| ☒ | 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 |
Cayman Islands | 001-41135 | N/A | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Identification No.) |
Lime Tree Bay Avenue, Grand Cayman KY1-1102, Cayman Islands | ||
(Address of Principal Executive Offices) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Class A ordinary shares, par value $0.0001 per share | TGAA | The Nasdaq | ||
Redeemable warrants, each whole warrant exercisable for one Class A ordinary share at an exercise price of $11.50 | TGAAW | The Nasdaq | ||
Units, each consisting of one Class A ordinary share and one-third of one redeemable warrant | TGAAU | The Nasdaq |
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
| Emerging growth company | ☒ | |||||
| Auditor Firm Id: PCAOB ID 688 | Auditor Name: Marcum LLP | Auditor Location: Houston, Texas |
TARGET GLOBAL ACQUISITION I CORP.
TABLE OF CONTENTS
| Page | ||||||
| 1 | ||||||
Item 1. | Financial Statements | 1 | ||||
| Condensed Balance Sheets as of September 30, | 1 | |||||
| 2 | ||||||
| 3 | ||||||
| 4 | ||||||
| Notes to Condensed Unaudited Financial Statements | 5 | |||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||||
Item 3. | Quantitative and Qualitative Disclosures Regarding Market Risk | |||||
Item 4. | Controls and Procedures | |||||
Item 1. | Legal Proceedings | |||||
Item 1A. | Risk Factors | |||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||||
Item 3. | Defaults Upon Senior Securities | |||||
Item 4. | Mine Safety Disclosures | |||||
Item 5. | Other Information | |||||
Item 6. | Exhibits | |||||
September 30, 2022 (Unaudited) | December 31, 2021 | |||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash | $ | 308,369 | $ | 1,006,074 | ||||
Prepaid expenses | 180,028 | 200,478 | ||||||
Total current assets | 488,397 | 1,206,552 | ||||||
Prepaid expenses, non-current | — | 163,973 | ||||||
Investment held in Trust Account | 220,381,467 | 219,204,052 | ||||||
Total assets | $ | 220,869,864 | $ | 220,574,577 | ||||
Liabilities, Shares Subject to Redemption and Shareholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 638,458 | $ | 502,745 | ||||
Due to related party | 97,419 | 7,419 | ||||||
Promissory Note—Related Party | — | 42,156 | ||||||
Over-allotment liability | — | 30,207 | ||||||
Total current liabilities | 735,877 | 582,527 | ||||||
Deferred underwriting commissions | 7,521,380 | 7,521,380 | ||||||
Total liabilities | 8,257,257 | 8,103,907 | ||||||
Commitments and Contingencies (Note 6) | ||||||||
Class A ordinary shares subject to possible redemption, 21,489,658 shares at redemption value of $10.26 and $10.20 at September 30, 2022 and December 31, 2021, respectively | 220,381,466 | 219,194,512 | ||||||
Shareholders’ Equity | ||||||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding at September 30, 2022 and December 31, 2021 | — | — | ||||||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; none outstanding (excluding 21,489,658 shares subject to possible redemption) at September 30, 2022 and December 31, 2021 | — | — | ||||||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 5,372,415 shares issued and outstanding at September 30, 2022 and December 31, 2021 | 537 | 537 | ||||||
Accumulated deficit | (7,769,396 | ) | (6,724,379 | ) | ||||
Total Shareholders’ Deficit | (7,768,859 | ) | (6,723,842 | ) | ||||
Total Liabilities, Shares Subject to Redemption and Shareholders’ Deficit | $ | 220,869,864 | $ | 220,574,577 | ||||
For the three months ended September 30, | For the nine months ended September 30, | For the period from February 2, 2021 (inception) through September 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
General and administrative expenses | $ | 281,241 | $ | — | $ | 1,065,685 | $ | 10,072 | ||||||||
Loss from operations | (281,241 | ) | — | (1,065,685 | ) | (10,072 | ) | |||||||||
Other income | ||||||||||||||||
Interest income on investment held in Trust Account | 959,949 | — | 1,177,415 | — | ||||||||||||
Change in fair value of overallotment liability | — | — | 30,207 | — | ||||||||||||
T otal other income | 959,949 | — | 1,207,622 | — | ||||||||||||
Net income (loss) | $ | 678,708 | $ | — | $ | 141,937 | $ | (10,072 | ) | |||||||
Basic and diluted weighted average shares outstanding, Class A ordinary shares subject to possible redemption | 21,489,658 | — | 21,489,658 | — | ||||||||||||
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption | $ | 0.03 | $ | — | $ | 0.01 | $ | — | ||||||||
Basic and diluted, weighted average shares outstanding, Class B non-redeemable ordinary shares | 5,372,415 | 6,250,000 | 5,372,415 | 6,250,000 | ||||||||||||
Basic and diluted net income (loss) per share, Class Bnon-redeemable ordinary shares | $ | 0.03 | $ | (0.00 | ) | $ | 0.01 | $ | (0.00 | ) | ||||||
Class A Ordinary Shares subject to redemption | Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Shareholders’ Deficit | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance as of December 31, 2021 | 21,489,658 | $ | 219,194,512 | 5,372,415 | $ | 537 | $ | — | $ | (6,724,379 | ) | $ | (6,723,842 | ) | ||||||||||||||
Accretion for Class A Common Stock to redemption value | 227,005 | (227,005 | ) | (227,005 | ) | |||||||||||||||||||||||
Net loss | — | — | — | — | — | (536,771 | ) | (536,771 | ) | |||||||||||||||||||
Balance as of June 30, 2022 | 21,489,658 | $ | 219,421,517 | 5,372,415 | $ | 537 | $ | — | $ | (7,488,155 | ) | $ | (7,487,618 | ) | ||||||||||||||
Accretion for Class A Common Stock to redemption value | 959,949 | (959,949 | ) | (959,949 | ) | |||||||||||||||||||||||
Net income | — | — | — | — | — | 678,708 | 678,708 | |||||||||||||||||||||
Balance as of September 30, 2022 | 21,489,658 | $ | 220,381,466 | 5,372,415 | $ | 537 | $ | — | $ | (7,769,396 | ) | $ | (7,768,859 | ) | ||||||||||||||
