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, 2022
or
| |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number:001-41378
CARTESIAN GROWTH CORPORATION II
(Exact name of registrant as specified in its charter)
| | |
Cayman Islands | N/A | |
(State or other jurisdiction of | | (I.R.S. Employer |
incorporation or organization) | | Identification No.) |
| | |
505 Fifth Avenue, 15th FloorNew York, New York | | 10017 |
(Address of principal executive offices) | | (Zip Code) |
(212)461-6363
(Registrant’s telephone number, including area code)
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 Class A Ordinary Share and | | RENEU | | The Nasdaq Stock Market LLC |
Class A Ordinary Shares, par value $0.0001 per share | | RENE | | The Nasdaq Stock Market LLC |
Warrants, each whole warrant exercisable for one Class A Ordinary Share, at an exercise price of $11.50 | | RENEW | | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (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 registrant 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 registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T( S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
| | | | | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| | | | | ||
Non-accelerated filer | ☒ | | Smaller reporting company | ☒ | ||
| | | | | ||
| | | Emerging growth company | ☒ |
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
As of November 8, 2022,9, 2023, there were 23,000,00028,749,998 Class A ordinary shares, par value $0.0001 per share, and 5,750,000two Class B ordinary shares, par value $0.0001 per share, issued and outstanding.
CARTESIAN GROWTH CORPORATION II
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 20222023
TABLE OF CONTENTS
CARTESIAN GROWTH CORPORATION II
September 30, 2022 (Unaudited) | December 31, 2021 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 660,551 | $ | — | ||||
Prepaid expenses | 381,543 | — | ||||||
Total Current assets | 1,042,094 | — | ||||||
Deferred offering costs | — | 463,629 | ||||||
Long-term prepaid expenses | 30,266 | — | ||||||
Cash and marketable securities held in Trust Account | 237,952,221 | — | ||||||
TOTAL ASSETS | $ | 239,024,581 | $ | 463,629 | ||||
LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY | ||||||||
Current liabilities | ||||||||
Accrued expenses | $ | 162,264 | $ | — | ||||
Accrued offering costs | 75,000 | 303,895 | ||||||
Promissory note – related party | — | 138,461 | ||||||
Total Current liabilities | 237,264 | 442,356 | ||||||
Warrant liabilities | 1,662,015 | — | ||||||
Convertible promissory note – related party, at fair value | 3,348,386 | — | ||||||
Deferred underwriting fee | 11,500,000 | — | ||||||
TOTAL LIABILITIES | 16,747,665 | 442,356 | ||||||
COMMITMENTS AND CONTINGENCIES (Note 6) | ||||||||
Class A ordinary shares subject to possible redemption 23,000,000 and 0 shares at redemption value of $10.35 and $0, respectively, per share at September 30, 2022 and December 31, 2021 | 237,952,221 | — | ||||||
SHAREHOLDERS’ (DEFICIT) EQUITY | ||||||||
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; none issued and outstanding (excluding 23,000,000 and 0 shares subject to possible redemption) at September 30, 2022 and December 31, 2021 | — | — | ||||||
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 5,750,000 shares issued and outstanding (1) at September 30, 2022 and December 31, 2021 | 575 | 575 | ||||||
Additional paid-in capital | — | 24,425 | ||||||
Accumulated deficit | (15,675,880 | ) | (3,727 | ) | ||||
TOTAL SHAREHOLDERS’ (DEFICIT) EQUITY | (15,675,305 | ) | 21,273 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | $ | 239,024,581 | $ | 463,629 | ||||
| | | | | | |
| | September 30, | | | | |
| | 2023 | | December 31, | ||
|
| (Unaudited) |
| 2022 | ||
ASSETS | |
| | |
| |
Current assets | |
| | |
| |
Cash | | $ | 26,981 | | $ | 543,667 |
Prepaid expenses | |
| 53,599 | |
| 306,733 |
Total Current assets | |
| 80,580 | |
| 850,400 |
| | | | | | |
Cash and marketable securities held in Trust Account | |
| 248,671,364 | |
| 239,745,907 |
TOTAL ASSETS | | $ | 248,751,944 | | $ | 240,596,307 |
| | | | | | |
LIABILITIES AND SHAREHOLDERS’ DEFICIT | |
|
| |
|
|
Current liabilities | |
|
| |
|
|
Accrued expenses | | $ | 218,146 | | $ | 148,911 |
Accrued offering costs | |
| — | |
| 70,000 |
Total Current liabilities | |
| 218,146 | |
| 218,911 |
| | | | | | |
Warrant liabilities | |
| 2,670,973 | |
| 3,826,696 |
Convertible promissory note – related party, at fair value | |
| 3,358,426 | |
| 3,342,932 |
Deferred underwriting fee | |
| 11,500,000 | |
| 11,500,000 |
TOTAL LIABILITIES | |
| 17,747,545 | |
| 18,888,539 |
| | | | | | |
COMMITMENTS AND CONTINGENCIES (Note 6) | |
|
| |
|
|
Class A ordinary shares subject to possible redemption; 23,000,000 shares at redemption value of $10.81 and $10.42 per share at September 30, 2023 and December 31, 2022, respectively | |
| 248,671,364 | |
| 239,745,907 |
| | | | | | |
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; 200,000,000 shares authorized; 5,749,998 and 0 issued outstanding (excluding 23,000,000 subject to possible redemption) at September 30, 2023 and December 31, 2022, respectively | |
| 575 | |
| — |
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 2 and 5,750,000 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | |
| — | |
| 575 |
Additional paid-in capital | |
| — | |
| — |
Accumulated deficit | |
| (17,667,540) | |
| (18,038,714) |
TOTAL SHAREHOLDERS’ DEFICIT | |
| (17,666,965) | |
| (18,038,139) |
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | | $ | 248,751,944 | | $ | 240,596,307 |
The accompanying notes are an integral part of the unaudited condensed financial statements.
1
(UNAUDITED)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2022 | 2022 | |||||||
Operating and formation costs | $ | 256,058 | $ | 481,449 | ||||
Loss from operations | (256,058 | ) | (481,449 | ) | ||||
Other income (expense): | ||||||||
Change in fair value of warrant liabilities | 4,284,045 | 3,871,253 | ||||||
Change in fair value of convertible promissory note – related party | 817,163 | 1,251,614 | ||||||
Transaction costs allocated to warrant liabilities | — | (195,984 | ) | |||||
Interest earned on cash and marketable securities held in Trust Account | 1,037,897 | 1,052,221 | ||||||
Other income, net | 6,139,105 | 5,979,104 | ||||||
Net income | $ | 5,883,047 | $ | 5,497,655 | ||||
Basic and diluted weighted average shares outstanding, Shares subject to possible redemption | 23,000,000 | 12,131,868 | ||||||
Basic and diluted net income per ordinary share, shares subject to possible redemption | $ | 0.20 | $ | 0.31 | ||||
Basic weighted average shares outstanding, Non-redeemable Class B ordinary shares | 5,750,000 | 5,394,301 | ||||||
Basic net income per share, non-redeemable Class B ordinary shares | $ | 0.20 | $ | 0.31 | ||||
Diluted weighted average shares outstanding, Non-redeemable Class B ordinary shares | 5,750,000 | 5,750,000 | ||||||
Diluted net income per share, non-redeemable Class B ordinary shares | $ | 0.20 | $ | 0.31 | ||||
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
|
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||
Operating and formation costs | | $ | 218,279 | | $ | 256,058 | | $ | 769,055 | | $ | 481,449 |
Loss from operations | |
| (218,279) | |
| (256,058) | |
| (769,055) | |
| (481,449) |
Other income: | |
|
| |
|
| |
|
| |
|
|
Change in fair value of warrant liabilities | |
| (10,309) | |
| 4,284,045 | |
| 1,155,723 | |
| 3,871,253 |
Change in fair value of convertible promissory note – related party | |
| (1,102,459) | |
| 817,163 | |
| (15,494) | |
| 1,251,614 |
Transaction costs allocated to warrant liabilities | |
| — | |
| — | |
| — | |
| (195,984) |
Interest earned on cash and marketable securities held in Trust Account | |
| 3,197,705 | |
| 1,037,897 | |
| 8,925,457 | |
| 1,052,221 |
Total other income, net | |
| 2,084,937 | |
| 6,139,105 | |
| 10,065,686 | |
| 5,979,104 |
Net income | | $ | 1,866,658 | | $ | 5,883,047 | | $ | 9,296,631 | | $ | 5,497,655 |
| | | | | | | | | | | | |
Basic and diluted weighted average shares outstanding, Class A ordinary shares subject to possible redemption | |
| 23,000,000 | |
| 23,000,000 | |
| 23,000,000 | |
| 12,131,868 |
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption | | $ | 0.06 | | $ | 0.20 | | $ | 0.32 | | $ | 0.31 |
Basic weighted average shares outstanding, non-redeemable Class A and Class B ordinary shares | |
| 5,750,000 | |
| 5,750,000 | |
| 5,750,000 | |
| 5,394,301 |
Basic net income per share, non-redeemable Class A and Class B ordinary shares | | $ | 0.06 | | $ | 0.20 | | $ | 0.32 | | $ | 0.31 |
Diluted weighted average shares outstanding, non-redeemable Class A and Class B ordinary shares | |
| 5,750,000 | |
| 5,750,000 | |
| 5,750,000 | |
| 5,750,000 |
Diluted net income per share, non-redeemable Class A and Class B ordinary shares | | $ | 0.06 | | $ | 0.20 | | $ | 0.32 | | $ | 0.31 |
The accompanying notes are an integral part of the unaudited condensed financial statements.
