UNITED STATES
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
10X CAPITAL VENTURE ACQUISITION CORP. III
(Exact name of registrant as specified in its charter)
Cayman Islands | 98-1611637 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1 World Trade Center, 85th Floor
New York, New York 10007
(Address of Principal Executive Offices, including zip code)
(212) 257-0069
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
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 one-half of one redeemable warrant | VCXB.U | New York Stock Exchange | ||
Class A ordinary shares, par value $0.0001 per share | VCXB | New York Stock Exchange | ||
Warrants, each whole warrant exercisable for one Class A ordinary share, each at an exercise price of $11.50 per share | VCXB WS | New York Stock Exchange |
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 Regulation
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☒ | |||||
| 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
10X CAPITAL VENTURE ACQUISITION CORP. III
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022MARCH 31, 2023
TABLE OF CONTENTS
| PART I. FINANCIAL INFORMATION | 1 | |||||
| Item 1. | Condensed Consolidated Financial Statements | 1 | ||||
| Condensed | |||||
| 1 | ||||||
| 2 | ||||||
| 3 | ||||||
| 4 | ||||||
| Notes to Unaudited Condensed Consolidated Financial Statements | 5 | |||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 | ||||
Item 3. | Quantitative and Qualitative Disclosures | 24 | ||||
Item 4. | 24 | |||||
| PART | 25 | |||||
Item 1. | Legal Proceedings | 25 | ||||
Item 1A. | Risk Factors | 25 | ||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 25 | ||||
Item 3. | Defaults Upon Senior Securities | 25 | ||||
Item 4. | Mine Safety Disclosures | 25 | ||||
Item 5. | Other Information | 25 | ||||
Item 6. | Exhibits | 26 | ||||
| 27 | ||||||
i
part I – financial information
Item 1. Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2022 | December 31, 2021 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 127,854 | $ | — | ||||
Prepaid expenses | 100,532 | 26,800 | ||||||
Total current assets | 228,386 | 26,800 | ||||||
Investments held in Trust Account | 306,355,099 | — | ||||||
Offering costs associated with initial public offering | — | 540,102 | ||||||
Total Assets | $ | 306,583,485 | $ | 566,902 | ||||
Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 223,456 | $ | 215,247 | ||||
Accrued expenses | 158,279 | 236,491 | ||||||
Note payable - related party | — | 134,771 | ||||||
Total current liabilities | 381,735 | 586,509 | ||||||
Deferred underwriting commissions | 14,280,000 | — | ||||||
Total Liabilities | 14,661,735 | 586,509 | ||||||
Commitments and Contingencies | ||||||||
Class A ordinary shares subject to possible redemption; 30,000,000 and -0- | 306,255,099 | — | ||||||
Shareholders’ Deficit | ||||||||
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding | — | — | ||||||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 1,153,000 and -0- non-redeemable shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 115 | — | ||||||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 10,000,000 and 10,005,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021 | 1,000 | 1,001 | (1) | |||||
Additional paid-in capital | — | 23,999 | ||||||
Accumulated deficit | (14,334,464 | ) | (44,607 | ) | ||||
Total Shareholders’ Deficit | (14,333,349 | ) | (19,607 | ) | ||||
Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | $ | 306,583,485 | $ | 566,902 | ||||
| March 31, 2023 (Unaudited) | December 31, 2022 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash | $ | 25,371 | $ | 67,093 | ||||
| Prepaid expenses | 79,547 | 126,224 | ||||||
| Due from Sponsor | 2,967,031 | — | ||||||
| Total current assets | 3,071,949 | 193,317 | ||||||
| Investments held in Trust Account | 42,139,444 | 308,661,515 | ||||||
| Total Assets | $ | 45,211,393 | $ | 308,854,832 | ||||
| Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 557,293 | $ | 676,349 | ||||
| Accrued expenses | 2,332,119 | 1,680,447 | ||||||
| Promissory note - related party | — | 250,000 | ||||||
| Class A ordinary shares tendered for redemption | — | 266,701,252 | ||||||
| Total current liabilities | 2,889,412 | 269,308,048 | ||||||
| Deferred underwriting commissions | 14,280,000 | 14,280,000 | ||||||
| Total Liabilities | 17,169,412 | 283,588,048 | ||||||
| Commitments and Contingencies | ||||||||
| Class A ordinary shares subject to possible redemption; 4,056,190 and 30,000,000 shares outstanding at redemption value of approximately $10.36 and $10.29 per share as of March 31, 2023 and December 31, 2022, respectively. | 42,039,444 | 41,860,263 | ||||||
| Shareholders’ Deficit: | ||||||||
| Preference shares, $0.0001 par value; 1,000,000 shares authorized, none issued or outstanding as of March 31, 2023 and December 31, 2022, respectively | — | — | ||||||
| Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 1,153,000 non-redeemable shares issued and outstanding as of March 31, 2023 (unaudited) and December 31, 2022 | 115 | 115 | ||||||
| Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 10,000,000 shares issued and outstanding as of March 31, 2023 (unaudited) and December 31, 2022 | 1,000 | 1,000 | ||||||
| Additional paid-in capital | — | — | ||||||
| Accumulated deficit | (13,998,578 | ) | (16,594,594 | ) | ||||
| Total Shareholders’ Deficit | (13,997,463 | ) | (16,593,479 | ) | ||||
| Total Liabilities, Class A Ordinary Shares Subject to Redemption and Shareholders’ Deficit | $ | 45,211,393 | $ | 308,854,832 | ||||
For the nine | For the period from February 10, 2021 (inception) | |||||||||||||||
For the three months ended September 30, | months ended September 30, | through September 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
General and administrative expenses | $ | 223,782 | $ | 12,784 | $ | 865,593 | $ | 23,717 | ||||||||
Administrative expenses - related party | 112,500 | — | 337,500 | — | ||||||||||||
Loss from operations | (336,282 | ) | (12,784 | ) | (1,203,093 | ) | (23,717 | ) | ||||||||
Other income: | ||||||||||||||||
Income from investments held in Trust Account | 1,448,249 | — | 1,855,099 | — | ||||||||||||
Total other income | 1,448,249 | — | 1,855,099 | — | ||||||||||||
Net income (loss) | $ | 1,111,967 | $ | (12,784 | ) | $ | 652,006 | $ | (23,717 | ) | ||||||
Weighted average Class A ordinary shares - basic and diluted | 31,153,000 | — | 29,669,524 | — | ||||||||||||
Basic and diluted net income per share, Class A ordinary shares | $ | 0.03 | $ | — | $ | 0.02 | $ | — | ||||||||
Weighted average Class B ordinary shares - basic | 10,000,000 | 8,700,000 | (1) | 9,938,095 | 8,700,000 | (1) | ||||||||||
Weighted average Class B ordinary shares - diluted | 10,000,000 | 8,700,000 | (1) | 10,000,000 | 8,700,000 | (1) | ||||||||||
Basic and diluted net income (loss) per share, Class B ordinary shares | $ | 0.03 | $ | (0.00 | ) | $ | 0.02 | $ | (0.00 | ) | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10X CAPITAL VENTURE ACQUISITION CORP. III
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | |||||||||||||||||||||||||
Non-redeemable Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance - December 31, 2021 | — | $ | — | 10,005,000 | $ | 1,001 | $ | 23,999 | $ | (44,607 | ) | $ | (19,607 | ) | ||||||||||||||
Sale of private placement units in private placement | 1,153,000 | 115 | — | — | 11,529,885 | — | 11,530,000 | |||||||||||||||||||||
Fair value of warrants included in the Units sold in the Initial Public Offering | — | — | — | — | 12,300,000 | — | 12,300,000 | |||||||||||||||||||||
Offering costs associated with issuance of warrants as part of the Units in the Initial Public Offering | — | — | — | — | (829,867 | ) | — | (829,867 | ) | |||||||||||||||||||
Forfeiture of Class B ordinary shares | — | — | (5,000 | ) | (1 | ) | 1 | — | — | |||||||||||||||||||
Accretion for Class A ordinary shares to redemption amount | — | — | — | — | (23,024,018 | ) | (13,186,764 | ) | (36,210,782 | ) | ||||||||||||||||||
Net loss | — | — | — | — | — | (347,368 | ) | (347,368 | ) | |||||||||||||||||||
Balance - March 31, 2022 (Unaudited) | 1,153,000 | 115 | 10,000,000 | 1,000 | — | (13,578,739 | ) | (13,577,624 | ) | |||||||||||||||||||
Increase in redemption value of Class A ordinary shares subject to possible redemption | — | — | — | — | — | (306,850 | ) | (306,850 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (112,593 | ) | (112,593 | ) | |||||||||||||||||||
Balance - June 30, 2022 (Unaudited) | 1,153,000 | 115 | 10,000,000 | 1,000 | — | (13,998,182 | ) | (13,997,067 | ) | |||||||||||||||||||
Increase in redemption value of Class A ordinary shares subject to possible redemption | — | — | — | — | — | (1,448,249 | ) | (1,448,249 | ) | |||||||||||||||||||
