent 20% of our issued and outstanding shares after the Initial Public Offering. Such securities were issued in connection with the Company’s organization pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
On March 18, 2021 our Sponsor purchased 6,000,000 Private Placement Warrants, each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.50 per Private Placement Warrant, generating gross proceeds of approximately $9.0 million, in a private placement that closed simultaneously with the closing of the Initial Public Offering. These issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
No underwriting discounts or commissions were paid with respect to such sales.
Use of Proceeds
On March 18, 2021, we consummated the Initial Public Offering of 30,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $300.0 million. The underwriter was granted a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 4,500,000 additional Units to cover over-allotments, if any, at $10.00 per Unit..
In connection with the Initial Public Offering, we incurred offering costs of approximately $17.3 million, inclusive of approximately $10.5 million in deferred underwriting commissions. Other incurred offering costs consisted principally of preparation fees related to the Initial Public Offering. After deducting the underwriting discounts and commissions (excluding the deferred portion, which amount will be payable upon consummation of the Initial Business Combination, if consummated) and the Initial Public Offering expenses, $300,000,000 of the net proceeds from our Initial Public Offering and certain of the proceeds from the private placement of the Private Placement Warrants (or $10.00 per Unit sold in the Initial Public Offering) was placed in the Trust Account. The net proceeds of the Initial Public Offering and certain proceeds from the sale of the Private Placement Warrants are held in the Trust Account and invested as described elsewhere in this Quarterly Report on Form 10-Q.
There has been no material change in the planned use of the proceeds from the Initial Public Offering and Private Placement as is described in the Company’s final prospectus related to the Initial Public Offering.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
None.
Item 6. Exhibits. |
| * | Filed herewith. |
| ** | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. | |
| (1) | Incorporated by reference to the registrant’s Current Report on Form 8-K, filed with the SEC on March 6, 2023. | |
| (2) | Incorporated by reference to the registrant’s Current Report on Form 8-K, filed with the SEC on March 22, 2023. | |
| (3) | Incorporated by reference to the registrant’s Current Report on Form 8-K, filed with the SEC on March 21, 2023. | |
| (4) | Incorporated by reference to Exhibit 10.13 to the registrant’s Annual Report on Form 10-K, filed with the SEC on April 17, 2023. |
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 on this 4th23rd day of June 2021.May 2023.
| Plum Acquisition Corp. I | ||
| By: | /s/ Michael Dinsdale | |
| Name: | Michael Dinsdale | |
| Title: | Chief Financial Officer | |
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