Class A Ordinary Shares subject to redemption | Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Shareholders’ Equity | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance as of February 2, 2021 (inception) | 21,489,658 | $ | 219,194,512 | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Class B ordinary shares issued to Sponsor | — | — | 5,750,000 | 575 | 24,425 | — | 25,000 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (8,663 | ) | (8,663 | ) | |||||||||||||||||||
Balance as of June 30, 2021 | 21,489,658 | $ | 219,194,512 | 5,750,000 | $ | 575 | $ | 24,425 | $ | (8,663 | ) | $ | 16,337 | |||||||||||||||
Net loss | — | — | — | — | — | (1,409 | ) | (1,409 | ) | |||||||||||||||||||
Balance as of September 30, 2021 | 21,489,658 | $ | 219,194,512 | 5,750,000 | $ | 575 | $ | 24,425 | $ | (10,072 | ) | $ | 14,928 | |||||||||||||||
September 30, 2023 (Unaudited) | December 31, 2022 | |||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash | $ | 69,341 | $ | 394,251 | ||||
Prepaid expenses | 41,658 | 111,739 | ||||||
Total current assets | 110,999 | 505,990 | ||||||
Investment held in Trust Account | 48,728,983 | 222,234,685 | ||||||
Total assets | $ | 48,839,982 | $ | 222,740,675 | ||||
Liabilities, Shares Subject to Redemption and Shareholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 584,141 | $ | 157,805 | ||||
Due to related party | 217,419 | 127,419 | ||||||
Promissory Note—Related Party | 1,310,015 | 500,000 | ||||||
Total current liabilities | 2,111,575 | 785,224 | ||||||
Deferred underwriting commissions | 3,760,690 | 7,521,380 | ||||||
Total liabilities | 5,872,265 | 8,306,604 | ||||||
Commitments and Contingencies (Note 6) | ||||||||
Class A ordinary shares subject to possible redemption, 4,495,530 and 21,489,658 shares at redemption value of $10.84 and $10.34 at September 30, 2023 and December 31, 2022, respectively | 48,728,983 | 222,234,685 | ||||||
Shareholders’ Deficit | ||||||||
| Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding at September 30, 2023 and December 31, 2022 | — | — | ||||||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 5,347,415 and none outstanding (excluding 4,495,530 and 21,489,658 shares subject to possible redemption) at September 30, 2023 and December 31, 2022, respectively | 535 | — | ||||||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 25,000 and 5,372,415 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | 2 | 537 | ||||||
Additional Paid in Capital | 3,760,690 | — | ||||||
Accumulated deficit | (9,522,493 | ) | (7,801,151 | ) | ||||
Total Shareholders’ Deficit | (5,761,266 | ) | (7,800,614 | ) | ||||
Total Liabilities, Shares Subject to Redemption and Shareholders’ Deficit | $ | 48,839,982 | $ | 222,740,675 | ||||
For the nine months ended September 30, 2022 | For the period from February 2, 2021 (inception) through September 30, 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 141,937 | $ | (10,072 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Formation costs paid by Sponsor | — | 10,072 | ||||||
Interest earned on investment held in Trust Account | (1,177,415 | ) | — | |||||
Change in fair value of overallotment liability | (30,207 | ) | — | |||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | 184,423 | — | ||||||
Accounts payable and accrued expenses | 135,713 | — | ||||||
Due to related party | 90,000 | — | ||||||
Net cash used in operating activities | (655,549 | ) | — | |||||
Cash flow from a financing activity: | ||||||||
Payment of promissory note—related party | (42,156 | ) | — | |||||
Net cash used in a financing activity | (42,156 | ) | — | |||||
Net change in cash | (697,705 | ) | — | |||||
Cash, beginning of the period | 1,006,074 | — | ||||||
Cash, end of the period | $ | 308,369 | $ | — | ||||
Supplemental disclosure of cash flow information: | ||||||||
Accretion for Class A Common Stock to redemption | $ | 1,186,954 | $ | — | ||||
Deferred offering costs paid by the Sponsor under the promissory note | $ | — | $ | 26,706 | ||||
Deferred offering costs paid by Sponsor in exchange for issuance of Class B ordinary shares | $ | — | $ | 14,928 | ||||
Deferred offering costs included in accounts payable and accrued expenses | $ | — | $ | 620,702 | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
| General and administrative expenses | $ | 349,242 | $ | 281,241 | $ | 1,361,327 | $ | 1,065,685 | ||||||||
Loss from operations | (349,242 | ) | (281,241 | ) | (1,361,327 | ) | (1,065,685 | ) | ||||||||
| Other income: | ||||||||||||||||
| Interest income on investment held in Trust Account | 625,818 | 959,949 | 5,116,755 | 1,177,415 | ||||||||||||
| Change in fair value of over-allotment liability | — | — | — | 30,207 | ||||||||||||
| Total other income | 625,818 | 959,949 | 5,116,755 | 1,207,622 | ||||||||||||
Net income | $ | 276,576 | $ | 678,708 | $ | 3,755,428 | $ | 141,937 | ||||||||
| Basic and diluted weighted average shares outstanding, Class A ordinary shares subject to possible redemption | 4,495,530 | 21,489,658 | 14,330,959 | 21,489,658 | ||||||||||||
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption | $ | 0.03 | $ | 0.03 | $ | 0.19 | $ | 0.01 | ||||||||
Basic and diluted, weighted average shares outstanding, Class A and B non-redeemable ordinary shares | 5,372,415 | 5,372,415 | 5,372,415 | 5,372,415 | ||||||||||||
Basic and diluted net income per share, Class A and B non-redeemable ordinary shares | $ | 0.03 | $ | 0.03 | $ | 0.19 | $ | 0.01 | ||||||||
Class A Ordinary Shares subject to redemption | Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Shareholders’ Deficit | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance as of December 31, 2022 | — | $ | — | 5,372,415 | $ | 537 | $ | — | $ | (7,801,151 | ) | $ | (7,800,614 | ) | ||||||||||||||