Net income | — | — | — | — | — | 1,111,967 | 1,111,967 | |||||||||||||||||||||
Balance - September 30, 2022 (Unaudited) | 1,153,000 | $ | 115 | 10,000,000 | $ | 1,000 | $ | — | $ | (14,334,464 | ) | $ | (14,333,349 | ) | ||||||||||||||
Ordinary Shares | Additional Paid-in Capital | Total Shareholders’ Equity | ||||||||||||||||||||||||||
Non-redeemable Class A | Class B | Accumulated Deficit | ||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance - February 10, 2021 (inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Issuance of Class B ordinary shares to Sponsor (1) | — | — | 10,005,000 | 1,001 | 23,999 | — | 25,000 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (10,547 | ) | (10,547 | ) | |||||||||||||||||||
Balance - March 31, 2021 (Unaudited) | — | — | 10,005,000 | 1,001 | 23,999 | (10,547 | ) | 14,453 | ||||||||||||||||||||
Net loss | — | — | — | — | — | (386 | ) | (386 | ) | |||||||||||||||||||
Balance - June 30, 2021 (Unaudited) | — | — | 10,005,000 | 1,001 | 23,999 | (10,933 | ) | 14,067 | ||||||||||||||||||||
Net loss | — | — | — | — | — | (12,784 | ) | (12,784 | ) | |||||||||||||||||||
Balance - September 30, 2021 (Unaudited) | — | $ | — | 10,005,000 | $ | 1,001 | $ | 23,999 | $ | (23,717 | ) | $ | 1,283 | |||||||||||||||
| Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | |||||||
| General and administrative expenses | $ | 1,291,484 | $ | 393,761 | ||||
| Administrative expenses - related party | 112,500 | 112,500 | ||||||
| Loss from operations | (1,403,984 | ) | (506,261 | ) | ||||
| Other income: | ||||||||
| Gain on settlement agreement | 4,000,000 | — | ||||||
| Income from investments held in Trust Account | 179,181 | 158,893 | ||||||
| Total other income | 4,179,181 | 158,893 | ||||||
| Net income (loss) | $ | 2,775,197 | $ | (347,368 | ) | |||
| Weighted average Class A ordinary shares - basic and diluted | 10,109,688 | 26,653,122 | ||||||
| Basic and diluted net income (loss) per share, Class A ordinary shares (see Note 2) | $ | 0.14 | $ | (0.01 | ) | |||
| Weighted average Class B ordinary shares – basic and diluted | 10,000,000 | 9,812,222 | ||||||
| Basic and diluted net income (loss) per share, Class B ordinary shares (see Note 2) | $ | 0.14 | $ | (0.01 | ) | |||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10X CAPITAL VENTURE ACQUISITION CORP. III
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2022 | For the period from February 10, 2021 (inception) through September 30, 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | 652,006 | $ | (23,717 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
General and administrative expenses paid by related party in exchange for issuance of Class B ordinary shares | — | 10,547 | ||||||
Income from investments held in Trust Account | (1,855,099 | ) | — | |||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | (73,732 | ) | — | |||||
Accounts payable | 95,234 | 1,483 | ||||||
Accrued expenses | 130,642 | 11,687 | ||||||
Net cash used in operating activities | (1,050,949 | ) | — | |||||
Cash Flows from Investing Activities: | ||||||||
Cash deposited in Trust Account | (304,500,000 | ) | — | |||||
Net cash used in investing activities | (304,500,000 | ) | — | |||||
Cash Flows from Financing Activities: | ||||||||
Repayment of note payable to related party | (136,617 | ) | — | |||||
Proceeds received from initial public offering, gross | 300,000,000 | — | ||||||
Proceeds received from private placement | 11,530,000 | — | ||||||
Offering costs paid | (5,714,580 | ) | — | |||||
Net cash provided by financing activities | 305,678,803 | — | ||||||
Net change in cash | 127,854 | — | ||||||
Cash - beginning of the period | — | — | ||||||
Cash - end of the period | $ | 127,854 | $ | — | ||||
Supplemental disclosure of noncash financing activities: | ||||||||
Offering costs paid by Sponsor in exchange for issuance of Class B ordinary shares | $ | — | $ | 14,453 | ||||
Offering costs included in accounts payable | $ | (87,025 | ) | $ | 93,065 | |||
Offering costs included in accrued expenses | $ | (208,854 | ) | $ | 128,179 | |||
Offering costs paid by related party under promissory note | $ | 1,847 | $ | 52,245 | ||||
Deferred underwriting commissions | $ | 14,280,000 | $ | — | ||||
FOR THE THREE MONTHS ENDED MARCH 31, 2023
| Ordinary Shares | ||||||||||||||||||||||||||||
| Non-redeemable Class A | Class B | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance - January 1, 2023 | 1,153,000 | 115 | 10,000,000 | 1,000 | — | (16,594,594 | ) | (16,593,479 | ) | |||||||||||||||||||
| Accretion for Class A ordinary shares to redemption amount | — | — | — | — | (179,181 | ) | (179,181 | ) | ||||||||||||||||||||
| Net income | — | — | — | — | — | 2,775,197 | 2,775,197 | |||||||||||||||||||||
| Balance – March 31, 2023 | 1,153,000 | $ | 115 | 10,000,000 | $ | 1,000 | — | $ | (13,998,578 | ) | $ | (13,997,463 | ) | |||||||||||||||
FOR THE THREE MONTHS ENDED MARCH 31, 2022
| Ordinary Shares | ||||||||||||||||||||||||||||
| Non-redeemable Class A | Class B | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance – January 1, 2022 | — | $ | — | 10,005,000 | $ | 1,001 | $ | 23,999 | $ | (44,607 | ) | $ | (19,607 | ) | ||||||||||||||
| Sale of private placement units in private placement | 1,153,000 | 115 | — | — | 11,529,885 | — | 11,530,000 | |||||||||||||||||||||
| Fair value of warrants included in the Units sold in the Initial Public Offering | — | — | — | — | 12,300,000 | — | 12,300,000 | |||||||||||||||||||||
| Offering costs associated with issuance of warrants as part of the Units in the Initial Public Offering | — | — | — | — | (829,867 | ) | — | (829,867 | ) | |||||||||||||||||||
| Forfeiture of Class B ordinary shares | — | — | (5,000 | ) | (1 | ) | 1 | — | — | |||||||||||||||||||
| Accretion for Class A ordinary shares to redemption amount | — | — | — | — | (23,024,018 | ) | (13,186,764 | ) | (36,210,782 | ) | ||||||||||||||||||
| Net loss | — | — | — | — | — | (347,368 | ) | (347,368 | ) | |||||||||||||||||||
| Balance – March 31, 2022 | 1,153,000 | $ | 115 | 10,000,000 | $ | 1,000 | $ | — | $ | (13,578,739 | ) | $ | (13,577,624 | ) | ||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10X CAPITAL VENTURE ACQUISITION CORP. III
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income (loss) | $ | 2,775,197 | $ | (347,368 | ) | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Income from investments held in Trust Account | (179,181 | ) | (158,893 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | 46,677 | (192,644 | ) | |||||
| Accounts payable | (119,056 | ) | 60,387 | |||||
| Accrued expenses | 651,672 | 131,947 | ||||||
| Due from Sponsor | (2,967,031 | ) | — | |||||
| Net cash provided by (used in) operating activities | 208,278 | (506,571 | ) | |||||
| Cash Flows from Investing Activities: | ||||||||
| Cash deposited in Trust Account | — | (304,500,000 | ) | |||||
| Cash withdrawn from trust for payment to redeeming shareholders | 266,701,252 | — | ||||||
| Net cash provided by (used in) investing activities | 266,701,252 | (304,500,000 | ) | |||||
| Cash Flows from Financing Activities | ||||||||
| Repayment of note payable to related party | — | (136,617 | ) | |||||
| Proceeds received from initial public offering, gross | — | 300,000,000 | ||||||
| Proceeds received from private placement | — | 11,530,000 | ||||||
| Repayment of promissory note - related party | (250,000 | ) | — | |||||
| Payment to redeeming shareholders | (266,701,252 | ) | — | |||||
| Offering costs paid | — | (5,714,580 | ) | |||||
| Net cash (used in) provided by financing activities | (266,951,252 | ) | 305,678,803 | |||||
| Net Change in Cash | (41,722 | ) | 672,232 | |||||
| Cash - Beginning of period | 67,093 | — | ||||||
| Cash - End of period | $ | 25,371 | $ | 672,232 | ||||
| Supplemental disclosure of noncash investing and financing activities: | ||||||||
| Offering costs included in accounts payable | $ | — | $ | 172,025 | ||||
| Offering costs included in accrued expenses | $ | — | $ | 123,854 | ||||
| Offering costs paid by related party under promissory note | $ | — | $ | 1,847 | ||||
| Deferred underwriting commissions | $ | — | $ | 14,280,000 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10X CAPITAL VENTURE ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND GOINGONGOING CONCERN
10X Capital Venture Acquisition Corp. III (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on February 10, 2021. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”). The Company has not selected any specific Business Combination target and the Company has not, nor has anyone on its behalf, engaged in any substantive discussions, directly or indirectly, with any Business Combination target with respect to the initial Business Combination with the Company.