2
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
| | | | | | | | | | | | | | | | | | | |
| | Class A |
| Class B |
| Additional |
| | |
| Total | ||||||||
| | Ordinary Shares | | Ordinary Shares | | Paid-in | | Accumulated | | Shareholders’ | |||||||||
|
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | |||||
Balance — January 1, 2023 | | — | | $ | — | | 5,750,000 | | $ | 575 | | $ | — | | $ | (18,038,714) | | $ | (18,038,139) |
Remeasurement for Class A ordinary shares subject to possible redemption amount |
| — |
| | — |
| — |
| | — |
| | — |
| | (2,902,118) |
| | (2,902,118) |
Net income |
| — |
| | — |
| — |
| | — |
| | — |
| | 3,710,757 |
| | 3,710,757 |
Balance – March 31, 2023 |
| — | | $ | — |
| 5,750,000 | | $ | 575 | | $ | — | | $ | (17,230,075) | | $ | (17,229,500) |
Remeasurement for Class A ordinary shares subject to possible redemption amount |
| — | |
| — |
| — | |
| — | |
| — | |
| (2,825,634) | |
| (2,825,634) |
Net income |
| — | |
| — |
| — | |
| — | |
| — | |
| 3,719,216 | |
| 3,719,216 |
Balance – June 30, 2023 |
| — | | $ | — |
| 5,750,000 | | $ | 575 | | $ | — | | $ | (16,336,493) | | $ | (16,335,918) |
Remeasurement for Class A ordinary shares subject to possible redemption amount |
| — | |
| — |
| — | |
| — | |
| — | |
| (3,197,705) | |
| (3,197,705) |
Conversion of Class B ordinary shares to Class A ordinary shares |
| 5,749,998 | |
| 575 |
| (5,749,998) | |
| (575) | |
| — | |
| — | |
| — |
Net income |
| — | |
| — |
| — | |
| — | |
| — | |
| 1,866,658 | |
| 1,866,658 |
Balance – September 30, 2023 |
| 5,749,998 | | $ | 575 |
| 2 | | $ | — | | $ | — | | $ | (17,667,540) | | $ | (17,666,965) |
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022
Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ (Deficit) Equity | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance — January 1, 2022 | — | $ | — | 5,750,000 | $ | 575 | $ | 24,425 | $ | (3,727 | ) | $ | 21,273 | |||||||||||||||
Net loss | — | — | — | — | — | — | — | |||||||||||||||||||||
Balance – March 31, 2022 | — | $ | — | 5,750,000 | $ | 575 | $ | 24,425 | $ | (3,727 | ) | $ | 21,273 | |||||||||||||||
Remeasurement for Class A ordinary shares subject to possible redemption amount | — | — | — | — | (5,951,825 | ) | (20,131,911 | ) | (26,083,736 | ) | ||||||||||||||||||
Sale of 8,900,000 Private Placement Warrants | — | — | — | — | 5,927,400 | — | 5,927,400 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (385,392 | ) | (385,392 | ) | |||||||||||||||||||
Balance – June 30, 2022 | — | $ | — | 5,750,000 | $ | 575 | $ | — | $ | (20,521,030 | ) | $ | (20,520,455 | ) | ||||||||||||||
Remeasurement for Class A ordinary shares subject to possible redemption amoun t | — | — | — | — | — | (1,037,897 | ) | (1,037,897 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | 5,883,047 | 5,883,047 | |||||||||||||||||||||
Balance – September 30, 2022 | — | $ | — | 5,750,000 | $ | 575 | $ | — | $ | (15,675,880 | ) | $ | (15,675,305 | ) | ||||||||||||||
| | | | | | | | | | | | | | | | | | | |
| | Class A | | Class B | | Additional | | | | | Total | ||||||||
| | Ordinary Shares | | Ordinary Shares | | Paid-in | | Accumulated | | Shareholders’ | |||||||||
|
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity (Deficit) | |||||
Balance — January 1, 2022 |
| — | | $ | — |
| 5,750,000 | | $ | 575 | | $ | 24,425 | | $ | (3,727) | | $ | 21,273 |
Net loss |
| — | |
| — |
| — | |
| — | |
| — | |
| — | |
| — |
Balance – March 31, 2022 |
| — | | $ | — |
| 5,750,000 | | $ | 575 | | $ | 24,425 | | $ | (3,727) | | $ | 21,273 |
Remeasurement for Class A ordinary shares subject to possible redemption amount |
| — | |
| — |
| — | |
| — | |
| (5,951,825) | |
| (20,131,911) | |
| (26,083,736) |
Sale of 8,900,000 Private Placement Warrants |
| — | |
| — |
| — | |
| — | |
| 5,927,400 | |
| — | |
| 5,927,400 |
Net loss |
| — | |
| — |
| — | |
| — | |
| — | |
| (385,392) | |
| (385,392) |
Balance – June 30, 2022 |
| — | | $ | — |
| 5,750,000 | | $ | 575 | | $ | — | | $ | (20,521,030) | | $ | (20,520,455) |
Remeasurement for Class A ordinary shares subject to possible redemption amount |
| — | |
| — |
| — | |
| — | |
| — | |
| (1,037,897) | |
| (1,037,897) |
Net income |
| — | |
| — |
| — | |
| — | |
| — | |
| 5,883,047 | |
| 5,883,047 |
Balance – September 30, 2022 |
| — | | $ | — |
| 5,750,000 | | $ | 575 | | $ | — | | $ | (15,675,880) | | $ | (15,675,305) |
The accompanying notes are an integral part of the unaudited condensed financial statements.
3
(UNAUDITED)
Nine Months Ended September 30, 2022 | ||||
Cash Flows from Operating Activities: | ||||
Net income | $ | 5,497,655 | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Interest earned on cash and marketable securities held in Trust Account | (1,052,221 | ) | ||
Transaction costs | 195,984 | |||
Change in fair value of convertible promissory note – related party | (1,251,614 | ) | ||
Change in fair value of warrant liabilities | (3,871,253 | ) | ||
Changes in operating assets and liabilities: | ||||
Prepaid expenses and other current assets | (411,809 | ) | ||
Accrued expense s | 162,264 | |||
Net cash used in operating activities | (730,994 | ) | ||
Cash Flows from Investing Activities: | ||||
Investment of cash in Trust Account | (236,900,000 | ) | ||
Net cash used in investing activities | (236,900,000 | ) | ||
Cash Flows from Financing Activities: | ||||
Proceeds from sale of Units, net of underwriting commissions paid | 225,400,000 | |||
Proceeds from sale of Private Placement warrants | 8,900,000 | |||
Proceeds from promissory note – related party | 77,944 | |||
Repayment of promissory note – related party | (216,405 | ) | ||
Proceeds from convertible promissory note - related party | 4,600,000 | |||
Payment of offering costs | (469,994 | ) | ||
Net cash provided by financing activities | 238,291,545 | |||
Net Change in Cash | 660,551 | |||
Cash – Beginning of period | — | |||
Cash – End of period | $ | 660,551 | ||
Non-Cash investing and financing activities: | ||||
Offering costs included in accrued offering costs | $ | 75,000 | ||
Remeasurement of Class A ordinary shares subject to possible redemption | $ | 27,121,633 | ||
Deferred underwriting fee payable | $ | 11,500,000 | ||
| | | | | | |
| | Nine months Ended September 30, | ||||
|
| 2023 |
| 2022 | ||
Cash Flows from Operating Activities: |
| |
|
| |
|
Net income | | $ | 9,296,631 | | $ | 5,497,655 |
Adjustments to reconcile net income to net cash used in operating activities: | |
|
| |
|
|
Interest earned on cash and marketable securities held in Trust Account | |
| (8,925,457) | |
| (1,052,221) |
Transaction costs | |
| — | |
| 195,984 |
Change in fair value of convertible promissory note – related party | |
| 15,494 | |
| (1,251,614) |
Change in fair value of warrant liabilities | |
| (1,155,723) | |
| (3,871,253) |
Changes in operating assets and liabilities: | |
|
| |
|
|
Prepaid expenses and other current assets | |
| 253,134 | |
| (411,809) |
Accrued expenses | |
| 69,235 | |
| 162,264 |
Net cash used in operating activities | |
| (446,686) | |
| (730,994) |
| | | | | | |
Cash Flows from Investing Activities: | |
|
| |
|
|
Investment of cash in Trust Account | |
| — | |
| (236,900,000) |
Net cash used in investing activities | |
| — | |
| (236,900,000) |
| | | | | | |
Cash Flows from Financing Activities: | |
|
| |
|
|
Proceeds from sale of Units, net of underwriting commissions paid | |
| — | |
| 225,400,000 |
Proceeds from sale of Private Placement warrants | |
| — | |
| 8,900,000 |
Proceeds from promissory note – related party | |
| — | |
| 77,944 |
Repayment of promissory note – related party | |
| — | |
| (216,405) |
Proceeds from convertible promissory note – related party | |
| — | |
| 4,600,000 |
Payment of offering costs | |
| (70,000) | |
| (469,994) |
Net cash (used in) provided by financing activities | |
| (70,000) | |
| 238,291,545 |
| | | | | | |
Net Change in Cash | |
| (516,686) | |
| 660,551 |
Cash – Beginning of period | |
| 543,667 | |
| — |
Cash – End of period | | $ | 26,981 | | $ | 660,551 |
| | | | | | |
Non-Cash investing and financing activities: | |
|
| |
|
|
Offering costs included in accrued offering costs | | $ | — | | $ | 75,000 |
Remeasurement of Class A ordinary shares subject to possible redemption | | $ | 8,925,457 | | $ | 27,121,633 |
Deferred offering costs included in accrued offering costs | | $ | — | | $ | 11,500,000 |
The accompanying notes are an integral part of the unaudited condensed financial statements.