| Accretion for Class A ordinary shares to redemption value | — | — | — | — | — | (2,358,022 | ) | (2,358,022 | ) | |||||||||||||||||||
| Partial waiver of deferred underwriters’ discount | — | — | 3,760,690 | — | 3,760,690 | |||||||||||||||||||||||
| Net income | — | — | — | — | — | 2,105,779 | 2,105,779 | |||||||||||||||||||||
Balance as of March 31, 2023 | — | $ | — | 5,372,415 | $ | 537 | $ | 3,760,690 | $ | (8,053,394 | ) | $ | (4,292,167 | ) | ||||||||||||||
| Accretion for Class A ordinary shares to redemption value | — | — | — | — | — | (2,402,931 | ) | (2,402,931 | ) | |||||||||||||||||||
| Net income | — | — | — | — | — | 1,373,073 | 1,373,073 | |||||||||||||||||||||
Balance as of June 30, 2023 | — | $ | — | 5,372,415 | $ | 537 | $ | 3,760,690 | $ | (9,083,251 | ) | $ | (5,322,024 | ) | ||||||||||||||
| Accretion for Class A ordinary shares to redemption value | — | — | — | — | — | (715,818 | ) | (715,818 | ) | |||||||||||||||||||
Conversion of Class B Common Stock to Class A Common Stock | 5,347,415 | 535 | (5,347,415 | ) | (535 | ) | — | — | — | |||||||||||||||||||
| Net income | — | — | — | — | — | 276,576 | 276,576 | |||||||||||||||||||||
Balance as of September 30, 2023 | 5,347,415 | $ | 535 | $ | 25,000 | $ | 2 | $ | 3,760,690 | $ | (9,522,493 | ) | $ | (5,761,266 | ) | |||||||||||||
Class A Ordinary Shares subject to redemption | Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Shareholders’ Deficit | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance as of December 31, 2021 | 21,489,658 | $ | 219,194,512 | 5,372,415 | $ | 537 | $ | — | $ | (6,724,379 | ) | $ | (6,723,842 | ) | ||||||||||||||
| Net loss | — | — | — | — | — | (441,116 | ) | (441,116 | ) | |||||||||||||||||||
Balance as of March 31, 2022 | 21,489,658 | $ | 219,194,512 | 5,372,415 | $ | 537 | $ | — | $ | (7,165,495 | ) | $ | (1,164,958 | ) | ||||||||||||||
| Accretion for Class A Common Stock to redemption value | 227,005 | (227,005 | ) | (227,005 | ) | |||||||||||||||||||||||
| Net loss | — | — | — | — | — | (95,655 | ) | (95,655 | ) | |||||||||||||||||||
Balance as of June 30, 2022 | 21,489,658 | $ | 219,421,517 | 5,372,415 | $ | 537 | $ | — | $ | (7,488,155 | ) | $ | (7,487,618 | ) | ||||||||||||||
| Accretion for Class A Common Stock to redemption value | 959,949 | (959,949 | ) | (959,949 | ) | |||||||||||||||||||||||
| Net income | — | — | — | — | — | 678,708 | 678,708 | |||||||||||||||||||||
Balance as of September 30, 2022 | 21,489,658 | $ | 220,381,466 | 5,372,415 | $ | 537 | $ | — | $ | (7,769,396 | ) | $ | (7,768,859 | ) | ||||||||||||||
For the Nine Months Ended September 30, | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
| Net income | $ | 3,755,428 | $ | 141,937 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Interest earned on investment held in Trust Account | (5,116,755 | ) | (1,177,415 | ) | ||||
| Change in fair value of over-allotment liability | — | (30,207 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | 70,081 | 184,423 | ||||||
| Accounts payable and accrued expenses | 426,336 | 135,713 | ||||||
| Due to related party | 90,000 | 90,000 | ||||||
Net cash used in operating activities | (774,910 | ) | (655,549 | ) | ||||
Cash flows from investing activities: | ||||||||
| Extension contributions in Trust Account | (360,015 | ) | — | |||||
| Cash withdrawn from Trust Account in connection with redemption | 178,982,472 | — | ||||||
| Payment of promissory note—related party | — | (42,156 | ) | |||||
Net cash provided by (used in) investing activities | 178,622,457 | (42,156 | ) | |||||
Cash flow from financing activity: | ||||||||
Proceeds of promissory note—related party | 810,015 | — | ||||||
Payment of redemptions | (178,982,472 | ) | — | |||||
Net cash used in a financing activity | (178,172,457 | ) | — | |||||
| Net change in cash | (324,910 | ) | (697,705 | ) | ||||
| Cash, beginning of the period | 394,251 | 1,006,074 | ||||||
Cash, end of the period | $ | 69,341 | $ | 308,369 | ||||
Supplemental disclosure of cash flow information: | ||||||||
| Impact of partial waiver of deferred underwriters’ fee | $ | 3,760,690 | $ | — | ||||
| Accretion for Class A ordinary shares to redemption | $ | 5,476,770 | $ | 1,186,954 | ||||
| 1) | to amend the Company’s Articles to |
| i. | extend the date (the “Termination Date”) by which the Company has to consummate an initial Business Combination (the “Extension Amendment”) from June 13, 2023 (the “Original Termination Date”) to September 13, 2023 (the “Articles Extension Date”) and to allow the Company, without another shareholder vote, to elect to further extend the Termination Date to consummate an initial Business Combination on a monthly basis for up to six times by an additional one month each time after the Articles Extension Date, by resolution of the Company’s board of directors, if requested by the Sponsor, and upon two calendar days’ advance notice prior to the applicable Termination Date, until March 13, 2024 (each, an “Additional Articles Extension Date”), or a total of up to nine months after the Original Termination Date, unless the closing of an initial Business Combination shall have occurred prior thereto, |
| ii. | to eliminate from the Articles the limitation that the Company shall not redeem Class A ordinary shares to the extent that such redemption would cause the Company’s net tangible assets to be less than $5,000,001, and |
| iii. | to provide that the Class B ordinary shares of the Company may be converted either at the time of the consummation of the Company’s initial Business Combination or at any earlier date at the option of the holders of the Class B ordinary shares; and |