As of September 30, 2022March 31, 2023, the Company had not commenced any operations. All activities through September 30, 2022 relateMarch 31, 2023 related to the Company’s formation and the initial public offering (“Initial Public Offering”), which is described below, and, subsequent to the Initial Public Offering, the search for a potential 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 10X Capital SPAC Sponsor III LLC, a Cayman Islands limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on January 11, 2022. On January 14, 2022, the Company consummated its Initial Public Offering of 30,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”), including the issuance of 3,900,000 Units as a result of the underwriter’s partial exercise of itstheir over-allotment option, at $10.00 per Unit, generating gross proceeds of $300.0 million, and incurring offering costs of approximately $20.2 million, of which approximately $14.3 million was for deferred underwriting commissions (Note(see Note 6).
Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 1,153,000 units (each, a “Private Placement Unit” and collectively, the “Private Placement Units”) at a price of $10.00 per Private Placement Unit to the Sponsor and Cantor Fitzgerald & Co. (“Cantor”), generating proceeds of approximately $11.5 million (Note(see Note 4).
Upon the closing of the Initial Public Offering and the Private Placement, $304.5 million ($10.15 per Unit) of net proceeds, including the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement, was placed in a trust account (“Trust Account”) and invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the Private Placement, Units, although substantially all of the net proceeds are intended to be generally applied toward consummating a Business Combination (less deferred underwriting commissions). The Company’s Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the net balance in the Trust Account (excluding the amount of deferred underwriting discounts held and taxes payable on the income earned on the Trust Account) at the time of the signing an agreement to enter into a Business Combination. However, the Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide the holders of the Company’s outstanding Public Shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of the initial Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) without a shareholder vote 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 its discretion. The Public Shareholders are entitled to redeem their Public Shares at a
All of the Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the liquidation, if there is a shareholder vote or tender offer in connection with the initial Business Combination and in connection with certain amendments to the amended and restated memorandum and articles of association (the “AmendedAmended and Restated Memorandum and Articles of Association”).Association. In accordance with U.S. Securities and Exchange Commission (the “SEC”) and its guidance on redeemable equity instruments, which has been codified in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”), paragraph
If the Company is unable to complete the initial Business Combination within the Combination Period, the Company will: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 holders of the Founder Shares (as defined in Note 5) prior to thisthe Initial Public Offering (the “Initial Shareholders”) agreed to (i) waive their redemption rights with respect to any Founder Shares and Public Shares they hold in connection with the completion of the initial Business Combination, (ii) waive their redemption rights with respect to any Founder Shares and Public Shares they hold in connection with a shareholder vote to approve an amendment to
The Company’s Sponsor agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.15 per public sharePublic Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.15 per Public Share due to reductions in the value of the Trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act. However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and the Company believes that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure that the Sponsor would be able to satisfy those obligations.
Extraordinary General Meeting
On December 28, 2022, the Company held an extraordinary general meeting of shareholders (the “Extraordinary General Meeting”), where the Company’s shareholders voted to approve, by special resolution, the proposal to amend and restate the Company’s amended and restated memorandum and articles of association to extend the date by which the Company must (1) consummate an initial business combination, (2) cease all operations except for the purpose of winding up if we fail to complete such initial business combination, and (3) redeem all of the Class A ordinary shares included as part of the Units sold in the Initial Public Offering from January 14, 2023 to July 14, 2023, and to allow the Company’s board of directors, without another shareholder vote, to elect to further extend the date to consummate an initial business combination after the Extended Date up to three times, by an additional month each time, upon two days’ advance notice prior to the applicable deadline, up to October 14, 2023. In connection with the Extraordinary General Meeting, holders of 29,486,306 ordinary shares, comprised of the Company’s Class A ordinary shares, par value $0.0001 per share (“Class A ordinary shares”), and the Company’s Class B ordinary shares, par value $0.0001 per share (“Class B ordinary shares,” together with the Class A ordinary shares, the “ordinary shares”), were present in person or by proxy, representing approximately 71.65% of the voting power of the 41,153,000 issued and outstanding ordinary shares of the Company, comprised of 31,153,000 Class A ordinary shares and 10,000,000 Class B ordinary shares, entitled to vote at the Extraordinary General Meeting at the close of business on November 21, 2022, which was the record date (the “Record Date”) for the Extraordinary General Meeting. The Company’s shareholders of record as of the close of business on the Record Date are referred to herein as “Shareholders.” In connection with the Extension (as defined below), a total of 186 Shareholders elected to redeem an aggregate of 25,943,810 Class A ordinary shares, representing approximately 83.28% of the issued and outstanding Class A ordinary shares. The payments for these redemptions took place on January 18, 2023.
Proposed Business Combination and Termination
On December 20, 2022, the Company entered into an Agreement and Plan of Merger (as amended, supplemented or otherwise modified from time to time, the “Merger Agreement”) by and among the Company, 10X Sparks Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), and Sparks Energy, Inc., a Delaware corporation (“Sparks”).
On February 2, 2023, the Company, Merger Sub, Sparks, and Ottis Jarrada Sparks entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”), pursuant to which the parties thereto (i) agreed to terminate the Merger Agreement and (ii) agreed to a mutual release of all claims related to the Merger Agreement and the transactions contemplated thereby.
Liquidity and Going Concern
As of September 30, 2022,March 31, 2023, the Company had approximately $128,000$25,371 in cashits operating bank account and working capital deficita Working Surplus of approximately $153,000.
The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to cover for certain expenses on behalf of the Company in exchange for issuance of Founder Shares (as defined in Note 5), and loan proceeds from the Sponsor of approximately $137,000 under the Note (as defined in Note 5). The Company fully repaid the Note (as defined in Note 5) on January 14, 2022. Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account.Account, as well as proceeds from the New Note (as defined in Note 2). In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, members of the Company’s founding team or any of their affiliates may provide the Company with Working Capital Loans (as defined in Note 5) as may be required (of which up to $1.5 million may be converted at the lender’s option into private placement-equivalent units at a price of $10.00 per unit).
Based upon the analysis above, management has determined that the Company does not have sufficient liquidity to meet its anticipated obligations for at least twelve months after the unaudited condensed consolidated financial statements are available to be issued, as such, the events and circumstances raise substantial doubt about the Company’s ability to continue as a going concern.
In connection with the Company’s assessment of going concern considerations in accordance with the ASC
Risks and Uncertainties
In addition to the risks noted above, management continues to evaluate the impact of the
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy areis not determinable as of the date of these unaudited condensed consolidated financial statements, and the specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these unaudited condensed consolidated financial statements.
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Amended Annual Report on Form
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.
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 of 2002, 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 an emerging growth 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 unaudited condensed consolidated financial statements in conformity with U.S. 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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.
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 consolidated 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.
Cash
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 no cash equivalents as of September 30, 2022March 31, 2023 and December 31, 2021.
Investments Held in Trust Account
The Company’s portfolio of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the consolidated balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities isare included in gain onincome from investments held in the Trust Account in the accompanying unaudited condensed consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
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 coverageCoverage limit of $250,000. AsAny loss incurred or lack of September 30, 2022access to such funds could have a significant adverse impact on the Company’s financial condition, results from operations, and December 31, 2021, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements,” approximates the carrying amounts represented in the condensedconsolidated balance sheets, primarily due to their short-term nature.
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of:
| ● | 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. |
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Promissory Note - Related Party
On November 14, 2022, the Company issued an unsecured promissory note (as amended and restated on November 14, 2022 and as may be further amended from time to time, the “New Note”) to the Sponsor for an aggregate principal amount of up to $250,000 for working capital purposes (“Working Capital Loan”). On May 17, 2023, the Company amended and restated the New Note. The New Note is for an aggregate principal amount of up to $2,500,000 for working capital purposes. The New Note bears no interest and is repayable in full upon the earlier of the consummation of the Company’s initial Business Combination and the day prior to the date the Company elects to liquidate and dissolve in accordance with the provisions of the Amended and Restated Articles of Association (such earlier date, the “Maturity Date”). Up to $1,500,000 of the principal amount of the New Note may also be converted into additional private placement-equivalent units, at a price of $10.00 per unit, at the option of the holder of the New Note at any time on or prior to the Maturity Date. During the three months ended March 31, 2023, the Company repaid the $250,000 outstanding under the New Note, bringing the total amount outstanding to $0.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is
Each whole warrant of the Company, the “Public Warrants,” and one-half of one redeemable warrant, the Private“Private Placement Warrants,” are classified in accordance with ASC 480 and ASC 815, which provides that the warrants are not precluded from equity classification. Equity-classified contracts were initially measured at fair value (or allocated value). Subsequent changes in fair value will not be recognized as long as the contracts continue to be classified in equity in accordance with ASC 480 and ASC 815.