4
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
Cartesian Growth Corporation II (the “Company”) was incorporated as a Cayman Islands exempted company on October 13, 2021. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or engaging in any other similar business combination with one or more businesses or entities (the “Business Combination”).
As of September 30, 2022,2023, the Company had not commenced any operations. All activity for the period from October 13, 2021 (inception) through September 30, 20222023 relates to the Company’s formation and its initial public offering (the “Initial Public Offering”), and subsequent to the Initial Public Offering, 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 generates
The Company’s Sponsor is CGC II Sponsor LLC, a Cayman Islands limited liability company (the “Sponsor”).
On May 10, 2022, the Company consummated the Initial Public Offering of 23,000,000 units (the “Units”), which includes the issuance of 3,000,000 Units as a result of the underwriters’ full exercise of their overallotment option, at $10.00 per Unit, generating gross proceeds of $230,000,000, which is discussed in Note 3. Each Unit consists of one Class A ordinary share of the Company, $0.0001 par value per share (the “Class A Ordinary Shares”) and
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 8,900,000 warrants (the “Private Placement Warrants”), each exercisable to purchase one Class A Ordinary Share at $11.50 per share, at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, Cantor Fitzgerald & Co. and Piper Sandler & Co. and/or their respective designees,, generating gross proceeds of $8,900,000, which is discussed in Note 4.
Simultaneously with the consummation of the Initial Public Offering, the Sponsor loaned the Company $4,600,000, pursuant to a promissory note at no interest (the “Sponsor Loan”). The Sponsor Loan will be repaid or converted into sponsor loan warrants (the “Sponsor Loan Warrants”) at a conversion price of $1.00 per Sponsor Loan Warrant, at the Sponsor’s discretion. The Sponsor Loan Warrants will be identical to the Private Placement Warrants. If the Company does not complete an initial Business Combination, the Company will not repay the Sponsor Loan from amounts held in a trust account established for the benefit of the Company’s public shareholders (the “Trust Account”), and the proceeds held in the Trust Account will be distributed to the holders of the Class A Ordinary Shares.
Transaction costs of the Initial Public Offering amounted to $16,804,728, consisting of $4,600,000 of underwriting commissions, $11,500,000 of deferred underwriting commissions and $704,728 of other offering costs.
Following the closing of the Initial Public Offering on May 10, 2022, an amount of $236,900,000 ($10.30 per Unit) from the net proceeds of the Initial Public Offering, the sale of the Private Placement Warrants and the Sponsor Loan, was placed in the Trust Account and will be invested only in U.S. government treasury obligations having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule
6
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
The Company will provide its public shareholders with the opportunity to redeem all or a portion of their Class A Ordinary Shares upon the completion of an initial Business Combination either (i) in connection with a general meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed Business Combination or conduct a tender offer will be made by the Company, solely in the Company’s discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require the Company to seek shareholder approval under the law or stock exchange listing requirements.
The Company will provide its public shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial Business Combination at a
If the Company has not consummated 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
The Company’s initial shareholders, officers and directors have agreed to (i) to waive their redemption rights with respect to their founder shares and any public shares purchased during or after the Initial Public Offering in connection with the completion of the initial Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to their founder shares if the Company fails to complete an initial Business Combination within the Combination Period, although they will be entitled to liquidating distributions from the Trust Account with respect to any public shares they hold if the Company fails to complete the initial Business Combination within the Combination Period, and (iii) vote their founder shares and public shares in favor of the Company’s initial Business Combination.
The Sponsor has agreed 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 discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended, (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, then the Sponsor will not be responsible to the extent of any liability for such third party claims. The Company has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and the Company has not asked the Sponsor to reserve for such indemnification obligations. Therefore, the Company cannot assure you that the Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for the initial Business Combination and redemptions could be reduced to less than $10.30 per public share. In such event, the Company may not be able to complete the initial Business Combination, and you would receive such lesser amount per share in connection with any redemption of the public shares. 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.
7
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Risks and Uncertainties
Management continues to evaluate the impact of the
The military conflict commenced in February 2022 by the Russian Federation in Ukraine and the surrounding region, and Hamas’ attack of Israel and the ensuing war, has created and is expected to create further global economic consequences, including but not limited to the possibility of extreme volatility and disruptions in the financial markets, diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in inflation rates and uncertainty about economic and political stability. Such global consequences may materially and adversely affect the Company’s ability to consummate an initial Business Combination, or the operations of a target business with which the Company ultimately consummates an initial Business Combination. In addition, the Company’s ability to consummate an initial Business Combination 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 global economy and the specific impact on the Company’s financial position, results of operations and/or ability to consummate an initial 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.
Going Concern
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) Subtopic
As of September 30, 2022,2023, the Company had $660,551$26,981 in its operating bank accounts, $237,952,221account, $248,671,364 in cash and marketable securities held in the Trust Account to be used for the completion of a Business Combination and/or for the redemption of the public shares if the Company is unable to complete a Business Combination within the Combination Period (subject to applicable law), and working capital deficit of $804,830.
Until the consummation of a Business Combination or the Company’s liquidation, the Company will use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination, and to pay for directors and officers liability insurance premiums.
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company Working Capital Loans (as defined below) (see Note 5).
8
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
NOTE 2. SUMMARY OF 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 rules and regulations of the SEC. 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 reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s CurrentAnnual Report on Form
Emerging Growth Company
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 shareholder approval of any golden parachute payments not previously approved.
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
Use of Estimates
The preparation of the unaudited condensed financial statements in conformity with GAAP requires the Company’s 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 unaudited condensed financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
9
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
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 cash of $660,551$26,981 and $0, respectively,$543,667 as of September 30, 20222023 and December 31, 2021.2022, respectively. The Company did
Cash and Marketable Securities Held in Trust Account
At September 30, 2023 and December 31, 2022, substantially all of the assets held in the Trust Account were held in primarily in U.S. Treasury securities. The Company did not have any assetsAll of the Company’s investments held in Trust Account are classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying statements of operations. The estimated fair values of investments held in Trust Account as of December 31, 2021.
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 Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
The failures of Silicon Valley Bank and Signature Bank on March 10, 2023, raised significant concerns regarding potential risks to deposits at First Republic Bank (“FRB”), including the discretionary working capital account of the Company held at FRB (the “FRB WC Account”). On March 10, 2023, the Company and its management moved to protect the funds in the FRB WC Account by reducing the funds held within the FRB WC Account to $250,000 (the amount covered by FDIC deposit account insurance) and transferring (the “Protective Transfer”), for the benefit of the Company and its shareholders, an aggregate amount of $200,000 (the “At-Risk Funds”) to a bank account at FRB held by the Sponsor. In connection with the foregoing, the Company entered into a letter agreement with Sponsor pursuant to which, Sponsor agreed (i) that the transfer of the At-Risk Funds was effected solely as an accommodation in order to protect such funds on behalf of the Company and its shareholders, (ii) that the At-Risk Funds are the legal property of the Company in all respects, (iii) that Sponsor (x) will hold the At-Risk Funds as and until directed by the Company, (y) will disburse the At-Risk Funds only to or as directed by the Company upon the Company’s written instruction, and (z) has no direct control over the At-Risk Funds in any respect, (iv) not to charge any escrow or accommodation fee to the Company, and (v) to indemnify the Company and its shareholders, directors and officers from and against any losses suffered or incurred as a result of the transfer of the At-Risk Funds. On March 27, 2023, the Company opened a bank account at Customers Bank and on March 28, 2023, the Company directed the Sponsor to transfer the At-Risk Funds to such account. On July 5, 2023, the Company directed the Sponsor to return the At-Risk Funds to the Company’s operating account. As of September 30, 2023, there were no funds held at Customers Bank and the funds held at FRB were below the federally insured limit.