| 2) | to amend that certain investment management trust agreement, dated December 8, 2021 (the “Trust Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, as trustee (“Continental”) to change the date on which Continental must commence liquidation (the “Trust Amendment”) of the Trust Account to the earliest of (i) the Company’s completion of an initial Business Combination; (ii) the Articles Extension Date, and (iii) the Additional Articles Extension Date. |
Carrying Value as of September 30, 2022 | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of September 30, 2022 | |||||||||||||
U.S. Treasury Securities Fund | $ | 220,381,467 | $ | — | $ | — | $ | 220,381,467 | ||||||||
Carrying Value as of December 31, 2021 | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of December 31, 2021 | |||||||||||||
U.S. Treasury Securities (matured September 16, 2022) | $ | 219,204,052 | $ | — | $ | (24,956 | ) | $ | 219,179,096 | |||||||
Carrying Value as of September 30, 2023 | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of September 30, 2023 | |||||||||||||
| U.S. Treasury Securities Fund | $ | 48,728,983 | $ | — | $ | — | $ | 48,728,983 | ||||||||
Carrying Value as of December 31, 2022 | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of December 31, 2022 | |||||||||||||
| U.S. Treasury Securities Fund | $ | 222,234,685 | $ | — | $ | — | $ | 222,234,685 | ||||||||
Gross proceeds | $ | 214,896,580 | $ | 214,896,580 | ||||
Less: | ||||||||
Proceeds allocated to Public Warrants | (2,865,288 | ) | (2,865,288 | ) | ||||
Class A ordinary shares issuance costs | (12,738,617 | ) | (12,738,617 | ) | ||||
Plus: | ||||||||
Remeasurement of carrying value to redemption value | 21,088,791 | 22,942,009 | ||||||
Class A ordinary shares subject to possible redemption | $ | 220,381,466 | ||||||
Class A ordinary shares subject to possible redemption, December 31, 2022 | 222,234,685 | |||||||
| Less: | ||||||||
| Redemptions | (178,982,472 | ) | ||||||
| Plus: | ||||||||
| Remeasurement of carrying value to redemption value | 5,476,771 | |||||||
Class A ordinary shares subject to possible redemption, September 30, 2023 | $ | 48,728,983 | ||||||
For the Three Months Ended September 30, | ||||||||||||||||
2023 | 2022 | |||||||||||||||
Class A redeemable | Class A and B non-redeemable | Class A redeemable | Class A and B non-redeemable | |||||||||||||
Basic and diluted net income per ordinary share | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net income | $ | 127,225 | $ | 149,351 | $ | 542,966 | $ | 135,742 | ||||||||
| Denominator: | ||||||||||||||||
| Basic and diluted weighted average shares outstanding | 4,495,530 | 5,372,415 | 21,489,658 | 5,372,415 | ||||||||||||
| Basic and diluted net income per ordinary share | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.03 | ||||||||
For the three months ended September 30, | For the nine months ended September 30, | For the period from February 2, 2021 (inception) through September 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Class A ordinary shares subject to possible redemption | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income allocable to Class A ordinary shares subject to possible redemption | $ | 542,966 | $ | — | $ | 113,550 | $ | — | ||||||||
Denominator: | ||||||||||||||||
Weighted Average Class A ordinary shares subject to possible redemption, basic and diluted | 21,489,658 | — | 21,489,658 | — | ||||||||||||
Basic and Diluted net income per share, Class A ordinary shares subject to possible redemption | $ | 0.03 | $ | — | $ | 0.01 | $ | — | ||||||||
Class B non-redeemable ordinary shares | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income (loss) allocable to Class B ordinary shares | $ | 135,742 | $ | — | $ | 28,387 | $ | (10,072 | ) | |||||||
Denominator: | ||||||||||||||||
Weighted Average Class B ordinary shares, basic and diluted | 5,372,415 | 6,250,000 | 5,372,415 | 6,250,000 | ||||||||||||
Basic and diluted net income (loss) per share, Class B ordinary shares | $ | 0.03 | $ | (0.00 | ) | $ | 0.01 | $ | (0.00 | ) | ||||||
For the Nine Months Ended September 30, | ||||||||||||||||
2023 | 2022 | |||||||||||||||
Class A redeemable | Class A and B non-redeemable | Class A redeemable | Class A and B non-redeemable | |||||||||||||
Basic and diluted net income per ordinary share | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net income | $ | 2,741,462 | $ | 1,013,966 | $ | 113,550 | $ | 28,387 | ||||||||
| Denominator: | ||||||||||||||||
| Basic and diluted weighted average shares outstanding | 14,330,959 | 5,372,415 | 21,489,658 | 5,372,415 | ||||||||||||
| Basic and diluted net income per ordinary share | $ | 0.19 | $ | 0.19 | $ | 0.01 | $ | 0.01 | ||||||||
September 30, 2022 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
U.S. Treasury Securities Fund | $ | 220,381,467 | $ | 220,381,467 | $ | — | $— | |||||||||
| $ | 220,381,467 | $ | 220,381,467 | $ | — | $— | ||||||||||
September 30, 2023 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
| U.S. Treasury Securities Fund | $ | 48,728,983 | $ | 48,728,983 | $ | — | $ | — | ||||||||
| $ | 48,728,983 | $ | 48,728,983 | $ | — | $ | — | |||||||||
December 31, 2021 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
U.S. Treasury Securities | $ | 219,179,096 | $ | 219,179,096 | $ | — | $— | |||||||||
| $ | 219,179,096 | $ | 219,179,096 | $ | — | $— | ||||||||||
December 31, 2022 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
| U.S. Treasury Securities Fund | $ | 222,234,685 | $ | 222,234,685 | $ | — | $ | — | ||||||||
| $ | 222,234,685 | $ | 222,234,685 | $ | — | $ | — | |||||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,” “Target Global Acquisition I Corp.,” “our,” “us” or “we” refer to Target Global Acquisition I Corp. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form