Offering Costs Associated with the Initial Public Offering
The Company complies with the requirements of FASB ASC
Class A Ordinary Shares Subject to Possible Redemption
Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. As part of the Private Placement, the Company issued 1,153,000 Private Placement Units to the Sponsor and Cantor. These Private Placement Units will not be transferable, assignable or salable until 30 days after the completion of the Company’s initial business combination, as such they are considered non-redeemable and presented as permanent equity in the Company’s September 30, 2022 condensed balance sheets. Excluding the Private Placement Units, theThe Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, all outstanding Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equitydeficit section of the Company’s condensedconsolidated balance sheets.
Under ASC 480, the Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of the redeemable Class A ordinary shares resulted in charges against additional
Income taxes
The Company complies with the accounting and reporting requirements of FASB ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
FASB ASC Topic 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
The Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the periods presented.
Net Income (Loss) per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. This presentation assumes a business combination as the most likely outcome. Net income (loss) per commonordinary share is calculated by dividing the net income (loss) by the weighted average shares of ordinary shares outstanding for the respective period.
The calculation of diluted net income (loss) per ordinary shares does not consider the effect of the Public Warrants and the Private Placement Warrants to purchase an aggregate of 15,576,500 Class A ordinary shares, because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method.events. As a result, diluted net income (loss) per share is the same as basic net income (loss) per share for the three and nine months ended September 30, 2022, the three months ended September 30, 2021March 31, 2023 and for the period from February 10, 2021 (inception) through September 30, 2021.2022. Accretion associated with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
The Company has considered the effect of Class B ordinary shares that were excluded from the weighted average number as they were contingent on the exercise of over-allotment option by the underwriter. Since the contingency was satisfied, with respect to the portion of the over-allotment exercised by the underwriter, the Company included these shares in the weighted average number as of the beginning of the reporting period to determine the dilutive impact of these shares.
The following tables reflectstable presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per share for each class of ordinary shares:
For the three months ended September 30, | ||||||||||||
2022 | 2021 | |||||||||||
Class A | Class B | Class B | ||||||||||
| Basic and diluted net income (loss) per ordinary share: | ||||||||||||
Numerator: | ||||||||||||
Allocation of net income (loss) - basic | $ | 841,764 | $ | 270,203 | $ | (12,784 | ) | |||||
Allocation of net income (loss) - diluted | $ | 841,764 | $ | 270,203 | $ | (12,784 | ) | |||||
Denominator: | ||||||||||||
Basic weighted average ordinary shares outstanding | 31,153,000 | 10,000,000 | 8,700,000 | |||||||||
Diluted weighted average ordinary shares outstanding | 31,153,000 | 10,000,000 | 8,700,000 | |||||||||
| Basic net income (loss) per ordinary share | $ | 0.03 | $ | 0.03 | $ | (0.00 | ) | |||||
Diluted net income (loss) per ordinary share | $ | 0.03 | $ | 0.03 | $ | (0.00 | ) | |||||
| Three Months Ended March 31, 2023 (Unaudited) | Three Months Ended March 31, 2022 (Unaudited) | |||||||||||||||
| Class A | Class B | Class A | Class B | |||||||||||||
| Basic and diluted net income (loss) per ordinary share: | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net income (loss) | 1,395,167 | 1,380,030 | (253,897 | ) | (93,471 | ) | ||||||||||
| Denominator: | ||||||||||||||||
| Basic and diluted weighted average ordinary shares outstanding | 10,109,688 | 10,000,000 | 26,653,122 | 9,812,222 | ||||||||||||
| Basic and diluted net income (loss) per ordinary share | $ | 0.14 | $ | 0.14 | $ | (0.01 | ) | $ | (0.01 | ) | ||||||
For the nine months ended September 30, 2022 | For the period from February 10, 2021 (inception) through September 30, 2021 | |||||||||||
Class A | Class B | Class B | ||||||||||
Basic and diluted net income (loss) per ordinary share: | ||||||||||||
Numerator: | ||||||||||||
Allocation of net income (loss ) - basic | $ | 488,409 | $ | 163,597 | $ | (23,717 | ) | |||||
Allocation of net income (loss) - diluted | $ | 487,647 | $ | 164,359 | $ | (23,717 | ) | |||||
Denominator: | ||||||||||||
Basic weighted average ordinary shares outstanding | 29,669,524 | 9,938,095 | 8,700,000 | |||||||||
Diluted weighted average ordinary shares outstanding | 29,669,524 | 10,000,000 | 8,700,000 | |||||||||
Basic net income (loss) per ordinary share | $ | 0.02 | $ | 0.02 | $ | (0.00 | ) | |||||
| Diluted net income (loss) per ordinary share | $ | 0.02 | $ | 0.02 | $ | (0.00 | ) | |||||
Recent Accounting Standards
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
On January 14, 2022, the Company consummated its Initial Public Offering of 30,000,000 Units, including the issuance of 3,900,000 Units as a result of the underwriter’s partial exercise of their over-allotment option, at $10.00 per Unit, generating gross proceeds of $300.0 million, and incurring offering costs of approximately $20.2 million, of which approximately $14.3 million was for deferred underwriting commissions.
Each Unit consists of one Class A ordinary share and
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 1,153,000 Private Placement Units, at a price of $10.00 per Private Placement Unit, to the Sponsor and Cantor, generating proceeds of approximately $11.5 million. Each Private Placement Unit is identical to the UnitUnits sold in the Initial Public Offering, except as described below.
If the Company does not complete the initial Business Combination within the Combination Period, the Private Placement Units will expire worthless. The Private Placement Units, private placement shares underlying the Private Placement Units and private placement warrants included in the Private Placement Units are subject to the transfer restrictions described below. The Private Placement Units have terms and provisions that are identical to those of the Units sold in the Initial Public Offering.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In February 2021, the Company’s Sponsor paid $25,000, or approximately $0.002 per share, to cover certain of the offering and formation costs in exchange for an aggregate of 11,672,500 Class B ordinary shares, par value $0.0001 per share (the “Founder Shares”). Shares and the associated amounts have been retroactively restated to reflect:reflect (i) the surrender of 2,089,167 Class B ordinary shares for no consideration on December 1, 2021; and (ii) the share capitalization of 421,667 Class B ordinary shares on January 11, 2022; resulting in an aggregate of 10,005,000 Class B ordinary shares outstanding. The Initial Shareholders agreed to forfeit up to 1,305,000 Founder Shares to the extent that the over-allotment option is not exercised in full by the underwriter, so that the Founder Shares will represent 25% of the Company’s issued and outstanding shares after the Initial Public Offering (not including the Class A ordinary shares underlying the Private Placement Units). On January 14, 2022, the underwriter partially exercised theits over-allotment option to purchase additional 3,900,000 Units; thus, 5,000 Class B ordinary shares were subsequently forfeited when the over-allotment option expired on February 25, 2022.
The Company’s Initial Shareholders agreed not to transfer, assign or sell any of their Founder Shares until consummation of the initial Business Combination. Any permitted transferees will be subject to the same restrictions and other agreements of the Initial Shareholders with respect to any Founder Shares (the
In December 2022, certain investors of the Company (“10X III Investors”) entered into a non-redemption agreement with the Company and Sponsor (“Non-Redemption Agreements”). Pursuant to the Non-Redemption Agreements, such 10X III Investors agreed, for the benefit of the Company, to vote certain ordinary shares of the Company now owned or acquired (the “Investor Shares”), representing 4 million ordinary shares of the Company in the aggregate, in favor of the proposal to amend the Company’s organizational documents to extend the time the Company is permitted to close a business combination and not to redeem the Investor Shares in connection with such proposal. In connection with these commitments from the 10X III Investors, Sponsor has agreed to transfer to each 10X III Investor an amount of its Class B Ordinary Shares on or promptly after the closing of the Company’s initial business combination.
Due from Sponsor
During January 2023, the Company received a settlement as a result of litigation in the amount of $4,000,000 related to its terminated Merger Agreement described in Note 1. This amount was held by the Sponsor, using the amounts to settle any related party payables. As of March 31, 2023, the amount due from the Sponsor to the Company is $2,967,031. The Sponsor will deposit this amount, less any used for expenses of the Company, in May of 2023.
