| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 86-2230021 | |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
2750 E. Cottonwood Parkway Suite #500 Cottonwood Heights, Utah | 84121 | |
(Address of principal executive offices) | (Zip Code) | |
Title of Each Class: | Trading Symbol(s) | Name of Each Exchange on Which Registered: | ||
Units, each consisting of one share of Class A Common Stock and one Warrant | MPRAU | The Nasdaq Stock Market LLC | ||
Class A Common Stock, par value $0.0001 per share | MPRA | The Nasdaq Stock Market LLC | ||
Warrants, each whole Warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share | MPRAW | The Nasdaq Stock Market LLC |
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
| Emerging growth company | ☒ | |||||
MERCATO PARTNERS ACQUISITION CORP.
Quarterly Report on Form
Table of Contents
Page No. | ||||||||
| 1 | ||||||||
Item 1. | 1 | |||||||
| 1 | ||||||||
| 2 | ||||||||
| 3 | ||||||||
| 4 | ||||||||
| 5 | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
| 25 | ||||||||
Item | 25 | |||||||
Item | 26 | |||||||
Item 1A. | 26 | |||||||
Item 2. | ||||||||
| 27 | ||||||||
Item 3. | 27 | |||||||
Item 4. | 28 | |||||||
Item 5. | 28 | |||||||
Item 6. | 28 | |||||||
| 29 | ||||||||
Item 1. Condensed Financial Statements |
March 31, 2022 | December 31, 2021 | |||||||
(Unaudited) | (Audited) | |||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash | $ | 249,854 | $ | 387,206 | ||||
Prepaid expenses - current | 454,838 | 478,734 | ||||||
Total current assets | 704,692 | 865,940 | ||||||
Prepaid expenses - long-term | 0 | 42,295 | ||||||
Investments held in Trust Account | 233,471,280 | 233,450,000 | ||||||
Total Assets | $ | 234,175,972 | $ | 234,358,235 | ||||
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit: | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 149,901 | $ | 86,149 | ||||
Accrued expenses | 126,813 | 133,172 | ||||||
Franchise tax payable | 85,789 | 37,022 | ||||||
Total current liabilities | 362,503 | 256,343 | ||||||
Derivative liabilities | 6,896,000 | 12,930,000 | ||||||
Deferred underwriting commissions | 8,050,000 | 8,050,000 | ||||||
Total Liabilities | 15,308,503 | 21,236,343 | ||||||
Commitments and Contingencies | 0 | 0 | ||||||
Class A common stock subject to possible redemption; 23,000,000 shares at redemption value of $10.15 per share as of March 31, 2022 and December 31, 2021 | 233,450,000 | 233,450,000 | ||||||
Stockholders’ Deficit: | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding | 0 | 0 | ||||||
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; 0 non-redeemable shares issued and outstanding as of March 31, 2022 and December 31, 2021 | 0 | 0 | ||||||
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 5,750,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021 | 575 | 575 | ||||||
Additional paid-in capital | 0 | 0 | ||||||
Accumulated deficit | (14,583,106 | ) | (20,328,683 | ) | ||||
Total stockholders’ deficit | (14,582,531 | ) | (20,328,108 | ) | ||||
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit | $ | 234,175,972 | $ | 234,358,235 | ||||
June 30, | December 31, | |||||||
2023 | 2022 | |||||||
Assets: | ||||||||
| Current assets: | ||||||||
| Cash | $ | 13,230 | $ | 52,955 | ||||
| Prepaid expenses—current | 132,576 | 103,491 | ||||||
Total current assets | 145,806 | 156,446 | ||||||
| Investments held in Trust Account | 45,408,122 | 236,940,614 | ||||||
Total Assets | $ | 45,553,928 | $ | 237,097,060 | ||||
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 452,233 | $ | 248,571 | ||||
| Accrued expenses | 3,469,321 | 272,711 | ||||||
Due to related party | — | 3,275 | ||||||
| Excise tax payable | 1,931,649 | — | ||||||
| Income tax payable | 309,155 | 524,799 | ||||||
| Franchise tax payable | 20,000 | 167,523 | ||||||
| Deferred tax liabilities | 36,300 | 158,801 | ||||||
| Convertible working capital loan—related party | 2,013,677 | 740,000 | ||||||
Total current liabilities | 8,232,335 | 2,115,680 | ||||||
| Derivative liabilities | 1,293,000 | 323,250 | ||||||
Total Liabilities | 9,525,335 | 2,438,930 | ||||||
Commitments and Contingencies | ||||||||
| Class A common stock subject to possible redemption; 4,300,363 and 23,000,000 shares at redemption value of approximately $10.46 and $10.26 per share as of June 30, 2023 and December 31, 2022, respectively | 44,999,286 | 235,921,638 | ||||||
Stockholders’ Deficit: | ||||||||
| Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; no non-redeemable shares issued and outstanding | — | — | ||||||
| Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 5,750,000 shares issued and outstanding | 575 | 575 | ||||||