Overview
We are a blank check company incorporated on February 2, 2021 as a Cayman Islands exempted company 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”).
Our sponsor is Target Global Sponsor Ltd., a Cayman Islands company limited by shares (the “Sponsor”). The registration statement for our initial public offering was declared effective on December 8, 2021. On December 13, 2021, we commenced our initial public offering (the “IPO”) of 20,000,000 units at $10.00 per unit. Transaction costs related to the IPO amounted to $12,535,264 consisting of $4,000,000 of underwriting commissions, $7,000,000 of deferred underwriting commissions (including the portion of the deferred underwriting commission subsequently waived by BofA Securities Inc., one of the two underwriters of our IPO (“BofA”) on January 10, 2023), $510,000 in value of the over-allotment option, and $1,025,264 of other offering costs.
Simultaneously with the consummation of the IPO, we consummated the private placement of 6,666,667 warrants (the “Private Placement Warrants”) to the Sponsor, at a price of $1.50 per Private Placement Warrant in a private placement. The sale of the Private Placement Warrants in connection with the IPO generated gross proceeds of $10,000,000.
On December 29, 2021, the underwriters partially exercised their over-allotment option, resulting in an additional 1,489,658 Units issued for gross proceeds of $14,896,580.
Following the closing of the IPO on December 13, 2021, and the subsequent close of the partial over-allotment option on December 29, 2021, a total of $219,194,512 from the net proceeds of the sale of the Units in the IPO and over-allotment and the sale of the Private Placement Warrants was deposited into a trust account (the “Trust Account”) and will bewas invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule
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Our amended and restated memorandum and articles of association providesArticles provide that we will have only 18 months from the closing of the IPOuntil September 13, 2023 (or up to 24 months from the closing of the IPOuntil March 13, 2024 if we extend the period of time to consummate a Business Combination, subject to the Sponsor depositing additional funds in the Trust Account) (the “Combination Period”)Combination) to consummate the initial Business Combination. On September 8, 2023, the Company’s board of directors, upon request of the Sponsor, has elected to extend the deadline prescribed in the Company’s Articles from September 13, 2023 for an additional month, to October 13, 2023. On October 10, 2023, the Company’s board of directors, upon request of the Sponsor, has elected to extend the deadline prescribed in the Company’s Articles from October 13, 2023 for an additional month, to November 13, 2023. On November 9, 2023, the Company’s board of directors, upon request of the Sponsor, has elected to extend the deadline prescribed in the Company’s Articles from November 13, 2023 for an additional month, to December 13, 2023. As a result, the Company will have until December 13, 2023, to complete a Business Combination unless the Company extends the deadline prescribed in the Company’s Articles further. If we have not consummated an initial Business Combination within the Combination Period,deadline prescribed in the Company’s Articles, 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 aper-sharea per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and board of directors, liquidate and dissolve, subject in the case of (ii) and (iii) above, to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to consummate an initial Business Combination within the deadline prescribed in the Company’s Articles.
On June 2, 2023, shareholders of the Company at the Shareholder Meeting agreed, among other things:
| 1) | to amend the Company’s Articles to (i) extend the Termination Date by which the Company has to consummate an initial Business Combination from the Original Termination Date to the Articles Extension Date and to allow the Company, without another shareholder vote, to elect to further extend the Termination Date to an Additional Articles Extension Date, (ii) to eliminate from the Articles the limitation that the Company shall not redeem Class A ordinary shares to the extent that such redemption would cause the Company’s net tangible assets to be less than $5,000,001 and (iii) to provide that the Class B ordinary shares of the Company may be converted either at the time of the consummation of the Company’s initial Business Combination or at any earlier date at the option of the holders of the Class B ordinary shares; and |
| 2) | to amend the Trust Agreement by and between the Company and Continental to change the date on which Continental must commence liquidation of the Trust Account to the earliest of (i) the Company’s completion of an initial Business Combination; (ii) the Articles Extension Date and (iii) the Additional Articles Extension Date. |
The foregoing description of the proposals approved at the Shareholder Meeting is qualified in its entirety by the full text of the Company’s Current Report on Form 8-K filed with the SEC on June 8, 2023. In connection with the shareholders’ vote at the Shareholder Meeting, the holders of 16,994,128 ordinary shares of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.53 per share. As a result, approximately $178.9 million was removed from the Trust Account to redeem such shares and 4,495,530 Class A ordinary shares of the Company remained outstanding after the redemption was been effected.