Promissory Note - Related Party
The Sponsor agreed to loan the Company up to $300,000 pursuant to a promissory note, dated on February 18, 2021 and was later(as amended on December 31, 2021, (thethe “Note”), to be used for a portion of the expenses of the Initial Public Offering. The Note was
Related Party 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 the initial Business Combination, the Company would repay the Working Capital Loans. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of the Working Capital Loans may be convertible into units of the post Business Combination entity at a price of $10.00 per unit at the option of the lender. The units would be identical to the Private Placement Units. On May 17, 2023, the Company amended and restated the New Note. The New Note, as amended and restated on May 17, 2023, is for an aggregate principal amount of up to $2,500,000 for working capital purposes. The New Note bears no interest and is repayable in full upon the earlier of the consummation of the Company’s initial Business Combination and the Maturity Date (as defined in Note 2). Up to $1,500,000 of the principal amount of the New Note may also be converted into additional private placement-equivalent units, at a price of $10.00 per unit, at the option of the holder of the New Note at any time on or prior to the Maturity Date. During the three months ended March 31, 2023, the Company repaid the $250,000 outstanding under the New Note. As of September 30, 2022March 31, 2023 and December 31, 2021, no2022, the Company had $0 and $250,000 of such Working Capital Loans were outstanding.
Administrative Support Agreement
On January 11, 2022, the Company entered into an agreement with the Sponsor, (the “Administrative Support Agreement”), pursuant to which the Company agreed to pay the Sponsor a total of $37,500 per month for office space, secretarial, and administrative services through the earlier of the Company’s consummation of a Business Combination and its liquidation. Upon consummation of a Business Combination, any remaining monthly payments shall be accelerated and due. For the three months ended September 30,March 31, 2023 and 2022, and 2021, the Company incurred approximately $113,000 and paid approximately $112,500 and $0 of administrative support expense, respectively. For the nine months ended September 30, 2022 and period from February 10, 2021 (inception) through September 30, 2021, the Company incurred and paid approximately $337,500 and $0$113,000 of administrative support expense, respectively. There werewas no outstanding balanceamounts as of September 30, 2022March 31, 2023 and December 31, 2021.
The Sponsor, executive officers and directors, or any of Contentstheir respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. The Company’s audit committee will review on a quarterly basis all payments that were made by the Company to the Sponsor, officers, directors or their affiliates. For the three months ended March 31, 2023 and 2022, the Company did not incur or reimburse any Business Combination costs to the Sponsor. There was no outstanding amounts as of March 31, 2023 and December 31, 2022.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration and Shareholder Rights
The holders of the Founder Shares, Private Placement Units, private placement shares andunderlying the Private Placement Units, private placement warrants andunderlying the Private Placement Units, the Class A ordinary shares underlying such private placement warrants, and Private Placement Unitsunits that may be issued upon conversion of the Working Capital Loans will have registration rights towhich will require the Company to register a sale of any of the Company’saforementioned securities of the Company held by them pursuant to a registration rights agreement signed upon the effective date of the Initial Public Offering. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back”“piggyback” registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. Notwithstanding the foregoing, Cantor may not exercise its demand and “piggyback” registration rights after five (5) and seven (7) years, respectively, after the effective date of the registration statement and may not exercise its demand rights on more than one occasion. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriter a
The underwriter was entitled to a cash underwriting discount of approximately $5.2 million in the aggregate paid upon the closing of the Initial Public Offering. An additional fee of approximately $14.3 million in the aggregate will be payable to the underwriter for deferred underwriting commission. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes an initial Business Combination, subject to the terms of the underwriting agreement for the Initial Public Offering.
NOTE 7—7. CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION
The Company’s Class A ordinary shares contain certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events. The Company is authorized to issue 500,000,000 Class A ordinary shares with a par value of $0.0001 per share. Holders of Company’s Class A ordinary shares are entitled to one
The Class A ordinary shares subject to possible redemption reflected on the accompanying condensedconsolidated balance sheets isare reconciled in the following table:
Gross proceeds | $ | 300,000,000 | ||
Less: | ||||
Proceeds allocated to Public Warrants | (12,300,000 | ) | ||
Class A ordinary shares issuance costs | (19,410,782 | ) | ||
Plus: | ||||
Accretion of carrying value to redemption value | 36,210,782 | |||
Class A ordinary shares subject to possible redemption as of March 31, 2022 | 304,500,000 | |||
Increase in redemption value of Class A ordinary shares subject to possible redemption | 306,850 | |||
Class A ordinary shares subject to possible redemption as of June 30, 2022 | 304,806,850 | |||
Increase in redemption value of Class A ordinary shares subject to possible redemption | 1,448,249 | |||
Class A ordinary shares subject to possible redemption as of September 30, 2022 | $ | 306,255,099 | ||
| Gross proceeds | $ | 300,000,000 | ||
| Less: | ||||
| Proceeds allocated to Public Warrants | (12,300,000 | ) | ||
| Class A ordinary shares issuance costs | (19,410,782 | ) | ||
| Redemption of shares | (266,701,252 | ) | ||
| Plus: | ||||
| Accretion of carrying value to redemption value | 36,210,782 | |||
| Increase in redemption value of Class A ordinary shares subject to possible redemption | 4,061,515 | |||
| Class A ordinary shares subject to possible redemption at December 31, 2022 | $ | 41,860,263 | ||
| Plus: | ||||
| Accretion of carrying value to redemption value | 179,181 | |||
| Class A ordinary shares subject to possible redemption at March 31, 2023 | $ | 42,039,444 |
NOTE 8. SHAREHOLDERS’ DEFICIT
Preference Shares
Class
Class
The Founder Shares will automatically convert into Class A ordinary shares concurrently with or immediately following the consummation of the initial Business Combination on a
NOTE 9. WARRANTS
As of September 30,March 31, 2023 and December 31, 2022, the Company hashad 15,000,000 Public Warrants and 576,500 Private Placement Warrants outstanding. There were no warrants issued and outstanding as of December 31, 2021.
Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable 30 days after the completion of a Business Combination; provided that the Company has an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities laws of the state of residence of the holder (or the Company permit holders to exercise their warrants on a cashless basis under certain circumstances). The Company 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 best efforts to file with the SEC a post-effective amendment to the registration statement used in connection with the Initial Public Offering or a new registration statement covering the Class A ordinary shares issuable upon exercise of the warrants and to maintain a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. 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 they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
The warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the 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 the initial shareholders or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Class A ordinary shares during the 10 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, then 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 prices described under “Redemption of warrants for cash” 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 Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and 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 a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be
Redemption of warrants for cash:
| ● | in whole and not in part; |
| ● | at a price of $0.01 per warrant; |
| ● | upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and |
| ● | if, and only if, the last reported sale price of Class A ordinary shares equals or exceeds $18.00 per share (as adjusted) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. |
The Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those Class A ordinary shares is available throughout the
In no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
NOTE 10. FAIR VALUE MEASUREMENTS
The following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis as of September 30,March 31, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation techniques thatinputs the Company utilized to determine such fair value.
Description | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||
Assets: | ||||||||||||
Investments held in Trust Account-U.S. Treasury Securities(1) | $ | 306,353,660 | $ | — | $ | — | ||||||
| Description | Amount at Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
| March 31, 2023 (Unaudited) | ||||||||||||||||
| Assets | ||||||||||||||||
| Investments held in Trust Account: | ||||||||||||||||
| U.S. Treasury Securities | $ | 42,139,444 | $ | 42,139,444 | $ | — | $ | — | ||||||||
| December 31, 2022 | ||||||||||||||||
| Assets | ||||||||||||||||
| Investments held in Trust Account: | ||||||||||||||||
| Money Market investments | $ | 308,661,515 | $ | 308,661,515 | $ | — | $ | — | ||||||||
NOTE 11. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred up to the date unaudited condensed consolidated financial statements were available to be issued. Based upon this review, the Company determined that there have been no events that have occurred that would require adjustments to the disclosures in the unaudited condensed consolidated financial statements.
On May 17, 2023, the Company amended and restated the New Note. The New Note, as amended and restated on May 17, 2023, is for an aggregate principal amount of up to $2,500,000 for working capital purposes. The New Note bears no interest and is repayable in full upon the earlier of the consummation of the Company’s initial Business Combination and the Maturity Date (as defined in Note 2). Up to $1,500,000 of the principal amount of the New Note may also be converted into additional private placement-equivalent units, at a price of $10.00 per unit, at the option of the holder of the New Note at any time on or prior to the Maturity Date.
ITEMItem 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSManagement’s Discussion and Analysis of Financial Condition and Results of Operations
References in this reportQuarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 (the “Quarterly Report”) to “we”, “us”,“we,” “us,” “our” or the “Company” arerefer to 10X Capital Venture Acquisition Corp. III, except where the context requires otherwise.III. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’sour financial condition and results of operations should be read in conjunction with ourthe unaudited condensed consolidated financial statements and relatedthe notes thereto includedcontained 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 Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’sour financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors“Risk Factors” section of the Company’sour Amended Annual Report on Form 10-K10-K/A for the year ended December 31, 20212022 filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2022. The Company’sMay 22, 2023. Our 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 disclaimswe disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
10X Capital Venture Acquisition Corp. III (the “Company”) is
We are a blank check company incorporated on February 10, 2021 as a Cayman Islands exempted company on February 10, 2021. The Company wasand formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities, (the “Business Combination”). The Company haswhich we refer to as our “initial business combination.” We have not selected any specific Business Combinationinitial business combination target, and the Company haswe have not, nor has anyone on itsour behalf, engaged in any substantive discussions, directly or indirectly, with any Business Combination target with respect to the initial Business Combination with the Company.business combination target.