Additional paid-in capital | — | — | ||||||
| Accumulated deficit | (8,971,268 | ) | (1,264,083 | ) | ||||
Total Stockholders’ deficit | (8,970,693 | ) | (1,263,508 | ) | ||||
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit | $ | 45,553,928 | $ | 237,097,060 | ||||
For The Three Months Ended March 31, 2022 | For The Period From February 22, 2021 (inception) Through March 31, 2021 | |||||||
General and administrative expenses | $ | 260,936 | $ | 4,496 | ||||
Franchise tax expenses | 48,767 | 618 | ||||||
Loss from operations | (309,703 | ) | (5,114 | ) | ||||
Other income: | ||||||||
Change in fair value of derivative liabilities | 6,034,000 | 0 | ||||||
Income from investments held in Trust Account | 21,280 | 0 | ||||||
Net income (loss) | $ | 5,745,577 | $ | (5,114 | ) | |||
Weighted average shares outstanding of Class A common stock, basic and diluted | 23,000,000 | 0 | ||||||
Basic and diluted net loss per share, Class A common stock | $ | 0.20 | $ | 0 | ||||
Weighted average shares outstanding of Class B common stock, basic and diluted | 5,750,000 | 3,684,211 | ||||||
Basic and diluted net loss per share, Class B common stock | $ | 0.20 | $ | 0.00 | ||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
| General and administrative expenses | $ | 596,227 | $ | 249,552 | $ | 3,872,785 | $ | 510,488 | ||||||||
| General and administrative expenses—related party | 45,000 | 119,000 | 90,000 | 119,000 | ||||||||||||
| Franchise tax expenses | 50,000 | 49,861 | 106,314 | 98,628 | ||||||||||||
Loss from operations | (691,227 | ) | (418,413 | ) | (4,069,099 | ) | (728,116 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Change in fair value of derivative liabilities | 862,000 | 3,663,500 | (969,750 | ) | 9,697,500 | |||||||||||
| Income from investments held in Trust Account | 535,288 | 283,982 | 1,831,997 | 305,262 | ||||||||||||
| Total other income (expense) | 1,397,288 | 3,947,482 | 862,247 | 10,002,762 | ||||||||||||
| Income (loss) before provision for income taxes | 706,061 | 3,529,069 | (3,206,852 | ) | 9,274,646 | |||||||||||
| Provision for income taxes | (101,911 | ) | (35,618 | ) | (326,093 | ) | (35,618 | ) | ||||||||
Net income (loss) | $ | 604,150 | $ | 3,493,451 | $ | (3,532,945 | ) | $ | 9,239,028 | |||||||
| Weighted average shares outstanding of Class A common stock, basic and diluted | 7,709,689 | 23,000,000 | 7,709,689 | 23,000,000 | ||||||||||||
Basic and diluted net income (loss) per share, Class A common stock | $ | 0.04 | $ | 0.12 | $ | (0.26 | ) | $ | 0.32 | |||||||
| Weighted average shares outstanding of Class B common stock, basic and diluted | 5,750,000 | 5,750,000 | 5,750,000 | 5,750,000 | ||||||||||||
Basic and diluted net income (loss) per share, Class B common stock | $ | 0.04 | $ | 0.12 | $ | (0.26 | ) | $ | 0.32 | |||||||
Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | |||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance - December 31, 2021 | 0 | $ | 0 | 5,750,000 | $ | 575 | $ | 0 | $ | (20,328,683 | ) | $ | (20,328,108 | ) | ||||||||||||||
Net income | — | — | — | — | — | 5,745,577 | 5,745,577 | |||||||||||||||||||||
Balance - March 31, 2022 (Unaudited) | 0 | $ | 0 | 5,750,000 | $ | 575 | $ | 0 | $ | (14,583,106 | ) | $ | (14,582,531 | ) | ||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||||||||||||
Class A | Class B | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
Balance—December 31, 2022 | — | $ | — | 5,750,000 | $ | 575 | $ | — | $ | (1,264,083 | ) | $ | (1,263,508 | ) | |||||||||||||||
| Remeasurement on Class A common stock subject to possible redemption | — | — | — | — | — | (1,798,134 | ) | (1,798,134 | ) | ||||||||||||||||||||
| Excise tax payable | — | — | — | — | — | (1,931,649 | ) | (1,931,649 | ) | ||||||||||||||||||||
| Net loss | — | — | — | — | — | (4,137,096 | ) | (4,137,096 | ) | ||||||||||||||||||||
Balance – March 31, 2023 | — | $ | — | 5,750,000 | $ | 575 | $ | — | $ | (9,130,962 | ) | $ | (9,130,387 | ) | |||||||||||||||
| Remeasurement on Class A common stock subject to possible redemption | — | — | — | — | — | (444,456 | ) | (444,456 | ) | ||||||||||||||||||||
| Net income | — | — | — | — | — | 604,150 | 604,150 | ||||||||||||||||||||||
Balance – June 30, 2023 | — | $ | — | 5,750,000 | $ | 575 | $ | — | $ | (8,971,268 | ) | $ | (8,970,693 | ) | |||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance - February 22, 2021 (inception) | 0 | $ | 0 | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
Issuance of Class B common stock to Sponsor | — | — | 5,750,000 | 575 | 24,425 | — | 25,000 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (5,114 | ) | (5,114 | ) | |||||||||||||||||||