In connection with the Extension Amendment, the Contributor agreed to deposit into the Trust Account the Contribution (i) on June 14, 2023, with respect to the extension to the Articles Extension Date, an amount equal to the lesser of (x) $270,000 or (y) $0.084 per public share multiplied by the number of public shares outstanding, and (ii) one business day following the public announcement by the Company disclosing that the Company’s board of directors has determined to extend the date by which the Company must consummate an initial Business Combination Period.
The Contribution Note may be converted into warrants of the post-business combination entity, which shall have terms identical to the Private Placement Warrants sold concurrently with the IPO, each exercisable for one Class A ordinary share at a purchase price of $11.50 per share, at a price of $1.50 per warrant at the option of the Contributor. The conversion feature included in the Contribution Note does not meet the definition of a derivative instrument.
Liquidity, Capital Resources and Going Concern
As of September 30, 2023, we had cash outside the Trust Account of $308,369,$69,341, available for working capital needs, and working deficit of $247,480.$2,000,576. Until consummation of its Business Combination, we will be using the funds held outside the Trust Account, and any additional Working Capital Loans from the initial shareholders, our officers and directors, or their respective affiliates, or other third parties, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
Our liquidity needs up to September 30, 20222023 had been satisfied through a payment from the Sponsor of $25,000 for the Founder Shares to cover certain offering costs and the loan under an unsecured promissory note from the Sponsor of up to $500,000. As of September 30, 2022,2023, we had no$1,310,015 borrowing outstanding borrowing under the promissory note.
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In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, initial shareholders, officers, directors or their affiliates may, but are not obligated to, provide us Working Capital Loans. As of September 30, 2022,2023, there were no amounts outstanding under any Working Capital Loans.
The Company may extend the foregoing, management believes that wedeadline prescribed in the Company’s Articles by up to six one-month periods after September 13, 2023, until March 13, 2024. On September 8, 2023, the Company’s board of directors, upon request of the Sponsor, has elected to extend the Termination Date from the Articles Extension Date for an additional month, until the October 2023 Termination Date. On October 10, 2023, the Company’s board of directors, upon request of the Sponsor, has elected to extend the Termination Date from the October 2023 Termination Date for an additional month, to the November 2023 Termination Date. On October 11, 2023, in connection with the November 2023 Extension, the Contributor deposited an additional $90,000 into the Trust Account as a Contribution. On November 9, 2023, the Company’s board of directors, upon request of the Sponsor, has elected to further extend the Termination Date from the November 2023 Termination Date for an additional month, to the December 2023 Termination Date. On November 10, 2023, in connection with the December 2023 Extension, the Contributor deposited an additional $90,000 into the Trust Account as a Contribution. As a result, the Company will have sufficient working capital and borrowing capacityuntil December 13, 2023, to meet our needs through the earlier of the consummation ofcomplete a Business Combination or one year from this filing. Over this time period,unless the Company extends the Termination Date further. However, if we are unable to complete a business combination within the deadline prescribed in the Company’s Articles, we will redeem 100% of the outstanding public shares for a pro rata portion of the funds held in the Trust Account, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us, divided by the number of then outstanding public shares, subject to applicable law and as further described in our registration statement, and then seek to dissolve and liquidate. In connection with the our assessment of going concern considerations in accordance with the authoritative guidance FASB Accounting Standards Update (“ASU”) Topic 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern”, our management has determined that potential liquidity and capital shortage as described above and a mandatory liquidation, and subsequent dissolution, should we be using these funds for paying existing accounts payable, identifyingunable to complete a business combination, raise substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target businessliabilities should we be required to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Risks and Uncertainties
Our management is currently evaluating the impact of the COVID-19 pandemic,current global economic uncertainty, rising interest rates, high inflation, high energy prices, supply chain disruptions and the Russia-Ukraine wararmed conflict (including the impact of any sanctions imposed in response thereto) and has concluded that while it is reasonably possible that any of these could have a negative effect on our financial position, results of our operations and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Results of Operations
As of September 30, 2022,2023, we had not commenced any operations. All activity for the period from February 2, 2021 (inception) through September 30, 20222023 relates to our formation and the IPO. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after the completion of our initial Business Combination, at the earliest. We generate
For the three months ended September 30, 2023, we had net income of $276,576, which consisted of income from investments held in the Trust Account and operating account of $625,818, offset by general and administrative expenses of $349,242.
For the nine months ended September 30, 2023, we had net income of $3,755,428, which consisted of income from investments held in the Trust Account and operating account of approximately $5,116,755, offset by general and administrative expenses of approximately $1,361,327.
For the three months ended September 30, 2022, we had net income of $678,708, which consisted of income from investments held in the Trust Account and operating account of $959,949, offset by general and administrative expenses of $281,241.
For the nine months ended September 30, 2022, we had net income of $141,937, which consisted of income from investments held in the Trust Account and operating account of $1,177,415 and change in fair value of overallotment liability of $30,207, offset by general and administrative expenses of $1,065,685.