Offering Costs
The Company complies with the requirements of ASC
10
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
The Class A Ordinary Shares contain a redemption feature which allows for the redemption of such shares in connection with the Company’s liquidation, or if there is a shareholder vote or tender offer in connection with the Company’s initial Business Combination. In accordance with FASB ASC
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable Class A Ordinary Shares to equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the remeasurement from initial book value to redemption value. The redemption value of the Class A Ordinary Shares does not take into account $100,000 of dissolution expenses, as such dissolution expenses only will be taken into account in the event of the Company’s liquidation. The change in the carrying value of redeemable Class A Ordinary Shares resulted in charges against additional
At September 30, 2023 and December 31, 2022, the Class A Ordinary Shares reflected in the condensed balance sheets are reconciled in the following table:
Gross proceeds | $ | 230,000,000 | ||
Less: | ||||
Proceeds allocated to public warrants | (2,560,668 | ) | ||
Class A Ordinary Shares issuance costs | (16,608,744 | ) | ||
Plus: | ||||
Remeasurement of carrying value to redemption value | 27,121,633 | |||
Class A Ordinary Shares subject to possible redemption | $ | 237,952,221 | ||
| | | |
Gross proceeds |
| $ | 230,000,000 |
Less: | |
|
|
Proceeds allocated to public warrants | |
| (2,560,668) |
Class A Ordinary Shares issuance costs | |
| (16,608,744) |
Plus: | |
|
|
Remeasurement of carrying value to redemption value | |
| 28,915,319 |
Class A Ordinary Shares subject to possible redemption, December 31, 2022 | | $ | 239,745,907 |
Plus: | |
|
|
Remeasurement of carrying value to redemption value | |
| 8,925,457 |
Class A Ordinary Shares subject to possible redemption, September 30, 2023 | | $ | 248,671,364 |
Income Taxes
The Company accounts for income taxes under the FASB ASC Topic 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both (i) the expected impact of differences between the financial statements and tax basis of assets and liabilities and (ii) the expected future tax benefit to be derived from tax loss and tax credit carry forwards. 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.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions 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. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of September 30, 20222023 and December 31, 2021,2022, there were no unrecognized tax benefits and no amounts were accrued for the payment of interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. Since its inception, the Company is subject to income tax examinations by major taxing authorities.
11
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
The Company is currentlyconsidered to be an exempted Cayman Islands company with no taxation imposed onconnection to any other taxable jurisdiction and is presently not subject to income by the government of the Cayman Islands. In accordance withtaxes or income tax regulations offiling requirements in the Cayman Islands income taxes are not levied onor the Company.United States. Consequently, income taxes are not reflected in the Company’s unaudited condensed financial statements.
Net Income per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income per ordinary share is computed by dividing net income by the weighted average number of shares of ordinary shares outstanding for the period. The Company has two classes of ordinary shares, which are referred to as redeemable Class A Ordinary Shares and non-redeemable Class A and Class B ordinary shares. Accretion associated with the redeemable shares of Class A Ordinary Shares is excluded from income per ordinary share as the redemption value approximates fair value.
The calculation of diluted income per ordinary share does not consider the effect of the warrants issued in connection with the Initial Public Offering and the Private Placement Warrants since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase 16,566,666 Class A Ordinary Shares in the aggregate. As of September 30, 2023 and 2022, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into ordinary shares that then share in the earnings of the Company, except for 750,000 Class BA ordinary shares which are no longer subject to forfeiture and thus included for dilutive purposes. As a result, diluted net income per ordinary share is the same as basic net income (loss) per ordinary share for the periods presented.
The following table reflects the calculation of basic and diluted net income per ordinary share (in dollars, except per share amounts):
| | | | | | | | | | | | |
|
| Three Months Ended September 30, | ||||||||||
| | 2023 | | 2022 | ||||||||
|
| | |
| Non- |
| | |
| Non- | ||
| | | | | Redeemable | | | | | Redeemable | ||
| | Redeemable | | Class A and | | Redeemable | | Class A and | ||||
| | Class A | | Class B | | Class A | | Class B | ||||
Basic and diluted net income per ordinary share Numerator: |
| |
|
| |
|
| |
|
| |
|
Allocation of net income | | $ | 1,493,326 | | $ | 373,332 | | $ | 4,706,438 | | $ | 1,176,609 |
Denominator: | |
|
| |
|
| |
|
| |
|
|
Basic and diluted weighted average shares outstanding | |
| 23,000,000 | |
| 5,750,000 | |
| 23,000,000 | |
| 5,750,000 |
Basic and diluted net income per ordinary share | | $ | 0.06 | | $ | 0.06 | | $ | 0.20 | | $ | 0.20 |
| | | | | | | | | | | | |
|
| Nine Months Ended September 30, | ||||||||||
| | 2023 | | 2022 | ||||||||
|
| | |
| Non- |
| | |
| Non- | ||
| | | | | Redeemable | | | | | Redeemable | ||
| | Redeemable | | Class A and | | Redeemable | | Class A and | ||||
| | Class A | | Class B | | Class A | | Class B | ||||
Basic net income per ordinary share Numerator: |
| |
|
| |
|
| |
|
| |
|
Allocation of net income | | $ | 7,437,305 | | $ | 1,859,326 | | $ | 3,805,556 | | $ | 1,692,099 |
Denominator: | |
|
| |
|
| |
|
| |
|
|
Basic weighted average shares outstanding | |
| 23,000,000 | |
| 5,750,000 | |
| 12,131,868 | |
| 5,394,301 |
Basic net income per ordinary share | | $ | 0.32 | | $ | 0.32 | | $ | 0.31 | | $ | 0.31 |
12
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2022 | 2022 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic net income per ordinary share | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 4,706,438 | $ | 1,176,609 | $ | 3,805,556 | $ | 1,692,099 | ||||||||
Denominator: | ||||||||||||||||
Basic weighted average shares outstanding | 23,000,000 | 5,750,000 | 12,131,868 | 5,394,301 | ||||||||||||
Basic net income per ordinary share | $ | 0.20 | $ | 0.20 | $ | 0.31 | $ | 0.31 | ||||||||
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Class A | Class B | Class A | Class B | |||||||||||||
Diluted net income per ordinary share | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net incom e | $ | 4,706,438 | $ | 1,176,609 | $ | 3,729,858 | $ | 1,767,797 | ||||||||
Denominator: | ||||||||||||||||
Diluted weighted average shares outstanding | 23,000,000 | 5,750,000 | 12,131,868 | 5,750,000 | ||||||||||||
Diluted net income per ordinary share | $ | 0.20 | $ | 0.20 | $ | 0.31 | $ | 0.31 | ||||||||
| | | | | | | | | | | | |
|
| Nine Months Ended September 30, | ||||||||||
| | 2023 | | 2022 | ||||||||
|
| | |
| Non- |
| | |
| Non- | ||
| | | | | Redeemable | | | | | Redeemable | ||
| | Redeemable | | Class A and | | Redeemable | | Class A and | ||||
| | Class A | | Class B | | Class A | | Class B | ||||
Diluted net income per ordinary share Numerator: |
| |
|
| |
|
| |
|
| |
|
Allocation of net income | | $ | 7,437,305 | | $ | 1,859,326 | | $ | 3,729,858 | | $ | 1,767,797 |
Denominator: | |
|
| |
|
| |
|
| |
|
|
Diluted weighted average shares outstanding | |
| 23,000,000 | |
| 5,750,000 | |
| 12,131,868 | |
| 5,750,000 |
Diluted net income per ordinary share | | $ | 0.32 | | $ | 0.32 | | $ | 0.31 | | $ | 0.31 |
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 Measurement and Disclosures,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Fair value is defined as the price that would be received for the sale of an asset or paid for the transfer of a liability, in an orderly transaction between market participants calculated 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). The Company’s financial instruments are classified as either Level 1, Level 2 or Level 3. 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. |
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, “Derivatives and Hedging – Contracts in Entity’s Own Equity” (“ASC
Warrant Liability
The Company accounts for the warrants issued in connection with the Initial Public Offering in accordance with the guidance contained in ASC
13
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Convertible Promissory Note (Sponsor Loan) – Related Party
The Company accounts for the Sponsor Loan issued pursuant to a convertible promissory note at no interest, under ASC Topic
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
On May 10, 2022, pursuant to the Company’s Initial Public Offering, the Company sold 23,000,000 Units, which includes the issuance of 3,000,000 Units as a result of the underwriters’ full exercise of their over-allotment option, at a purchase price of $10.00 per Unit. Each Unit consists of one Class A Ordinary Share and
Each whole public warrant entitles the holder to purchase one Class A Ordinary Share at a price of $11.50 per share, subject to adjustment. The warrants will become exercisable on the later of 12 months from the closing of the Initial Public Offering or 30 days after the completion of the Company’s 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.