Balance - March 31, 2021 (Unaudited) | 0 | $ | 0 | 5,750,000 | $ | 575 | $ | 24,425 | $ | (5,114 | ) | $ | 19,886 | |||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | |||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance—January 1, 2022 | — | $ | — | 5,750,000 | $ | 575 | $ | — | $ | (20,328,683 | ) | $ | (20,328,108 | ) | ||||||||||||||
| Net income | — | — | — | — | — | 5,745,577 | 5,745,577 | |||||||||||||||||||||
Balance—March 31, 2022 | — | — | 5,750,000 | 575 | — | (14,583,106 | ) | (14,582,531 | ) | |||||||||||||||||||
| Remeasurement on Class A common stock subject to possible redemption | — | — | — | — | — | (71,562 | ) | (71,562 | ) | |||||||||||||||||||
| Net income | — | — | — | — | — | 3,493,451 | 3,493,451 | |||||||||||||||||||||
Balance—June 30, 2022 | — | $ | — | 5,750,000 | $ | 575 | $ | — | $ | (11,161,217 | ) | $ | (11,160,642 | ) | ||||||||||||||
For the Six Months Ended June 30, | ||||||||||||||||
For The Period Ended March 31, 2022 | For The Period From February 22, 2021 (inception) Through March 31, 2021 | 2023 | 2022 | |||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||
Net income (loss) | $ | 5,745,577 | $ | (5,114 | ) | |||||||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||||||||||
| Net (loss) income | $ | (3,532,945 | ) | $ | 9,239,028 | |||||||||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||||||||||
Change in fair value of derivative liabilities | (6,034,000 | ) | 0 | 969,750 | (9,697,500 | ) | ||||||||||
Income from investments held in Trust Account | (21,280 | ) | 0 | (1,831,997 | ) | (305,262 | ) | |||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Prepaid expenses - current | 66,191 | 0 | ||||||||||||||
| Prepaid expenses | (29,085 | ) | 191,332 | |||||||||||||
Accounts payable | 63,752 | 4,496 | 203,662 | 146,272 | ||||||||||||
Accrued expenses | (6,359 | ) | 0 | 3,196,610 | 12,824 | |||||||||||
| Due to related party | (3,275 | ) | — | |||||||||||||
| Income tax payable | (215,644 | ) | 35,618 | |||||||||||||
Franchise tax payable | 48,767 | 618 | (147,523 | ) | 61,060 | |||||||||||
| Deferred tax payable | (122,501 | ) | — | |||||||||||||
Net cash used in operating activities | (137,352 | ) | 0 | (1,512,948 | ) | (316,628 | ) | |||||||||
Cash Flows from Investing Activities: | ||||||||||||||||
| Cash deposited in Trust Account | (845,000 | ) | — | |||||||||||||
| Cash withdrawn from Trust Account for tax purposes | 1,044,546 | — | ||||||||||||||
| Cash withdrawn from Trust Account in connection with redemption | 193,164,942 | — | ||||||||||||||
Net cash provided by investing activities | 193,364,488 | — | ||||||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||
Proceeds from issuance of Class B common stock to Sponsor | 0 | 25,000 | ||||||||||||||
| Proceeds from working capital loan | 428,677 | — | ||||||||||||||
| Proceeds from extension note | 845,000 | — | ||||||||||||||
| Redemption of Class A common stock | (193,164,942 | ) | — | |||||||||||||
Net cash provided by financing activities | 0 | 25,000 | ||||||||||||||
Net cash used in financing activities | (191,891,265 | ) | — | |||||||||||||
Net change in cash | (137,352 | ) | 25,000 | (39,725 | ) | (316,628 | ) | |||||||||
Cash - beginning of the period | 387,206 | 0 | ||||||||||||||
| Cash—beginning of the period | 52,955 | 387,206 | ||||||||||||||
Cash - end of the period | $ | 249,854 | $ | 25,000 | ||||||||||||
Cash—end of the period | $ | 13,230 | $ | 70,578 | ||||||||||||
Supplemental disclosure of noncash financing activities: | ||||||||||||||||
Offering costs included in accounts payable | $ | 0 | $ | 320,976 | ||||||||||||
Offering costs included in accrued expenses | $ | 0 | $ | 144,839 | ||||||||||||
| Excise tax payable | $ | 1,931,649 | $ | — | ||||||||||||
| Remeasurement on Class A common stock subject to possible redemption | $ | 2,242,590 | $ | — | ||||||||||||
| Gross proceeds from Initial Public Offering | $ | 230,000,000 | ||
| Less: | ||||
| Fair value of Public Warrants at issuance | (6,966,700 | ) | ||
| Offering costs allocated to Class A common stock subject to possible redemption | (13,306,294 | ) | ||
| Plus: | ||||
| Remeasurement on Class A common stock subject to possible redemption | 23,722,994 | |||
| Class A common stock subject to possible redemption, December 31, 2021 | 233,450,000 | |||
| Remeasurement on Class A common stock subject to possible redemption | 2,471,638 | |||
| Class A common stock subject to possible redemption, December 31, 2022 | $ | 235,921,638 | ||
| Redemption of Class A common stock | (193,164,942 | ) | ||
| Remeasurement on Class A common stock subject to possible redemption | 1,798,134 | |||