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Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
Office Space, Secretarial and Administrative Services
Commencing on December 9, 2021, through the earlier of consummation of the initial Business Combination and the liquidation, we agreed to pay the Sponsor a total of $10,000 per month for office space, utilities, secretarial and administrative support and to reimburse the Sponsor for any
Registration Rights
The holders of the Founder Shares, Private Placement Warrants, Class A ordinary shares underlying the Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans and extension loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and extension loans) will beare entitled to registration rights pursuant to a registration and shareholder rights agreement to be signed prior to or on the effective date of the Public Offering.agreement. 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” registration rights with respect to registration statements filed subsequent to our completion of the initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters had a
The underwriters were paid underwriting commissioncommissions of $0.20 per unit, or $4,000,000 in aggregate, upon the closing of the IPO. Following the exercise of the underwriters’ over-allotment option on December 29, 2021, the underwriters earned an additional $297,932 for an aggregate of $4,297,932 in underwriting commissions related to the IPO and over-allotment.
In addition, $7,000,000 iswas payable to the underwriters for deferred underwriting commissions.commissions (including the portion of the deferred underwriting commissions subsequently waived by BofA on January 10, 2023). Following the exercise of the underwriters’ over-allotment option on December 29, 2021, the underwriters earned an additional $521,380 for an aggregate of $7,521,380 in deferred underwriting commissions related to the IPO and over-allotment. Theover-allotment (including the portion of the deferred underwriting commission will become payablesubsequently waived by BofA). On January 10, 2023, BofA executed a waiver letter confirming BofA’s resignation and waiver of its entitlement to the underwriterspayment of deferred underwriting commission in the amount of $3,760,690. The remaining balance of $3,760,690 owing to UBS has not been waived and remains due and payable from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Forward Purchase Agreements
We entered into two forward purchase agreements (the “Forward Purchase Agreements”) with Target Global Selected Opportunities, LLC – Series Selenium (“TGSO Series Selenium”) on November 8, 2021, pursuant to which TGSO Series Selenium agreed to purchase (1) an aggregate of 2,500,000 forward purchase shares for $10.00 per share (the “firm forward purchase shares”), or an aggregate amount of $25,000,000 and (2) in addition, an aggregate of up to 2,500,000 forward purchase shares for $10.00 per share (the “additional forward purchase shares”), or an aggregate maximum amount of up to $25,000,000, in each case in a private placement that may close simultaneously with the closing of the Business Combination. On May 11, 2022, all of TGSO Series Selenium’s rights and obligations under the Forward Purchase Agreements (including the obligation to purchase the Forward Purchase Shares) were transferred in full to Target Global Selected Opportunities, LLC – Series Selenium 3 (the “FPA Purchaser”) in accordance with Section 4(c) of the Forward Purchase Agreements. The FPA Purchaser’s obligations to purchase the forward purchase shares will automatically terminate if the Business Combination is not consummated by December 13, 2023.
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Critical Accounting Policies
Offering Costs Associated with IPO
Deferred offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the IPO. We comply with the requirements of the ASC
Ordinary Shares Subject to Possible Redemption
We account for ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and measured at fair value. Conditionally redeemable ordinary shares (including 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 our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ deficit. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, 4,495,530 and 21,489,658 Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ deficit section of our balance sheets.
We recognize changes in redemption value immediately as they occur and adjusts the carrying value of Class A ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid in capital and accumulated deficit.
Net Income (Loss) Per Ordinary Share
Net income (loss) per ordinary share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture by the Sponsor. Weighted average shares were reduced for the effect of an aggregate of 750,000 ordinary shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters. At September 30, 20222023 and December 31, 2021,2022, we did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in our earnings. As a result, diluted income (loss) per ordinary share is the same as basic lossincome per share for the period presented.
Recent Accounting Standards
Our management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed financial statements.
Off-Balance
As of September 30, 20222023 and December 31, 2021,2022, we did not have any
Emerging Growth Company Status
We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our 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.
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Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were 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 September 30, 2022 covered by this Quarterly Report on
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our prospectus filed with the SECAnnual Report on October 21, 2021 and in our Annual ReportForm 10-K for the year ended December 31, 2021. Any of these factors could result in a significant or material adverse effect2022 filed with SEC on our results of operations or financial condition. AdditionalMarch 28, 2023 (the “2022 Annual Report”), except for the risk factors set forth below.
We may in the future not presently knownbe compliant with all of Nasdaq’s continued listing standards and our Public Warrants could be delisted.
On June 15, 2023, the Company received a written notice from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) indicating that since the Company’s aggregate market value of its outstanding warrants was less than $1 million, the Company was no longer in compliance with the Nasdaq Global Market continued listing criteria set forth in Listing Rule 5452(b)(C), which requires the Company to maintain an aggregate market value of its outstanding warrants of at least $1 million (the “Notice”). The Notice additionally indicated that the Company, pursuant to the Listing Rules, has 45 calendar days, or until July 31, 2023, to submit a plan to regain compliance. If Nasdaq accepts the Company’s plan, the Company will have 180 calendar days from the date of the Notice, or until December 12, 2023, to evidence compliance. If Nasdaq were to reject the Company’s plan, Nasdaq rules permit the Company to appeal the decision to a hearings panel.
On October 2, 2023, the Company submitted a revised plan to regain compliance, and, if Nasdaq accepts such plan, the Company intends to subsequently regain compliance with Rule 5452(b)(C) within the 180-calendar day compliance period. While the Company is exercising diligent efforts to maintain the listing of its warrants on Nasdaq Global Market, there can be no assurance that the Company will be able to regain or maintain compliance with Nasdaq Global Market aggregate market value of outstanding warrants requirement. In addition, if the Company does not meet the aggregate market value of outstanding warrants requirement by the end of the 180-calendar day compliance period, Nasdaq could provide notice that the Company’s warrants will become subject to delisting. In the event the Company receives notice that its warrants are being delisted, Nasdaq rules permit the Company to appeal any delisting determination by the Nasdaq staff to a hearings panel.