In addition, if (i) the Company issues additional Class A Ordinary Shares or equity-linked securities for capital raising purposes in connection with the closing of an initial Business Combination at an issue price or effective issue price of less than $9.20 per Class A Ordinary Share (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the initial shareholders or their affiliates, without taking into account any founder shares held by them prior to such issuance) (the “Newly Issued Price”), (ii) 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 completion of the initial Business Combination (net of redemptions), and (iii) the volume-weighted average trading price of the Class A Ordinary Shares during the 20 trading day period starting on the trading day prior to the day on which the Company completes 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 described adjacent to “Redemption of warrants when the price per Class A Ordinary Share equals or exceeds $18.00” below, 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 Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closing of the initial Business Combination, the Company will use its commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A Ordinary Shares issuable upon exercise of the warrants. The Company will use its commercially reasonable 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 or redemption of the warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, 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 it satisfies 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 it so elect, the Company will not be required to file or maintain in effect a registration statement or register or qualify the shares under applicable blue sky laws to the extent an exemption is available.
14
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Redemption of warrants when the price per Class
| ● | 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; and |
| ● | if, and only if, the last reported sale price of the Class A Ordinary Shares equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant) for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders. |
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 6,600,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, Cantor Fitzgerald & Co. purchased an aggregate of 1,897,500 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, and Piper Sandler & Co. purchased an aggregate of 402,500 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $8,900,000. The Private Placement Warrants (including the Class A Ordinary Shares issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of the initial Business Combination and they will not be redeemable by the Company so long as they are held by the Sponsor, Cantor Fitzgerald & Co., Piper Sandler & Co. or their permitted transferees. The Sponsor, Cantor Fitzgerald & Co., Piper Sandler & Co. or their permitted transferees, have the option to exercise the Private Placement Warrants on a cashless basis.
If the Private Placement Warrants are held by holders other than the Sponsor, Cantor Fitzgerald & Co., Piper Sandler & Co. or their 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 Initial Public Offering.
A portion of the proceeds from the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the public shares (subject to the requirements of applicable law) and the Private Placement Warrants will be worthless (See Note 8).
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On October 20, 2021, the Company issued an aggregate of 5,750,000 Class B ordinary shares (the “founder shares”) to the Sponsor and CGC II Sponsor DirectorCo LLC (“directorCo”DirectorCo”) for a total subscription price of $25,000, or approximately $0.004 per share. Such shares are fully paid. Prior to the initial investment in the Company of $25,000 by the Sponsor and directorCo,DirectorCo, the Company had no assets, tangible or intangible. Up to 750,000 founder shares were subject to forfeiture by the Sponsor depending on the extent to which the underwriters’ over-allotment option was exercised. The number of founder shares issued was determined based on the expectation that such founder shares would represent 20% of the total number of outstanding public shares and founder shares upon completion of the Initial Public Offering. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the Company by the number of founder shares issued. As a result of the underwriters’ decision to fully exercise their over-allotmentover- allotment option on the closing date of the Initial Public Offering, there currently are no founder shares subject to forfeiture.
The Sponsor and directorCoDirectorCo have agreed not to transfer, assign or sell any of the founder shares (except to certain permitted transferees) until one year after the date of the completion of the initial Business Combination or earlier if, subsequent to the initial Business
15
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Combination, (i) the last reported sale price of the Class A Ordinary Shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any
The founder shares are identical to the Class A Ordinary Shares, except as described herein. However, the holders of the founder shares have agreed (i) to vote any shares owned by them in favor of any proposed Business Combination and (ii) not to redeem any shares in connection with a shareholder vote or tender offer to approve or in connection with a proposed initial Business Combination.
Administrative Services Agreement
The Company entered into an agreement with the Sponsor pursuant to which, commencing on May 5, 2022 through the earlier of the Company’s consummation of a Business Combination and its liquidation, the Company will pay the Sponsor a total of $10,000 per month for office space, utilities, secretarial support and administrative services. For the three and nine months ended September 30, 2022,2023, the Company incurred $50,000$30,000 and $90,000 for these services, respectively, of which $10,000$20,000 is included in accrued expenses in the accompanying balance sheet.
Promissory Note — Related Party
On December 31, 2021, the Sponsor agreed to loan the Company up to $250,000 under a promissory note to be used for a portion of the expenses of the Initial Public Offering. This loan was
Convertible Promissory Note (Sponsor Loan) – Related Party
Simultaneously with the consummation of the Initial Public Offering, the Sponsor loaned the Company the Sponsor Loan, for an aggregate of $4,600,000. The proceeds of the Sponsor Loan were added to the Trust Account on the closing date of the Initial Public Offering and will be used to fund the redemption of Class A Ordinary Shares. The Sponsor Loan shall be repaid at the time of an initial Business Combination, or converted into Sponsor Loan Warrants at a conversion price of $1.00 per Sponsor Loan Warrant, at the Sponsor’s discretion. The Sponsor Loan Warrants will be identical to the Private Placement Warrants. The Sponsor Loan Warrant was extended in order to ensure that the amount in the Trust Account is $10.30 per public share. If the Company does not complete an initial Business Combination, the Company will not repay the Sponsor Loan from amounts held in the Trust Account, and the proceeds held in the Trust Account will be distributed to the Company’s public shareholders. The Sponsor Loan was valued using the fair value method.method using the monte-carlo method (see Note 9). At September 30, 2023 and December 31, 2022, the Sponsor Loan was valued at a fair value of $3,348,386.
Working Capital Loans
In order to finance transaction costs in connection with an intended initial 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 (the “Working Capital Loans”). If the Company completes an initial Business Combination, it would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that the initial Business Combination does not close, the Company may use a portion of the funds 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 the Working Capital Loans may be converted into warrants at a price of $1.00
16
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
per warrant at the option of the lender. The warrants will be identical to the Private Placement Warrants, including, as to exercise price, exercisability and exercise period. As of September 30, 2023 and December 31, 2022, the Company had no borrowings under any Working Capital Loans.
NOTE 6. COMMITMENTS
Registration Rights Agreement
The holders of the founder shares, Private Placement Warrants, any Sponsor Loan Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A Ordinary Shares issuable upon the exercise of the Private Placement Warrants, any Sponsor Loan Warrants and warrants that may be issued upon conversion of Working Capital Loans) are entitled to registration rights pursuant to a registration rights agreement entered into in connection with the Initial Public Offering, requiring the Company to register such securities for resale. The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration 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
Underwriting Agreement
On May 10, 2022, the underwriters of the Initial Public Offering were paid a cash underwriting commission of two percent (2.0%) of the gross proceeds of the Initial Public Offering, or $4,600,000. Additionally, the underwriters for the Initial Public Offering are entitled to a deferred underwriting commission of $11,500,000. Subject to the terms of the underwriting agreement of the Initial Public Offering, (i) the deferred underwriting commission will be placed in the Trust Account and released to the underwriters only upon the completion of a Business Combination and (ii) the deferred underwriting commission will be waived by the underwriters in the event that the Company does not complete a Business Combination.
Service Provider Agreements
The Company has engaged a legal advisor to provide services related to the consummation of Contentsan initial Business Combination. In connection with this agreement, the Company may be required to pay the legal advisor’s fees in connection with its services contingent upon a successful initial Business Combination. If a Business Combination does not occur, the Company would not be required to pay these contingent fees. There can be no assurance that the Company will complete a Business Combination.
Preference Shares
17
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Class A Ordinary Shares
Class A Ordinary Shares issued and outstanding.
Prior to a Business Combination, only holders of Class B ordinary shares will have the right to vote on the appointment of directors and may, by ordinary resolution, remove a member of the Company’s board of directors for any reason. Holders of Class A Ordinary Shares and holders of Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of the shareholders except as required by law. Unless specified in the Company’s amended and restated memorandum and articles of association, or as required by applicable provisions of the Companies Act (As Revised) of the Cayman Islands, as the same may be amended from time to time, or applicable stock exchange rules, the affirmative vote of at least a majority of the votes cast by the holders of the issued ordinary shares present in person or represented by proxy at a general meeting of the company and entitled to vote is required to approve any such matter voted on by its shareholders.