| Class A common stock subject to possible redemption, March 31, 2023 | $ | 44,554,830 | ||
| Remeasurement on Class A common stock subject to possible redemption | 444,456 | |||
| Class A common stock subject to possible redemption, June 30, 2023 | $ | 44,999,286 |
Gross proceeds from Initial Public Offering | $ | 230,000,000 | ||
Less: | ||||
Fair value of Public Warrants at issuance | (6,966,700 | ) | ||
Offering costs allocated to Class A common stock subject to possible redemption | (13,306,293 | ) | ||
Plus: | ||||
Accretion on Class A common stock subject to possible redemption amount | 23,722,993 | |||
Class A common stock subject to possible redemption | $ | 233,450,000 | ||
For the Three Months Ended March 31, 2022 | For The Period From February 22, 2021 (inception) Through March 31, 2021 | For the Three Months Ended June 30, | ||||||||||||||||||||||||||||||
Class A | Class B | Class A | Class B | 2023 | 2022 | |||||||||||||||||||||||||||
Basic and diluted net income (loss) per common stock: | ||||||||||||||||||||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||||||||||||||||||
| Basic and diluted net income per common stock: | ||||||||||||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||||||||
Allocation of net income (loss) | $ | 4,596,462 | $ | 1,149,115 | $ | 0 | $ | (5,114 | ) | |||||||||||||||||||||||
| Allocation of net income | $ | 346,056 | $ | 258,094 | $ | 2,794,761 | $ | 698,690 | ||||||||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||||||||
Basic and diluted weighted average common stock outstanding | 23,000,000 | 5,750,000 | 0 | 3,684,211 | 7,709,689 | 5,750,000 | 23,000,000 | 5,750,000 | ||||||||||||||||||||||||
| Basic and diluted net income per common stock | $ | 0.04 | $ | 0.04 | $ | 0.12 | $ | 0.12 | ||||||||||||||||||||||||
Basic and diluted net income (loss) per common stock | $ | 0.20 | $ | 0.20 | $ | 0 | $ | (0.00 | ) | |||||||||||||||||||||||
For the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||||||||||||||||||
| Basic and diluted net (loss) income per common stock: | ||||||||||||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||||||||
| Allocation of net (loss) income | $ | (2,023,665 | ) | $ | (1,509,280) | $ | 7,391,222 | $ | 1,847,806 | |||||||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||||||||
| Basic and diluted weighted average common stock outstanding | 7,709,689 | 5,750,000 | 23,000,000 | 5,750,000 | ||||||||||||||||||||||||||||
| Basic and diluted net (loss) income per common stock | $ | (0.26) | $ | (0.26) | $ | 0.32 | $ | 0.32 | ||||||||||||||||||||||||
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—Money Market Fund | $ | 45,408,122 | $ | — | $ | — | ||||||
Liabilities: | ||||||||||||
| Derivative liabilities-Public Warrants | $ | 690,000 | $ | — | $ | — | ||||||
| Derivative warrant liabilities-Private Placement Warrants | $ | — | $ | 603,000 | $ | — | ||||||
March 31, 2022 | ||||||||||||
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 – Money Market Fund | $ | 233,471,280 | $ | — | $ | — | ||||||
Liabilities: | ||||||||||||
Derivative liabilities—Public Warrants | $ | 3,680,000 | $ | — | $ | — | ||||||
Derivative warrant liabilities—Private Placement Warrants | $ | — | $ | 3,216,000 | $ | — | ||||||
December 31, 2021 | ||||||||||||
Description | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||
Liabilities: | ||||||||||||
Derivative liabilities—Public Warrants | $ | 6,900,000 | $ | — | $ | — | ||||||
Derivative warrant liabilities—Private Placement Warrants | $ | — | $ | 6,030,000 | $ | — | ||||||
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—Money Market Fund | $ | 236,940,614 | $ | — | $ | — | ||||||
Liabilities: | ||||||||||||
| Derivative liabilities-Public Warrants | $ | 172,500 | $ | — | $ | — | ||||||
| Derivative warrant liabilities-Private Placement Warrants | $ | — | $ | 150,750 | $ | — | ||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed financial statements and related notes included in Part I, Item 1 of this Quarterly Report. This discussion and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.” Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item 1A “Risk Factors” of our Annual Report on Form
Overview
We are a blank check company incorporated in Delaware on February 22, 2021. We were formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies.
As of March 31, 2022,June 30, 2023, we have not commenced any operations. All activity for the period from February 22, 2021 (inception) through March 31, 2022June 30, 2023 relates to our formation and the IPO, described below, and, since the offering, the search for a prospective initial business combination. We will not generate any operating revenues until after the completion of its initial business combination, at the earliest. We will