Our sponsor is 10X Capital SPAC Sponsor III LLC, a Cayman Islands limited liability company (the “Sponsor”). The registration statement for our initial public offering (the “Initial Public Offering”) was declared effective on January 11, 2022. On January 14, 2022, we consummated our Initial Public Offering of 30,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”), including the issuance of 3,900,000 Units as a result of the underwriter’s partial exercise of its over-allotment option,option. Each Unit consists of one Class A ordinary share, par value $0.0001 per share, of the Company (“Class A ordinary shares” and, with respect to the Class A ordinary shares included in the Units offered in the Initial Public Offering, the “Public Shares”) and one-half of one redeemable warrant of the Company (each whole warrant, a “Public Warrant”), with each Public Warrant entitling the holder thereof to purchase one Class A ordinary share for $11.50 per share, subject to adjustment. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to us of $300.0 million, and incurringmillion. In connection with the Initial Public Offering, we incurred offering costs of approximately $20.2 million, of which approximately $14.3 million was for deferred underwriting commissions (Note 6).commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement (“Private(the “Private Placement”) of 1,153,000 units (each, a “Private Placement Unit” and collectively, the “Private Placement Units”) at a price of $10.00 per Private Placement Unit to the Sponsor and Cantor Fitzgerald & Co. (“Cantor”), generating proceeds of approximately $11.5 million (Note 4).million. Each Private Placement Unit consists of one Class A ordinary share (the “Private Placement Shares”) and one-half of one redeemable warrant (the “Private Placement Warrants.”
18
Upon the closing of the Initial Public Offering and the Private Placement, $304.5 million ($10.15 per Unit) of net proceeds, including the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement, was placed in a trust account (the “Trust Account”) and invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), which invest only in direct U.S. government treasury obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to us to pay itsour taxes, the proceeds from the Initial Public Offering and the sale of the Private Placement Units will not be released from the Trust Account until the earliest of (i) the completion of the initial Business Combination,business combination, (ii) the redemption of the Public Shares if we are unable to complete the initial Business Combination within 12 months from the closingbusiness combination by July 14, 2023, or up to October 14, 2023 if approved by our board of the Initial Public Offering, or January 14, 2023directors (the “Combination Period”), subject to applicable law, and (iii) the redemption of the Public Shares properly submitted in connection with a shareholder vote to amend our second amended and restated memorandum and articles of association (the “Charter”) to modify the substance or timing of itsour obligation to redeem 100% of the Public Shares if we have not consummated the initial Business Combinationbusiness combination within the Combination Period or with respect to any other material provisions relating to shareholders’ rights or pre-initial Business Combination business combination activity. The proceeds deposited in the Trust Account could become subject to the claims of our creditors, if any, which could have priority over the claims of theholders of Public Shareholders (as defined below).Shares.
Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the Private Placement, Units, although substantially all of the net proceeds (less deferred underwriting commissions) are intended to be generally applied toward consummating a Business Combination (less deferred underwriting commissions).an initial business combination. Our Business Combinationinitial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the net balance in the Trust Account (excluding the amount of deferred underwriting discounts held and taxes payable on the income earned on the Trust Account) at the time of the signing an agreement to enter into a Business Combination.an initial business combination. However, we will only complete a Business Combinationan initial business combination if the post-Business Combinationpost-business combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that we will be able to successfully effect an initial business combination.
On December 28, 2022, a Business Combination.total of 186 shareholders elected to redeem an aggregate of 25,943,810 Class A ordinary shares, representing approximately 83.28% of the issued and outstanding Class A ordinary shares. The payment in connection with the redemption of these shares took place on January 18, 2023, whereby a total value of $266,701,252 was paid out to shareholders from the Trust Account. Following such redemptions, there were 4,056,190 Class A ordinary shares subject to possible redemption outstanding.
Termination of Sparks Merger Agreement
On December 20, 2022, we entered into an Agreement and Plan of Merger (as amended, supplemented or otherwise modified from time to time, the “Sparks Merger Agreement”) with 10X Sparks Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and Sparks Energy, Inc., a Delaware corporation (“Sparks”).
We were subsequently informed by the management of Sparks that it was their belief that the Sparks Merger Agreement did not constitute a binding contract. In response, on January 30, 2023, we filed a complaint in the Delaware Court of Chancery (the “Delaware Action”) to obtain a declaratory judgment that the Sparks Merger Agreement constitutes a binding and enforceable contract between us, Merger Sub and Sparks, requiring Sparks to take certain steps as may be reasonably necessary to consummate the business combination pursuant to the Sparks Merger Agreement as soon as practicable.
On February 2, 2023, we entered into the Settlement Agreement with Merger Sub, Sparks and Ottis Jarrada Sparks, pursuant to which (i) the parties thereto mutually agreed to terminate the Sparks Merger Agreement and (ii) the parties thereto agreed to a mutual release of all claims related to the Sparks Merger Agreement, the transactions contemplated thereby, and the Delaware Action.
By virtue of the termination of the Sparks Merger Agreement, the Ancillary Agreements (as defined in the Sparks Merger Agreement) were terminated in accordance with their terms.
Extension
On December 28, 2022, we held an extraordinary general meeting of shareholders, at which our shareholders approved, by special resolution, the proposal to amend and restate our amended and restated memorandum and articles of association to extend the date by which we must (1) consummate an initial business combination, (2) cease all operations except for the purpose of winding up if we fail to complete such initial business combination, and (3) redeem all of the Class A ordinary shares included as part of the Units sold in the Initial Public Offering from January 14, 2023 to July 14, 2023 (the “Extended Date”) and to allow our board of directors (the “Board”), without another shareholder vote, to elect to further extend the date to consummate an initial business combination after the Extended Date up to three times, by an additional month each time, upon two days’ advance notice prior to the applicable deadline, up to October 14, 2023 (the “Extension” and such proposal, the “Extension Proposal”). In connection with the Extension, a total of 186 shareholders elected to redeem an aggregate of 25,943,810 Class A ordinary shares, representing approximately 83.28% of the issued and outstanding Class A ordinary shares. As a result, an aggregate of $266,701,252 (or approximately $10.28 per share) was released from the Trust Account to pay such shareholders.
Liquidity, Capital Resources, and Going Concern
For the three months ended March 31, 2023, net cash provided by operating activities was $208,278, which was due to our net income of $2,775,197 partially offset by income from investments held in the Trust Account of $179,181, and by changes in working capital accounts of $2,387,738.
For the three months ended March 31, 2022, net cash used in operating activities was $506,571, which was due to income from investments held in the Trust Account of $158,893, our net loss of $347,368, and changes in working capital of $310.
For the three months ended March 31, 2023, net cash provided by investing activities was $266,701,252, which was due to Cash withdrawn from the Trust Account for payment to redeeming shareholders in connection with the Extension.
For the three months ended March 31, 2022, net cash used in investing activities of $304,500,000 was the result of the amount of net proceeds from our Initial Public Offering being deposited into the Trust Account.
For the three months ended March 31, 2023, net cash used in financing activities of $266,951,252 was a result of a payment to redeeming shareholders of $266,701,252, and the repayment of the promissory note – related party in the amount of $250,000.
For the three months ended March 31, 2022, net cash provided by financing activities of $305,678,803 was comprised of $300,000,000 in proceeds from the issuance of Units in our Initial Public Offering, and proceeds from the Private Placement of $11,530,000, partially offset by the repayment of the promissory note with our Sponsor of $136,617 and payment of offering costs of $5,714,580.
As of September 30, 2022,March 31, 2023, we had approximately $128,000$25,371 held outside of the Trust Account and a working capital deficitsurplus of approximately $153,000.$0.2 million.
Our liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to cover for certain expenses on our behalf in exchange for issuance of Founder Shares (as defined in Note 5)Class B ordinary shares, par value $0.0001 per share (“Class B ordinary shares”), of the Company and loan proceeds from the Sponsor of approximately $137,000 under a promissory note, dated February 18, 2021 (as amended on December 31, 2021, the Note (as defined in Note 5)“Pre-IPO Promissory Note”). We fully repaid the Pre-IPO Promissory Note on January 14, 2022. Subsequent to the consummation of the Initial Public Offering, our liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account.
Account and a Working Capital Loan (as defined below) under an unsecured promissory note from the Sponsor of $2,500,000. In addition, in order to finance transaction costs in connection with a Business Combination,business combination, the Sponsor, members of our founding team or any of their affiliates may provide us with additional Working Capital Loans. During the three months ended March 31, 2023, we repaid the $250,000 outstanding under the Working Capital Loan. As of March 31, 2023 and December 31, 2022, there was $0 and $250,000 outstanding under the Working Capital Loans, (as defined below) as may be required (of which up to $1.5 million may be converted at the lender’s option into private placement-equivalent units at a price of $10.00 per unit).respectively.