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 any redemption rights or be entitled to liquidating distributions from the Trust Account if the Company fails to consummate an initial Business Combination) at the time of the initial Business Combination or earlier at the option of the holders thereof at a ratio such that the number of Class A Ordinary Shares issuable upon conversion of all founder shares will equal, in the aggregate, on an
NOTE 8. WARRANT LIABILITIES
The Company accounts for the 16,566,666 warrants issued in connection with the Initial Public Offering (7,666,666 public warrants and 8,900,000 Private Placement Warrants) in accordance with the guidance contained in ASC
18
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | Level | September 30, 2022 | May 10, 2022 (Initial Measurement) | |||||||
Liabilities: | ||||||||||
Warrant liability – Public warrants | 1 | $ | 766,667 | $ | — | |||||
Warrant liability – Public warrants | 3 | $ | — | $ | 2,560,668 | |||||
Warrant liability – Private Placement Warrants | 3 | $ | 895,348 | $ | 2,972,600 | |||||
Convertible Promissory Note | 3 | $ | 3,348,386 | $ | 4,600,000 | |||||
| | | | | | | | |
| | | | September 30, | | December 31, | ||
Description |
| Level |
| 2023 |
| 2022 | ||
Liabilities: | | | | | | | | |
Warrant liability – Public warrants |
| 1 | | $ | 1,226,667 | | $ | 1,724,233 |
Warrant liability – Private Placement Warrants |
| 3 | | $ | 1,444,306 | | $ | 2,102,463 |
Convertible Promissory Note |
| 3 | | $ | 3,358,426 | | $ | 3,342,932 |
The warrants were accounted for as liabilities in accordance with ASC
The warrants and convertible promissory note were valued using a binomial latticemonte- carlo model, which is considered to be a Level 3 fair value measurement. The binomial latticemonte carlo model’s primary unobservable input utilized in determining the fair value of the warrants is the expected volatility of the Class A Ordinary Shares. The expected volatility as of the closing date of the Initial Public Offering date was derived from observable pricing of public warrants on comparable ‘blank-check’ companies without an identified target.
The following table provides quantitative information regarding the warrant liability Level 3 fair value measurements:
September 30, 2022 | May 10, 2022 (Initial Measurement) | |||||||
Trading stock price | $ | 10.06 | $ | 9.89 | ||||
Exercise price | $ | 11.50 | $ | 11.50 | ||||
Expected term (in years) | 5.76 | 6.10 | ||||||
Volatility | 8.30 | % | 2.30 | % | ||||
Risk-free rate | 4.03 | % | 2.95 | % | ||||
Dividend yield | 0.00 | % | 0.00 | % | ||||
| | | | | | | | | | |
|
| | |
| | |
| May 10, 2022 |
| |
|
| September 30, 2023 |
| December 31, 2022 |
| (Initial Measurement) | | |||
Trading stock price | | $ | 10.86 | | $ | 10.25 | | $ | 9.89 |
|
Exercise price | | $ | 11.50 | | $ | 11.50 | | $ | 11.50 | |
Expected term (in years) | | | 1.35 | | | 1.12 | |
| 6.10 | |
Volatility | | | 1.0 | % | | 10.9 | % | | 2.30 | % |
Risk-free rate | | | 5.31 | % | | 4.69 | % | | 2.95 | % |
Dividend yield | | | 0.00 | % | | 0.00 | % | | 0.00 | % |
The following table presentsprovides quantitative information regarding the changes in thewarrant liability Level 3 fair value measurements:
| | | | | | | | | |
| | Public | | Private | | Total | |||
| | Warrant | | Warrant | | Warrant | |||
|
| Liabilities |
| Liabilities |
| Liabilities | |||
Fair value as of October 13, 2021 (inception) | | $ | — | | $ | — | | $ | — |
Initial measurement on May 10, 2022 | | | 2,560,668 | | | 2,972,600 | | | 5,533,268 |
Change in fair value |
| | 189,807 |
| | (870,137) |
| | (680,330) |
Transfer to Level 1 |
| | (2,750,475) |
| | — |
| | (2,750,475) |
Fair value as of December 31, 2022 | | $ | — | | $ | 2,102,463 | | $ | 2,102,463 |
Change in fair value | |
| — | |
| (567,883) | |
| (567,883) |
Fair value as of March 31, 2023 | | $ | — | | $ | 1,534,580 | | $ | 1,534,580 |
Change in fair value | |
| — | |
| (76,816) | |
| (76,816) |
Fair value as of June 30, 2023 | | $ | — | | $ | 1,457,764 | | $ | 1,457,764 |
Change in fair value | |
| — | |
| (13,458) | |
| (13,458) |
Fair value as of September 30, 2023 | | $ | — | | $ | 1,444,306 | | $ | 1,444,306 |
19
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Public Warrant Liabilities | Private Warrant Liabilities | Total Warrant Liabilities | ||||||||||
Fair value as of October 13, 2021 (inception) | $ | — | $ | — | $ | — | ||||||
Initial measurement on May 10, 2022 | 2,560,668 | 2,972,600 | 5,533,268 | |||||||||
Change in fair value | 189,807 | 222,984 | 412,791 | |||||||||
Transfer to Level 1 | (2,750,475 | ) | — | (2,750,475 | ) | |||||||
Fair value as of June 30, 2022 | $ | — | $ | 3,195,584 | $ | 3,195,584 | ||||||
Change in fair value | (2,300,236 | ) | (2,300,236 | ) | ||||||||
Fair value as of September 30, 2022 | $ | — | $ | 895,348 | $ | 895,348 | ||||||
| | | | | | | | | | |
|
| | |
|
| |
| May 10, 2022 |
| |
|
| September 30, 2023 |
| December 31, 2022 |
| (Initial Measurement) |
| |||
Trading stock price | | $ | 10.86 | | $ | 10.25 | | $ | 9.89 | |
Exercise price | | $ | 11.50 | | $ | 11.50 | | $ | 11.50 | |
Expected term (in years) | |
| 0.63 | |
| 0.68 | |
| 1.10 | |
Expected term of warrant conversion (in years) | |
| 5.63 | |
| 5.68 | |
| 6.10 | |
Volatility | |
| 1.0 | % |
| 10.9 | % |
| 2.30 | % |
Risk-free rate | |
| 5.51 | % |
| 4.75 | % |
| 2.35 | % |
Probability of merger closing | |
| 75 | % |
| 75 | % |
| 75 | % |
The following table provides quantitative information regarding the convertible promissory note Level 3 fair value measurements:
| | | |
Fair value as of October 13, 2021 (inception) |
| $ | — |
Initial measurement on May 10, 2022 | | | 4,600,000 |
Change in fair value |
| | (1,706,572) |
Fair value as of December 31, 2022 | | $ | 3,342,932 |
Change in fair value | |
| 15,962 |
Fair value as of March 31, 2023 | | $ | 3,358,894 |
Change in fair value | |
| (1,102,927) |
Fair value as of June 30, 2023 | | $ | 2,255,867 |
Change in fair value | |
| 1,102,459 |
Fair value as of September 30, 2023 | | $ | 3,358,426 |
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. There were no transfers in or out of Level 3 from other levels in the fair value hierarchy for the period from October 13, 2021 (inception) through September 30, 2022.
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the date of the balance sheetssheet date up to the date that the unaudited condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.statements, except as set forth below:
On October 12, 2023, the Company issued an unsecured promissory note in the principal amount of $500,000 to the Sponsor, which was funded in its entirety by the Sponsor. The note does not bear interest and the principal balance will be payable on the earlier to occur of (i) the date on which the Company consummates its initial business combination and (ii) the date that the winding up of the Company is effective (such earlier date, the “Maturity Date”). In the event the Company consummates its initial business combination, the Sponsor has the option on the Maturity Date to convert all or any portion of the principal outstanding under the note into that number of warrants equal to the portion of the principal amount of the note being converted divided by $1.00, rounded up to the nearest whole number.
On November 6, 2023, the Company’s shareholders approved an amendment to the Company’s amended and restated memorandum and articles of association (the “Charter Amendment”). The Charter Amendment extended the date by which the Company has to consummate a business combination for up to an additional twelve months, from November 10, 2023 to up to November 10, 2024, by electing to extend the date to consummate an initial business combination on a monthly basis for up to twelve times by an additional one month each time, unless the closing of the Company’s initial business combination has occurred (referred to as an “Extension” and such applicable later date, the “Extended Date”), without the need for any further approval of the Company’s shareholders, provided that the Sponsor (or its affiliates or permitted designees) will deposit into the Trust Account for each such one-month extension (the “Extension Payment”) the lesser of (a) an aggregate of $150,000 and (b) $0.02 per public share that remains outstanding and is not
20
CARTESIAN GROWTH CORPORATION II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
redeemed prior to any such one-month extension, in exchange for a non-interest bearing promissory note payable upon consummation of an initial business combination.
In connection with the votes to approve the Charter Amendment, the holders of 7,129,439 Class A Ordinary Shares properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.86 per share, for an aggregate redemption amount of approximately $77.4 million, leaving approximately $172.4 million in the Trust Account following the Charter Amendment.