Our sponsor is Mercato Partners Acquisition Group, LLC, a Delaware limited liability company. The registration statement filed in connection with our Initial Public Offering was declared effective on November 3, 2021. On November 8, 2021, we consummated our Initial Public Offering of 20,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “public shares”), at $10.00 per Unit, generating gross proceeds of $200.0 million, and incurring offering costs of approximately $12.1 million, of which $4.0 million was for underwriting commissions, (see Note 5), $7.0 million was for deferred underwriting commissions and approximately $1.1 million was for offering costs, of which approximately $343,000$0.3 million was allocated to derivative warrant liabilities.
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 9,000,000 warrants, at a price of $1.00 per private placement warrant to the sponsor, generating proceeds of $9.0 million.
In connection with the Initial Public Offering, the underwriter was granted an option (the “Over-allotment Option”) to purchase up to an additional 3,000,000 Units (“Over-allotment Units”) solely to cover over-allotments, if any, at an offering price of $10.00 per Over-allotment Unit. On November 19, 2021, the underwriter exercised the Over-allotment Option in full and, on November 23, 2021, purchased 3,000,000 Over-allotment Units, generating gross proceeds of $30,000,000, and incurring additional offering costs of approximately $1.7 million, of which $600,000 was paid for underwriting commissions, and approximately $1.1 million is payable to the underwriter for deferred underwriting commissions.
On August 1, 2022 the underwriter irrevocably waived its rights to the deferred underwriting commissions due under the underwriting agreement consummated in connection with the Initial Public Offering.
Simultaneously with the sale of the Over-allotment Units, on November 23, 2021, the Company consummated a second closing of the Private Placement of an aggregate of 1,050,000 private placement warrants, at a price of $1.00 per private placement warrant, with the sponsor. The second closing of the Private Placement generated additional aggregate gross proceeds of $1,050,000. The private placement warrants are identical to the warrants sold as part of the Units in the Initial Public Offering except that, if held by the sponsor or its permitted transferees, they (i) may be exercised for cash or on a cashless basis, (ii) are not subject to being called for redemption under certain redemption scenarios and (iii) subject to certain limited exceptions, will be subject to transfer restrictions until 30 days following the consummation of the Company’s initial business combination.
Upon the closing of the Initial Public Offering, over-allotment and the Private Placement, $233.45 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”) with Continental Stock Transfer & Trust Company acting as trustee and invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under
Our management has broad discretion with respect to the specific application of the net proceeds of its Initial Public Offering and the sale of private placement warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a business combination. Our business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the trust account (excluding the deferred underwriting commissions, which the underwriter irrevocably waived on August 1, 2022, and taxes payable on the interest earned on the trust account) at the time we sign a definitive agreement in connection with the initial business combination. However, we will only complete a business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
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We will provide our holders of the public shares (the “public stockholders”) with the opportunity to redeem all or a portion of their public shares upon the completion of a business combination either (i) in connection with a stockholders’ meeting called to approve the business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a business combination or conduct a tender offer will be made by us, solely in its discretion. The public stockholders will be entitled to redeem their public shares for a pro rata portion of the amount then in the trust account (initially at $10.15 per share, plus any pro rata interest earned on the funds held in the trust account and not previously released to us to pay its tax obligations).