Based upon the analysis above, our management has determined that we do not have sufficient liquidity to meet itsour anticipated obligations for at least twelve months after the financial statements are available to be issued, and as such, the events and circumstances raise substantial doubt about our ability to continue as a going concern.
We have until July 14, 2023, with the option upon Board approval to extend up to October 14, 2023, to consummate an initial business combination. It is uncertain that we will be able to consummate an initial business combination by this time. If an initial business combination is not consummated by the applicable date, there will be a mandatory liquidation and subsequent dissolution. In connection with our assessment of going concern considerations in accordance with the ASC 205-40, We have until January 14, 2023FASB Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to consummateContinue as a Business Combination. It is uncertain that we will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution. OurGoing Concern,” our management has determined that the liquidity condition and mandatory liquidation, should a Business Combinationbusiness combination not occur, and potential subsequent dissolution raises substantial doubt about our ability to continue as a going concern. We intend to complete a Business Combinationbusiness combination before the mandatory liquidation date.
19
We continue to evaluate Over this time period, we will be using the impactfunds outside of the COVID-19 pandemicTrust Account for paying existing accounts payable, identifying and evaluating prospective initial business combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the industrytarget business to merge with or acquire, and has concluded that while it is reasonably possible that the virus could have a negative effect on our financial position, results of operations and/or our search for a target company, the specific impact is not readily determinable as of the date of these financial statement. The unaudited condensed financial statements does not include any adjustments that might result from the outcome of this uncertainty.
In February 2022, the Russian Federationstructuring, negotiating and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these unaudited condensed financial statements and the specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these unaudited condensed financial statements.consummating an initial business combination.
Results of Operations
Our entire activity fromsince inception up to September 30, 2022March 31, 2023 related to our formation, the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination.business combination and expenses related to consummating an initial business combination. We will not generate any operating revenues until after the completion of our initial Business Combination.business combination. We generate non-operating income in the form of investment income from the Trust Account. We will continue to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. Additionally, we recognize non-cash gainsexpenses and losses within other income (expense) related to changes in recurring fair value measurement of our derivative liabilities at each reporting period.transaction expenses.
For the three months ended September 30, 2022,March 31, 2023, we incurredhad net income of approximately $1.1 million,$2,775,197, which consisted of approximately $1.4 million$179,181 in income from investments held in the Trust Account partiallyand approximately $4,000,000 on a gain from a settlement agreement, partly offset by approximately $224,000$1,291,484 in general and administrative expense and approximately $112,500 in administrative expenses-related party.
For the three months ended March 31, 2022, we incurred a net loss of approximately $347,000, which consisted of approximately $394,000 in general and administrative expense and approximately $113,000 in administrative expenses-related party.
For the three months ended September 30, 2021, we had a net loss ofparty, partly offset by approximately $13,000, consisted solely of general and administrative expenses.
For the nine months ended September 30, 2022, we incurred net income of approximately $652,000, which consisted of approximately $1.9 million$159,000 in income from investments held in the Trust Account, partially offset by approximately $866,000 in general and administrative expense and approximately $338,000 in administrative expenses-related party.Account.
For the period from February 10, 2021 (inception) through September 30, 2021, we had a net loss of approximately $24,000, consisted solely of general and administrative expenses.
Contractual Obligations
Promissory Note—Notes - Related Party
The Sponsor agreed to loan us up to $300,000 pursuant to a promissory note, dated on February 18, 2021 and was later(as amended on December 31, 2021, (thethe “Note”), to be used for a portion of the expenses of the Initial Public Offering. The Note was non-interest bearing, unsecured and due upon the closing of the Initial Public Offering. The CompanyWe borrowed approximately $135,000$137,000 under the Note as of December 31, 2021, and fully repaid the Note balance on January 14, 2022. Subsequent to the repayment, the facility was no longer available to the Company
Working Capital Loan
Related Party Loans
In order to finance transaction costs in connection with an intended initial Business Combination,business combination, the Sponsor or an affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required (the “Workingfor working capital purposes (“Working Capital Loans”). If we complete thean initial Business Combination,business combination, we would repay the Working Capital Loans. In the event that the initial Business Combinationbusiness combination does not close, we may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans, but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of the Working Capital Loanssuch loans may be convertible into units of the post Business Combinationpost-business combination entity (the “Working Capital Units”) at a price of $10.00 per unit at the option of the lender. The unitsWorking Capital Units would be identical to the Private Placement Units. Each Working Capital Unit would consist of one Class A ordinary share and one-half of one redeemable warrant (the “Working Capital Warrants”). On May 17, 2023, we amended and restated an existing unsecured promissory note issued to our Sponsor (as amended and restated on May 17, 2023, the “New Note” ). The New Note is for an aggregate principal amount of up to $2,500,000 for working capital purposes. The New Note bears no interest and is repayable in full upon the earlier of the consummation of our initial business combination and the day prior to the date we elect to liquidate and dissolve in accordance with the provisions of the Charter (such earlier date, the “Maturity Date”). Up to $1,500,000 of the principal amount of the New Note may also be converted into additional private placement-equivalent units, at a price of $10.00 per unit, at the option of the holder of the New Note at any time on or prior to the Maturity Date. During the three months ended March 31, 2023, we repaid $250,000 outstanding under the New Note. As of September 30, 2022March 31, 2023 and December 31, 2021, no2022, we had $0 and $250,000 of such Working Capital Loans were outstanding.outstanding, respectively.
20
Registration and Shareholder Rights
The holders of the Founder Shares,Class B ordinary shares, Private Placement Units, private placement sharesPrivate Placement Shares and private placement warrantsPrivate Placement Warrants and the Class A ordinary shares underlying such private placement warrants and Private Placement Units that may be issued upon conversion of the Working Capital LoansUnits and Working Capital Warrants will have registration rights to require us to register a sale of any of our securities held by them pursuant to a registration rights agreement signed upon the effective date of the Initial Public Offering. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back”“piggyback” registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination.business combination. Notwithstanding the foregoing, Cantor may not exercise its demand and “piggyback” registration rights after five (5) and seven (7) years, respectively, after the effective date of the registration statement filed in connection with the Initial Public Offering and may not exercise its demand rights on more than one occasion. We will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
We granted the underwriter a 45-day option from the date of the Initial Public Offering to purchase up to an additional 3,915,000 Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On January 14, 2022, the underwriter partially exercised the over-allotment option to purchase an additional 3,900,000 Units.
The underwriter was entitled to a cash underwriting discount of approximately $5.2 million in the aggregate paid upon the closing of the Initial Public Offering. An additional fee of approximately $14.3 million in the aggregate will be payable to the underwriter for deferred underwriting commission.commissions. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that we complete an initial Business Combination,business combination, subject to the terms of the underwriting agreement for the Initial Public Offering.
Critical Accounting Policies and Estimates
The preparation of unaudited condensed financial statements and related disclosures in conformity with U.S. GAAPaccounting 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 unaudited condensed financial statements, and the reported amounts of income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified the following as ourany critical accounting policies:
Offering Costs Associated with the Initial Public Offering
The Company complies with the requirements of FASB ASC 340-10-S99-1. Offering costs consisted of legal, accounting, and other costs incurred that were directly related to the Initial Public Offering. Offering costs associated with warrants were charged to shareholders’ equity upon the completion of the Initial Public Offering. Offering costs associated with the Class A ordinary shares were charged against the carrying value of Class A ordinary shares subject to possible redemption upon the completion of the Initial Public Offering.
Net Income (Loss) per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. This presentation assumes a business combination as the most likely outcome. Net income (loss) per common share is calculated by dividing the net income (loss) by the weighted average shares of ordinary shares outstandingestimates for the respective period.
21
The calculation of diluted net income (loss) per ordinary shares does not consider the effect of the Public Warrants, the Private Placement Warrants and the Rights to purchase an aggregate of 15,576,500 Class A ordinary shares since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income (loss) per share is the same as basic net income (loss) per share for the three and nine months ended September 30, 2022, the three months ended September 30, 2021March 31, 2023 and for the period from February 10, 2021 (inception) through September 30, 2021. Accretion associated with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.2022.
Recent Accounting PronouncementsStandards
In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The ASU amends ASC 820 to clarify that a contractual sales restriction is not considered in measuring an equity security at fair value and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The ASU applies to both holders and issuers of equity and equity-linked securities measured at fair value. The amendments in this ASU are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is still evaluating the impact of this pronouncement on the condensed financial statements.
Our managementManagement does not believe that any other recently issued, but not yet effective, accounting standards, updates, if currently adopted, would have a material effect on the accompanyingCompany’s unaudited condensed consolidated financial statements.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
As of September 30, 2022 and December 31, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” under the JOBS Act and are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We elected to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our unaudited condensed financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
As an “emerging growth company”, we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an “emerging growth company,” whichever is earlier.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
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.