In connection with the Extension Payments, on November 6, 2023, the Company issued an unsecured promissory note to the Sponsor in the aggregate amount of $1,800,000 (the “Extension Note”). On November 6, 2023, the Sponsor deposited an Extension Payment in the amount of $150,000 in the Trust Account, representing the lesser of (a) an aggregate of $150,000 and (b) $0.02 per public share that remained outstanding and unredeemed prior to the Extension, which enabled the Company to extend the period of time it has to consummate an initial business combination from November 10, 2023 to December 10, 2023. The Extension Note bears no interest and the principal balance is payable on the date of the consummation of the Company’s initial business combination. The Extension Note is not convertible into private placement warrants and the principal balance may be prepaid at any time.
21
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this Quarterly Report on Form 10-Q (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Cartesian Growth Corporation II. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor”“sponsor” refer to CGC II Sponsor LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the 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, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the completion of an initial Business Combination (as defined below), 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, including that the conditions of the Proposed Business Combination are not satisfied.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 final prospectusannual report on Form 10-K for its Initial Public Offeringthe fiscal year ended December 31, 2022 (the “2022 Annual Report”) filed with the U.S. Securities and Exchange Commission (the “SEC”), on May 9, 2022.March 30, 2023. 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 in the Cayman Islands on October 13, 2021 formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or engaging in any other similar business combination with one or more businesses or entities (the “Business Combination”“business combination”).
We may pursue our initial Business Combinationbusiness combination in any business industry or sector, however, we have focused on seeking high-growth businesses with proven or potential transnational operations or outlooks in order to capitalize on the experience, reputation, and network of our management team. Furthermore, we seek target businesses where we believe we will have an opportunity to drive ongoing value creation after our initial Business Combinationbusiness combination is completed.
We intend to effectuate our initial Business Combinationbusiness combination using cash from the net proceeds of our initial public offering, (the “Initial Public Offering”), the sale of the Private Placement Warrants,private placement warrants, the Sponsor Loan,sponsor loan (as defined below), our share capital or a combination of cash, share capital and debt.
We expect to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete an initial Business Combinationbusiness combination will be successful.
On September 22, 2023, in accordance with the provisions of our amended and restated memorandum and articles of association the Sponsor and CGC II Sponsor DirectorCo LLC exercised their rights to convert an aggregate of 5,749,998 Class B ordinary shares into an equal number of Class A ordinary shares, on a one-for-one basis (the “Class B Conversion”). As a result of the Class B Conversion, at September 30, 2023, there were 28,749,998 Class A ordinary shares and two Class B ordinary shares issued and outstanding.
On November 6, 2023, our shareholders approved an amendment to our amended and restated memorandum and articles of association (the “Charter Amendment”). The Charter Amendment extended the date by which we have to consummate a business combination for up to an additional twelve months, from November 10, 2023 to up to November 10, 2024, by electing to extend the date to consummate an initial business combination on a monthly basis for up to twelve times by an additional one month each time, unless the closing of
20
the Company’s initial business combination has occurred (which we refer to as an “Extension” and such applicable later date, the “Extended Date”), without the need for any further approval of the Company’s shareholders, provided that the Sponsor (or its affiliates or permitted designees) will deposit into the
trust account for each such one-month extension (the “Extension Payment”) the lesser of (a) an aggregate of $150,000 and (b) $0.02 per public share that remains outstanding and is not redeemed prior to any such one-month extension, in exchange for a non-interest bearing promissory note payable upon consummation of an initial business combination.
In connection with the votes to approve the Charter Amendment, the holders of 7,129,439 Class A Ordinary Shares properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.86 per share, for an aggregate redemption amount of approximately $77.4 million, leaving approximately $172.4 million in the trust account following the Charter Amendment.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception through September 30, 20222023 were organizational activities and those necessary to prepare for our Initial Public Offering,initial public offering, and since our Initial Public Offering,initial public offering, our activity has been limited to identifying a target company for a Business Combination.business combination. We do not expect to generate any operating revenues until after the completion of our initial Business Combination.business combination. We generate non-operating income in the form of interest income on cash and marketable securities held in the trust account (the “Trust Account”“trust account”) with Continental Stock Transfer & Trust Company acting as trustee, located in the United States, established for the benefit of our public shareholders. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, our initial Business Combination.business combination.
For the three months ended September 30, 2023, we had net income of $1,866,658 which consists of interest earned on cash and marketable securities held in the trust account of $3,197,705, offset by a change in the fair value of warrant liabilities of $10,309, a change in the fair value of the convertible promissory note – related party of $1,102,459, and operating costs of $218,279.
For the nine months ended September 30, 2023, we had net income of $9,296,631 which consists of a change in the fair value of warrant liabilities of $1,155,723, and interest earned on cash and marketable securities held in the trust account of $8,925,457, offset by a change in the fair value of the convertible promissory note – related party of $15,494 and operating costs of $769,055.
For the three months ended September 30, 2022, we had net income of $5,883,047 which consists of a change in the fair value of warrant liabilities of $4,284,045, a change in the fair value of the convertible promissory note – related party of $817,163, and interest earned on cash and marketable securities held in the Trust Account of $1,037,897, offset by operating and formation costs of $256,058.
17
For the nine months ended September 30, 2022, we had net income of $5,497,655 which consists of a change in the fair value of warrant liabilities of $3,871,253, a change in the fair value of the convertible promissory note – related party of $1,251,614, and interest earned on cash and marketable securities held in the Trust Account of $1,052,221, offset by operating and formation costs of $481,449 and transaction costs of $195,984.
Liquidity and Capital Resources
Until the consummation of our Initial Public Offering,initial public offering, our only source of liquidity was an initial purchase of Class B ordinary shares, par value $0.0001 per share by the Sponsorsponsor and loans from the Sponsor.sponsor.
On May 10, 2022, we consummated the Initial Public Offeringinitial public offering of 23,000,000 Units,units, including the full exercise by underwriters of their over-allotment option, at a purchase price of $10.00 per Unit,unit, generating total gross proceeds of $230,000,000. Simultaneously with the closing of the Initial Public Offering,initial public offering, we consummated the sale of 8,900,000 Private Placement Warrants,private placement warrants, each exercisable to purchase one Class A Ordinary Shareordinary share at a price of $11.50 per share, at a price of $1.00 per Private Placement Warrantprivate placement warrant in a private placement to the Sponsor,sponsor, Cantor Fitzgerald & Co. and/or their respective designees,and Piper Sandler & Co., generating gross proceeds of $8,900,000.
Simultaneously with the consummation of the Initial Public Offering,initial public offering, the Sponsorsponsor loaned us $4,600,000 at no interest (the “Sponsor Loan”“sponsor loan”). The Sponsor Loansponsor loan will be repaid or converted into sponsor loan warrants (the “Sponsor Loan Warrants”“sponsor loan warrants”) at a conversion price of $1.00 per Sponsor Loan Warrant,sponsor loan warrant, at the Sponsor’ssponsor’s discretion. The Sponsor Loan Warrantssponsor loan warrants will be identical to the Private Placement Warrants. private placement warrants.
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If we do not complete a Business Combination,business combination, we will not repay the Sponsor Loansponsor loan from amounts held in the Trust Account,trust account, and the proceeds held in the Trust Accounttrust account will be distributed to the holders of the Class A Ordinary Shares.ordinary shares.
A total of $236,900,000 ($10.30 per Unit)unit) of the net proceeds from the Initial Public Offering,initial public offering, including the full exercise of the over-allotment option, the sale of the Private Placement Warrantsprivate placement warrants and the Sponsor Loan,sponsor loan, was placed in the Trust Account.trust account. Transaction costs of the Initial Public Offeringinitial public offering amounted to $16,804,728, consisting of $4,600,000 of underwriting commissions, $11,500,000 of deferred underwriting commissions and $704,728 of other offering costs.
For the nine months ended September 30, 2022,2023, cash used in operating activities was $730,994.$446,686. Net income of $5,497,655$9,296,631 was affected by interest earned on cash and marketable securities held in the Trust Accounttrust account of $1,052,221,$8,925,457, a change in the fair value of a convertible promissory note of $1,251,614,$15,494 and a change in the fair value of warrant liabilities of $3,871,253 and transactions costs allocated to warrant liabilities of $195,984.$1,155,723. Changes in operating assets and liabilities was affected by $249,545$322,369 of cash usedprovided for operating activities.
As discussed above, following the Charter Amendment, there was approximately $172.4 million remaining in the trust account.