If we seek stockholder approval in connection with a business combination, the holders of the founder shares prior to this Initial Public Offering (the “initial stockholders”) agreed to vote their founder shares and any public shares purchased during or after the Initial Public Offering in favor of a business combination. In addition, the initial stockholders agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of a business combination. In addition, we agreed not to enter into a definitive agreement regarding an initial business combination without the prior consent of the sponsor.
Notwithstanding the foregoing, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Class A common stock sold in the Initial Public Offering, without the prior consent of us.
The sponsor, executive officers, directors and director nominees have agreed not to propose an amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to provide for the redemption of its public shares in connection with a business combination or to redeem 100% of its public shares if we do not complete a business combination, unless we provide the public stockholders with the opportunity to redeem their Class A common stock in conjunction with any such amendment. Any such payments would be made in the form of a loan.
We will have 1520 months (including five months extension) from the closing of the Initial Public Offering or February 8, 2023, to consummate an initial business combination. In connection with the special meeting approving the extension, our stockholders were provided an opportunity to redeem all or a portion of their Class A common stock, and stockholders holding 18,699,637 shares of Class A common stock exercised their right to redeem such shares for a pro rata portion of the funds in the trust account. Consequently, approximately $193,164,942 (approximately $10.33 per share) was removed from the trust account to pay such redeeming holders. Additionally, in connection with the approval of the extension, we issued a promissory instrument (the “Extension Instrument”) in the principal amount of up to $1,350,000 to our Sponsor, pursuant to which our Sponsor agreed to loan us up to $1,350,000. The Extension Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of the initial Business Combination or (b) the date of our liquidation. In order to extend the time available for the Company to consummate the initial Business Combination for an additional five months, the Sponsor or its affiliates or designees deposited into the Trust Account $0.157 per Public Share, or $675,000 in the aggregate. However, if we anticipatethe Company anticipates that it may not be able to consummate the initial business combinationBusiness Combination within 1520 months, we will,the Company may, by resolution of its board of directors if requested by the sponsor,Sponsor, extend the period of time to consummate a business combinationBusiness Combination up to five times, each by anone additional three monthsmonth (for a total of 18 monthsup to complete a business combination)five additional months), subjectby depositing into the Trust Account, for each such monthly extension, an amount equal to the sponsor depositing additional funds intolesser of (x) $135,000 and (y) $0.045 for each public share that is not redeemed in connection with the trust account as set out below.special meeting.
On June 30, 2023, the Company received notice from the Sponsor that it was extending the period available to consummate an initial business combination from July 8, 2023 to August 8, 2023 (the “July 2023 Extension”). In connection with any such extension, public stockholders will not be offered the opportunity to voteJuly 2023 Extension, on or redeem their shares. In order to extendJune 30, 2023, the time available to usSponsor deposited $170,000 into the Trust Account, on behalf of the Company, thereby effectively further extending the period for the Company to consummate thean initial business combination for an additional three months,up to August 8, 2023. Subsequently, the sponsor or its affiliates or designees must depositerroneous excess funding of $35,000 into the trust account $0.10 per Public Share, or $2.3 million in the aggregate on or priorTrust Account was identified and returned to the dateSponsor.
On August 4, 2023, the Company received notice from the Sponsor that it was again extending the period available to consummate an initial business combination from August 8, 2023 to September 8, 2023 (the “August 2023 Extension”). In connection with the August 2023 Extension, on August 4, 2023, the Sponsor deposited $135,000 into the Trust Account, on behalf of the deadline.
If we are unable to complete a business combinationBusiness Combination within 1520 months from the closing of the Initial Public Offering or a potential three-monthfive-month extension period (the “Combination Period”), we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at
In connection with the redemption of 100% of our outstanding public shares for a portion of the funds held in the trust account, each holder will receive a full pro rata portion of the amount then in the trust account, plus any pro rata interest earned on the funds held in the trust account and not previously released to the Company to pay the Company’s taxes payable (less up to $100,000 of interest to pay dissolution expenses).