22
Item 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under Securitiesthe Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As of September 30, 2022, as required by Rules 13a-15 and 15d-15 under the Exchange Act, our principal executive officerChief Executive Officer and principal financial and accounting officerChief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures.procedures as of March 31, 2023. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the period covered in this Quarterly Report, our disclosure controls and procedures (as defined in Rules 13a-15(e)13a-15 (e) and 15d-15(e)15d-15 (e) under the Exchange Act) were not effective.
Management concluded that a material weakness in internal controls over financial reporting existed relating to the accounting treatment for complex accounting applications. A material weakness is a deficiency, or combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control overControls Over Financial Reporting
There werehas been no changeschange in our internal controlcontrols over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of under the Exchange Act) during the most recent fiscal quarter that havehas materially affected, or areis reasonably likely to materially affect, our internal controlcontrols over financial reporting. Management will enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our updated processes will include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
PART II-OTHERII – OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
There are certain risks and uncertainties in our business that could cause our actual results to differ materially from those anticipated. A detailed discussion of our risk factorssuch risks was included in Part I, Item 1A, “Risk Factors” of our Amended Annual Report on Form 10-K10-K/A for the year ended December 31, 2021,2022, filed with the SEC on March 31, 2022.May 22, 2023 (the “Amended Annual Report”). These risk factors should be read carefully in connection with evaluating our business and in connection with the forward-looking statements and other information contained in this Quarterly Report. Any of the risks described in the Amended Annual Report on Form 10-K for the year ended December 31, 2021, could materially affect our business, financial condition or future results and the actual outcome of matters as to which forward-looking statements are made. There have been no material changes to the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2021 except for the following:
If we are deemed to be an investment company for purposes of the Investment Company Act, we may be forced to abandon our efforts to complete an initial business combination and instead be required to liquidate the Company. To mitigate the risk of that result, on or prior to the 24-month anniversary of the effective date of the registration statement relating to our IPO, we may instruct Continental Stock Transfer & Trust Company to liquidate the securities held in the trust account and instead hold all funds in the trust account in cash. As a result, following such change, we will likely receive minimal, if any, interest, on the funds held in the trustaccount, which would reduce the dollar amount that our public shareholders would have otherwise received upon any redemption or liquidation of the Company if the assets in the trust account had remained in U.S. government securities or money market funds.
On March 30, 2022, the SEC issued proposed rules (the “SPAC Rule Proposals”), relating, among other things, to circumstances in which SPACs such as us could potentially be subject to the Investment Company Act and the regulations thereunder. The SPAC Rule Proposals would provide a safe harbor for such companies from the definition of “investment company” under Section 3(a)(1)(A) of the Investment Company Act, provided that a SPAC satisfies certain criteria. To comply with the duration limitation of the proposed safe harbor, a SPAC would have a limited time period to announce and complete a de-SPAC transaction. Specifically, to comply with the safe harbor, the SPAC Rule Proposals would require a company to file a report on Form 8-K announcing that it has entered into an agreement with a target company for an initial business combination no later than 18 months after the effective date of the registration statement for its initial public offering. The company would then be required to complete its initial business combination no later than 24 months after the effective date of the registration statement for its initial public offering. We understand that the SEC has recently been taking informal positions regarding the Investment Company Act consistent with the SPAC Rule Proposals.
There is currently uncertainty concerning the applicability of the Investment Company Act to a SPAC, including a company like ours, that does not complete its initial business combination within the proposed time frame set forth in the proposed safe harbor rule. As indicated above, we completed our IPO in January 2022 and have operated as a blank check company searching for a target business with which to consummate an initial business combination since such time (or approximately nine months after the effective date of our IPO, as of the date of this Quarterly Report). If we were deemed to be an investment company for purposes of the Investment Company Act, we might be forced to abandon our efforts to complete an initial business combination and instead be required to liquidate the Company. If we are required to liquidate the Company, our investors would not be able to realize the benefits of owning shares in a successor operating business, including the potential appreciation in the value of our shares and warrants following such a transaction, and our warrants would expire worthless.
The funds in the trust account have, since our IPO, been held only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the Investment Company Act. As of September 30, 2022, amounts held in trust account included approximately $1,855,099 of accrued interest. To mitigate the risk of us being deemed to have been operating as an unregistered investment company under the Investment Company Act, we may, on or prior to the 24-month anniversary of the effective date of the registration statement relating to our IPO, or January 14, 2024, instruct Continental Stock Transfer & Trust Company, the trustee with respect to the trust account, to liquidate the U.S. government treasury obligations or money market funds held in the trust account and thereafter to hold all funds in the trust account in cash (i.e., in one or more bank accounts) until the earlier of the consummation of a business combination or our liquidation. Following such liquidation of the assets in our trust account, we will likely receive minimal interest, if any, on the funds held in the trust account, which would reduce the dollar amount our public shareholders would have otherwise received upon any redemption or liquidation of the Company if the assets in the trust account had remained in U.S. government securities or money market funds. This means that the amount available for redemption will not increase in the future.
In addition, even prior to the 24-month anniversary of the effective date of the registration statement relating to our IPO, we may be deemed to be an investment company. The longer that the funds in the trust account are held in short-term U.S. government securities or in money market funds invested exclusively in such securities, even prior to the 24-month anniversary, there is a greater risk that we may be considered an unregistered investment company, in which case we may be required to liquidate. Accordingly, we may determine, in our discretion, to liquidate the securities held in the trust account at any time, even prior to the 24-month anniversary, and instead hold all funds in the trust account in cash, which would further reduce the dollar amount our public shareholders would receive upon any redemption or our liquidation.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales
None.
23
Use of Proceeds
On January 14, 2022, we consummated our Initial Public Offering of 30,000,000 Units, at an offering price to the public of $10.00 per Unit, for an aggregate offering price of $300.0 million, with each Unit consisting of one Class A ordinary share and one-half of one Public Warrant. Each Public Warrant entitles the holder thereof to purchase one Class A ordinary share at a price of $11.50 per share. Cantor acted as the sole bookrunning manager for the Initial Public Offering. Our Initial Public Offering did not terminate before all of the securities registered in our registration statement were sold. The securities sold in the Initial Public Offering were registered under the Securities Act on a registration statement on Form S-1 (File No. 333-253868), which was declared effective by the SEC on January 11, 2022.
Net proceeds of $304.5 million, comprised of $294.8 million of the proceeds from the Initial Public Offering (which amount includes $14.3 million of the underwriter’s deferred discount) and $9.7 million of the proceeds of the sale of the Private Placement Units, were deposited in the Trust Account upon closing of the Initial Public Offering. We paid a total of $5.2 million in underwriting discounts and commissions and $741,000 for other offering costs related to the Initial Public Offering. In addition, the underwriter agreed to defer approximately $14.3 million in underwriting discounts, which amount will be payable when and if an initial business combination is consummated. No payments were made by us to directors, officers or persons owning ten percent or more of our ordinary shares or to their associates, or to our affiliates. There has been no material change in the planned use of proceeds from the Initial Public Offering as described in our final prospectus related to the Public Offering, dated January 11, 2022, which was filed with the SEC on January 14, 2022.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
On May 17, 2023, we amended and restated the New Note to increase the aggregate principal amount of the New Note of up to $2,500,000 (the “Amended New Note”). Any loans made by Sponsor are, and will be, evidenced by the Amended New Note. We expect to use the proceeds of the working capital loans to fund working capital deficiencies and to finance transaction costs in connection with an initial business combination.
The Amended New Note is an unsecured obligation of the Company and is payable from our assets other than the Trust Account. The Amended New Note provides that the holder waives recourse to the Trust Account.
The Amended New Note bears no interest and is repayable in full upon the earlier of the consummation of our initial business combination and the day prior to the date we elect to liquidate and dissolve in accordance with the provisions of our Charter (such earlier date, the “Maturity Date”).
The holder of the Amended New Note has the option to convert all or any portion of the principal outstanding under the Amended New Note into private placement-equivalent units, at a price of $10.00 per unit, at any time on or prior to the Maturity Date. However, the maximum principal amount that may be converted, as to the New Note and all other notes evidencing Working Capital Loans, is $1,500,000 or such greater dollar amount as may be agreed to by us, with such approvals as may be necessary or advisable.
Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed herewith. |
| ** | Furnished. |
24
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| 10X CAPITAL VENTURE ACQUISITION CORP. III | ||||
| Date: | May 22, 2023 | By: | /s/ Hans Thomas | |
| Name: | Hans Thomas | |||
| Title: | Chief Executive Officer | |||
| (Principal Executive Officer) | ||||
| Date: | May 22, 2023 | By: | /s/ Guhan Kandasamy | |
| Name: | Guhan Kandasamy | |||
| Title: | Chief Financial Officer | |||
| (Principal Financial and Accounting | ||||
Officer) | ||||
25
27