As of September 30, 2022,2023, we had cash and marketable securities held in the Trust Accounttrust account of $237,952,221$248,671,364 (including approximately $1,052,221$11,771,364 of interest income consisting of U.S. Treasury Billstreasury bills with a maturity of 185 days or less). We may withdraw interest from the Trust Accounttrust account to pay taxes, if any. We intend to use substantially all of the funds held in the Trust Account,trust account, including any amounts representing interest earned on the Trust Accounttrust account (less any taxes payable), to complete our initial Business Combination.business combination. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete our initial Business Combination,business combination, the remaining proceeds held in the Trust Accounttrust 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.
As of September 30, 2022,2023, we had cash held outside of the Trust Accounttrust account of $660,551$26,981 available for working capital needs. We intend to use the funds held outside the Trust Accounttrust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination,business combination, and to pay for directors and officers liability insurance premiums.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination,business combination, the Sponsor,sponsor, or certain of our officers and directors or their affiliates may, but are not obligated to, loan us funds as may be required (the “Working Capital Loans”“working capital loans”). If we complete a Business Combination,business combination, we would repay such loaned amounts. In the event that a Business Combinationbusiness combination does not close, we may use a portion of the funds held outside the Trust Accounttrust account to repay such loaned amounts but no proceeds from the Trust Accounttrust account would be used for such repayment. Up to $1,500,000 of the Working Capital Loansworking capital loans may be converted into warrants at a price of $1.00 per warrant at the option of the lender. The warrants will be identical to the Private Placement Warrants,private placement warrants, including, as to exercise price, exercisability and exercise period. As of September 30, 20222023 and December 31, 2021, the Company2022, we had no borrowings under any Working Capital Loans.working capital loans.
On October 12, 2023, we issued an unsecured promissory note in the principal amount of $500,000 to the Sponsor, which was funded in its entirety by the Sponsor. The note does not bear interest and the principal balance will be payable on the earlier to occur of (i) the date on which the Company consummates its initial business combination and (ii) the date that the winding up of the Company is effective (such earlier date, the “Maturity Date”). In the event the Company consummates its initial business combination, the Sponsor has the option on the Maturity Date to convert all or any portion of the principal outstanding under the note into that number of warrants equal to the portion of the principal amount of the note being converted divided by $1.00, rounded up to the nearest whole number.
In connection with the Extension Payments described above, on November 6, 2023, we issued an unsecured promissory note to the Sponsor in the aggregate amount of $1,800,000 (the “Extension Note”). On November 6, 2023, the Sponsor deposited an Extension Payment in the amount of $150,000 in the trust account, representing the lesser of (a) an aggregate of $150,000 and (b) $0.02 per public share that remained outstanding and unredeemed prior to the Extension, which enabled us to extend the period of time we have to consummate an initial business combination from November 10, 2023 to December 10, 2023. The Extension Note bears no interest and the principal balance is payable on the date of the consummation of our initial business combination. The Extension Note is not convertible into private placement warrants and the principal balance may be prepaid at any time.
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Going Concern
In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 205-40, “Presentation of Financial Statements – Going Concern,” management has determined that our liquidity condition and liquidation date raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after November 10, 2023.2023, or the applicable Extended Date.
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As of September 30, 2022,2023, we had $660,551$26,981 in our operating bank accounts, $237,952,221$248,671,364 in marketable securities held in the Trust Accounttrust account to be used for the completion of a Business Combinationbusiness combination and/or for the redemption of the public shares if we are unable to complete a Business Combinationbusiness combination by November 10, 2023 (subject to applicable law), unless our shareholders approve the Extension Proposal, and working capital deficit of $804,830.$137,566.
Until the consummation of a Business Combinationbusiness combination or our liquidation, we will use the funds held outside the Trust Accounttrust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination,business combination, and to pay for directors and officers liability insurance premiums. In addition, in order to finance transaction costs in connection with a Business Combination,business combination, the Sponsorsponsor or an affiliate of the Sponsor,sponsor, or certain of the Company’sour officers and directors may, but are not obligated to, loan the Company Working Capital Loans.us working capital loans.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 20222023 and December 31, 2021.2022.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations, operating lease obligations or other long-term liabilities, other than an agreement to pay the Sponsorsponsor a sum of $10,000 per month for office space, utilities, secretarial support and administrative services. We began incurring these fees on May 5, 2022 and will continue to incur these fees on a monthly basis until the earlier of the completion of an initial Business Combinationbusiness combination and our liquidation.
The underwriters of our Initial Public Offeringinitial public offering are entitled to a deferred underwriting commission of $0.50 per Unit,unit, or $11,500,000 in the aggregate. Subject to the terms of the underwriting agreement for our Initial Public Offering,initial public offering, (i) the deferred underwriting commission was placed in the Trust Accounttrust account and will be released to the underwriters only upon the consummation of our initial Business Combinationbusiness combination and (ii) the deferred underwriting commission will be waived by the underwriters in the event that we do not complete a Business Combination.business combination.
We have engaged a legal advisor to provide services related to the consummation of an initial business combination. In connection with this agreement, we may be required to pay the legal advisor’s fees in connection with its services contingent upon a successful initial business combination. If a business combination does not occur, we would not be required to pay these contingent fees. There can be no assurance that we will complete a business combination.
Critical Accounting Policies
The preparation of unaudited condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Warrant Liabilities
We account for the warrants issued in connection with the Initial Public Offering, which are discussed in Note 3, Note 4 and Note 9 to the unaudited condensed financial statements included elsewhere in this Quarterly Report, in accordance with FASB ASC Topic 815-40,
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“Derivatives and Hedging, Contracts in Entity’s Own Equity.” Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. Accordingly, we classify each warrant as a liability at its fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in our statement of operations.
Ordinary Shares Subject to Possible Redemption
In accordance with FASB ASC 480-10-S99, redemption provisions not solely within our control require ordinary shares subject to redemption to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of FASB ASC 480-10-S99. All of the 23,000,000 Class A Ordinary Sharesordinary shares contain a redemption feature which allows for the redemption of such public shares in connection with our liquidation, if there is a shareholder vote or tender offer in connection with an initial Business Combination and in connection with certain amendments to our amended and restated memorandum and articles of association. Accordingly, at September 30, 2022,2023, all Class A Ordinary Shares subject to possible redemption are presented at redemption value as temporary equity, outside of shareholders’ deficit on the balance sheets.
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We recognize changes in redemption value immediately as they occur and adjust the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid in capital and accumulated deficit.
Net Income (Loss) Per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share,” pursuant to which net income (loss) per share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the period. We have two classes of shares, Class A Ordinary Sharesordinary shares and Class B ordinary shares. Earnings and losses are shared pro rata between the two classes of shares. Accretion associated with the redeemable Class A Ordinary Sharesordinary shares is excluded from income (loss) per ordinary share as the redemption value approximates fair value.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. ASU 2020-06 also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. We adopted ASU 2020-16 effective January 1, 2022 and noted we had no impact on our financial position, results of operations or cash flows.
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our 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.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation 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 September 30, 2022,2023, 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 concluded 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 reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter of 20222023 covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - II—OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our final prospectus for the Initial Public Offering filed with the SEC on May 9, 2022.2022 Annual Report. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our final prospectus for the Initial Public Offering filed with the SEC,2022 Annual Report, except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On May 10, 2022, we consummated the Initial Public Offeringinitial public offering of 23,000,000 Units,units, including the full exercise by underwriters of their over-allotment option, at a purchase price of $10.00 per Unit,unit, generating total gross proceeds of $230,000,000. The securities sold in our Initial Public Offeringinitial public offering were registered under the Securities Act on registration statement on Form S-1 (File No. 333-261866). The registration statement became effective on March 5, 2022.
A total of $236,900,000 of the net proceeds from the Initial Public Offering,initial public offering, the sale of the Private Placement Warrantsprivate placement warrants and the Sponsor Loansponsor loan was deposited in a trust account established for the benefit of our public shareholders, with Continental Stock Transfer & Trust Company acting as trustee. For a description of the use of the proceeds generated in the Initial Public Offering,initial public offering, see Part I, Item 2 of this Quarterly Report.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
Report.
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No. | Description of Exhibit | |
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3.1 | | |
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3.2 | | |
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10.1 | | |
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10.2 | | |
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31.1* | | |
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31.2* | | |
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32.1** | | |
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32.2** | | |
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101.INS* | | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL |
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101.SCH* | | Inline XBRL Taxonomy Extension Schema Document |
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101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB* | | Inline XBRL Taxonomy Extension Labels Linkbase Document |
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101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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104* | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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*Filed herewith. |
22**Furnished herewith.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | CARTESIAN GROWTH CORPORATION II | |||||
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Date: November | | By: | /s/ Peter Yu | ||||
| | Name: | Peter Yu | ||||
| | Title: | Chief Executive Officer | ||||
| | | (Principal Executive Officer) | ||||
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Date: November | | By: | /s/ Beth Michelson | ||||
| | Name: | Beth Michelson | ||||
| | Title: | Chief Financial Officer | ||||
| | | (Principal Financial and Accounting Officer) | ||||
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