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The initial stockholders agreed to waive their liquidation rights with respect to the founder shares if we fail to complete a business combination within the Combination Period. However, if the initial stockholders should acquire public shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete a business combination within the Combination Period. The underwriter agreed to waiveirrevocably waived its rights to theirthe deferred underwriting commissioncommissions held in the trust account in the event we do not complete a business combination within the Combination Period and in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including trust account assets) will be only $10.15 per share initially held in the trust account. In order to protect the amounts held in the trust account, the sponsor agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to our, or a prospective target business with which we have 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 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 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
Business Combination Agreement with Nuvini
On February 26, 2023, the Company, Nuvini Holdings Limited, an exempted company incorporated with limited liability in the Cayman Islands (“Nuvini,” and together with its subsidiaries, the “Nuvini Group”), Nvni Group Limited, an exempted company incorporated with limited liability in the Cayman Islands (“New PubCo”) and Nuvini Merger Sub, Inc., a Delaware corporation and direct, wholly-owned subsidiary of New PubCo (“Merger Sub”) entered into a business combination agreement (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Business Combination Agreement”).
Going Concern Consideration
As of March 31, 2022,June 30, 2023, we have had approximately $250,000$13,000 in cash and working capital deficit of approximately $342,000.
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 purchase founder shares and a loan under the Note from the sponsor of approximately $162,000. The Company fully repaid the Note on November 12, 2021. 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.
In connection with our assessment of going concern considerations in accordance with FASB Accounting Standards Update
Results of Operations
Our entire activity from February 22, 2021 (inception) through March 31, 2022June 30, 2023 was in preparation for our formation and the Initial Public Offering.Offering, and subsequent to the IPO, identifying a target company for a business combination. We will not be generating any operating revenues until the closing and completion of our initial business combination.
For the three months ended March 31,June 30, 2023, we had a net income of approximately $604,000 which consisted of approximately $535,000 in income from investments held in trust account, and $862,000 of non-operating gain from the change in the fair value of derivative liabilities, offset by approximately $641,000 of general and administrative expenses, approximately $102,000 of income tax expense, and approximately $50,000 in franchise tax expense.
For the three months ended June 30, 2022, we had a net income of approximately $5,746,000,$3,493,000, which consisted of approximately $6,034,000$3,664,000 of
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For the period from February 22, 2021 (inception) through March 31, 2021,six months ended June 30, 2023, we had a net loss of approximately $5,000,$3,533,000, which consisted of approximately $3,963,000 of general and administrative expenses.
For the six months ended June 30, 2022, we had a net income of approximately $9,239,000, which consisted of approximately $9,698,000 of non-operating gain from the change in the fair value of derivative liabilities, and approximately $305,000 in income from investments held in trust account, partially offset by approximately $629,000 of general and administrative expenses, approximately $36,000 of income tax expense, and approximately $99,000 in franchise tax expense.
Other Contractual Obligations
Registration and Shareholder Rights
The holders of the founder shares, private placement warrants, Class A common stock underlying the private placement warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A common stock issuable upon the exercise of the private placement warrants and warrants that may be issued upon conversion of Working Capital Loans) are entitled to registration rights pursuant to the registration and shareholder rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial business combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriter received an underwriting discount of $0.20 per Unit, or $4.6 million in the aggregate, paid upon the closing of the Initial Public Offering and over-allotment. An additional fee of $0.35 per Unit, or $8.05 million in the aggregate will be payable to the underwriter for deferred underwriting commissions. The deferred fee will become payableOn August 1, 2022, the underwriter irrevocably waived its rights to the underwriter from the amounts held in the trust account solely in the event that the Company completes a business combination, subject to the terms of the underwriting agreement. These deferred underwriting commissions are included indue under the accompanying balance sheet.
Risks and Uncertainties
Management continues to evaluate the impact of
Critical Accounting Policies and Estimates
This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our unaudited condensed financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have identified the following as our critical accounting policies:
Derivative Warrant Liabilities
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, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and
Redeemable Class A Common Stock
All of the 20,000,000 shares of Class A common stock sold as parts of the Units in the Initial Public Offering contain a redemption feature. In accordance with
Effective with the closing of the Initial Public Offering, we recognized the accretion from initial book value to redemption amount, which resulted in charges against
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Net Income (Loss) Per Share of Common Stock
We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net lossincome (loss) per share is computed by dividing net lossincome (loss) by the weighted average number of shares of common stock outstanding during the periods, excluding common stock subject to forfeiture. We considered the effect of Class B common stock that were excluded from the weighted average number of basic shares outstanding as they were contingent on the exercise of the Over-allotment Option by the underwriter. As of March 31,June 30, 2023 and 2022, and December 31, 2021, we did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into shares of common stock and then share in the earnings of ours. As a result, diluted income (loss) per share is the same as basic lossincome (loss) per share for the periods presented.
Recent accounting pronouncements
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 us 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. we are still evaluating the impact of this pronouncement on the financial statements.
Our management does not believe that any other recently issued, but not yet effective, accounting pronouncements,standards updates, if currently adopted, would have a material effect on the Company’sour unaudited condensed financial statements.
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Off-Balance Sheet
As of March 31, 2022,June 30, 2023, we did not have
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
We are a smaller reporting company as defined by
Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended March 31, 2022,June 30, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer have concluded that during the period covered by this report, our disclosure controls and procedures were not effective as of March 31, 2022,June 30, 2023, because of a material weaknessweaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, the Company’s management has concluded that our control around the accounting for certain complex equity instruments issued by the Company, accounting for income taxes, and review of the financial reporting package, was not effectively designed or maintained. Additionally, thisthese material weaknessweaknesses could result in a misstatement of the carrying value of
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complex financial instruments, income tax provision, and related accounts and disclosures that would result in a material misstatement of the financial statements that would not be prevented or detected on a timely basis. As a result, our management performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with generally accepted in the United States of America. Accordingly, management believes that the financial statements included in this Form 10-Q present fairly, in all material respects, our financial position, result of operations and cash flows of the periods presented. Management understands that the accounting standards applicable to our financial statements are complex and has since the inception of the Company benefited from the support of experienced third-party professionals with whom management has regularly consulted with respect to accounting issues. Management intends to continue to further consult with such professionals in connection with accounting matters.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There waswere no changechanges in our internal control over financial reporting that occurred(as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter ended March 31, 2022 covered by this Quarterly Report on Form 10-Q that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting, other than the expansion and continued improvements noted in the following paragraph.
Our principal executive officer and principal financial officer performed additional accounting and financial analyses and other post-closing procedures including consulting with subject matter experts related to the accounting for certain complex equity instruments issued by the Company. The Company’s management has expended, and will continue to expend, a substantial amount of effort and resources for the remediation and improvement of our internal control over financial reporting. While we have processes to properly identify and evaluate the appropriate accounting technical pronouncements and other literature for all significant or unusual transactions, we have expanded and will continue to improve these processes to ensure that the nuances of such transactions are effectively evaluated in the context of the increasingly complex accounting standards.
PART II – II—OTHER INFORMATION
Item 1. | Legal Proceedings |
None.
Item 1A. | Risk Factors |
Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our final prospectus for its Initial Public Offering, as filed with the SEC on November 5, 2021, our quarterly report on Form 10-Q for the quarter ended September 30, 2022, as filed with the SEC on November 15, 2022, and the Company’sour annual report on Form
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
On November 8, 2021, the Company consummated its initial public offering (the “IPO”) of 20,000,000 Units, including 3,000,000 Units issued pursuant to the exercise of the underwriters’ over-allotment option in full. Each Unit consists of one share of Class A common stock of the Company, par value $0.0001 per share, and
A total of $233,450,000 of the proceeds from the IPO and the sale of the Private Placement Warrants, which also includes $8,050,000 of deferred underwriting fees, was placed in a U.S.-based trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee. The proceeds held in the trust account will be invested by the trustee in U.S. government treasury bills 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
We incurred offering costs of approximately $12.1 million, of which $4.0 million was for underwriting commissions, $7.0 million was for deferred underwriting commissions and approximately $1.1 million was for offering costs, of which approximately $343,000 was allocated to derivative warrant liabilities. We incurred additional offering costs of approximately $1.7 million in connection with the over-allotment, of which $600,000 was paid for underwriting commissions, and approximately $1.1 million was for deferred underwriting commissions.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form
Item 3. | Defaults Upon Senior Securities |
None.
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Item 4. | Mine Safety Disclosures |
None.
Item 5. | Other Information |
None.
Item 6. | Exhibits |
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form
EXHIBIT INDEX
| * | Filed herewith. |
| ** | Furnished herewith. |
| (1) | Incorporated by reference to the Company’s Form 8-K, filed with the SEC on February 27, 2023. |
| (2) | Incorporated by reference to the Company’s Form S-1,filed with the SEC on October 13, 2021 (File No. 333-260219). |
Incorporated by reference to the Company’s Form 8-K, filed with the SEC on November 8, 2021. |
Incorporated by reference to the Company’s |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: May 16, 2022
| Mercato Partners Acquisition Corp. | ||
| By: | /s/ Greg Warnock | |
| Name: | Greg Warnock | |
| Title: | Chief Executive Officer and Chair of the Board | |
| By: | /s/ Scott Klossner | |
| Name: | Scott Klossner | |
| Title: | Chief Financial Officer | |
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