We may not be able to consummate an initial business combination within the deadline prescribed in our Articles, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate.
We may not be able to find a suitable target business and consummate an initial business combination within the deadline prescribed in our Articles. Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein. For example, geopolitical conditions and global economic uncertainty, including the Israel-Hamas conflict, the Russia-Ukraine war and other macroeconomic factors that negatively impact the equity and debt markets, as described elsewhere in our Annual Report, could limit our ability to complete our initial business combination, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. In addition, such macroeconomic events, including terrorist attacks, the Israel-Hamas conflict, the ongoing Russia-Ukraine war, natural disasters or a significant outbreak of infectious diseases may negatively impact businesses we may seek to acquire. In addition, the current U.S. political environment and the resulting uncertainties regarding actual and potential shifts in U.S. foreign investment, trade, taxation, economic, environmental and other policies under the current administration, as well as the impact of geopolitical tension, such as a deterioration in the bilateral relationship between the U.S. and China, the Israel-Hamas conflict or the ongoing Russia-Ukraine war (including any further escalations thereof) could lead to disruption, instability and volatility in the global markets. If we have not consummated an initial business combination within the deadline prescribed in our Articles, 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 a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. Our amended and restated memorandum and articles of association provide that, if we wind up for any other reason prior to the consummation of our initial business combination, we will follow the foregoing procedures with respect to the liquidation of the trust account as promptly as reasonably possible but not more than ten business days thereafter, subject to applicable Cayman Islands law. In either such case, our public shareholders may receive only $10.20 per public share, or less than $10.20 per public share, on the redemption of their shares, and our warrants will expire worthless. See “-If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $10.20 per public share” and other risk factors herein and in our 2022 Annual Report.
If we do not consummate our initial business combination by December 13, 2023, our forward purchase agreements with the FPA Purchaser will terminate automatically, potentially leaving us with insufficient funds to consummate our initial business combination.
Our two forward purchase agreements with Target Global Selected Opportunities, LLC Series Selenium, for the sale of our Class A ordinary shares in the aggregate maximum amount of up to $25,000,000, will terminate automatically if our initial business
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combination is not consummated by December 13, 2023. In the event of such termination, we may not be able to obtain additional funds to account for such shortfall on terms favorable to us or at all and may be unable to consummate our initial business combination. Any such shortfall would also reduce the amount of funds that we currently deem immaterialhave available for working capital of the post-business combination company.
If we seek shareholder approval of our initial business combination, our sponsor and members of our management team have agreed to vote in favor of such initial business combination, regardless of how our public shareholders vote.
As of the date of this Quarterly Report, our initial shareholders own 25,000 Class B ordinary shares and 5,347,415 Class A ordinary shares (resulting from a conversion on July 11, 2023 of an equal number of Class B ordinary shares previously held by the initial shareholders). Our sponsor and members of our management team also may also impair our business or results of operations. We may disclose changes to such risk factors or disclose additional risk factors from time to time inpurchase Class A ordinary shares prior to our future filings with the SEC.
Afterinitial business combination. Our amended and restated memorandum and articles of association provide that, if we seek shareholder approval, we will complete our initial business combination substantiallyonly if we obtain the approval by way of an ordinary resolution under Cayman Islands law, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the Company. Our initial shareholders’ founder shares and Class A ordinary shares represent approximately 54.44 % of all our issued and outstanding shares. Our initial shareholders have agreed to vote their shares in favor of our initial business combination. Therefore, we would not need additional shares to be voted in favor of an initial business combination in order to have our initial business combination approved. Accordingly, if we seek shareholder approval of our initial business combination, the agreement by our sponsor and each member of our management team to vote their shares in favor of our initial business combination will increase the likelihood that we will receive the requisite shareholder approval for such initial business combination.
The ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target.
We may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If too many public shareholders exercise their redemption rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination. Furthermore, unlike other similar special purpose acquisition companies, we can redeem our public shares irrespective of whether such redemption would cause our net tangible assets to be less than $5,000,001. Prospective targets will be aware of these risks and, thus, may be located inreluctant to enter into a foreign country and substantially allbusiness combination transaction with us.
The ability of our revenuepublic shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure.
At the time we enter into an agreement for our initial business combination, we will not know how many of our remaining shareholders may exercise their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be derived fromsubmitted for redemption. If our operations in such country. Accordingly, our resultsremaining shareholders submit their shares for redemption, we may need to restructure the transaction to reserve a greater portion of operations and prospects will be subject, to a significant extent, to the economic, political and legal policies, developments and conditionscash in the country in which we operate.
trust account or arrange for additional third-party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect our business. Economic growth could be uneven, both geographically and among various sectors of the economy and such growthabove considerations may not be sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely affectlimit our ability to findcomplete the most desirable business combination available to us or optimize our capital structure. The amount of the deferred underwriting commission payable to UBS in case we complete a Business Combination, will not be adjusted for any shares that are redeemed in connection with an attractiveinitial business combination. The per-share amount we will distribute to shareholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions, the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting commission due to UBS if we complete a Business Combination.
The requirement that we consummate an initial business combination within the deadline prescribed in our Articles may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our shareholders.
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Any potential target business with which we enter into negotiations concerning a business combination will be aware that we must consummate an initial business combination within the deadline prescribed in our Articles. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable to complete our initial business combination with any target business. This risk will increase as we get closer to the deadline described above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
Our sponsor has the right, but not the obligation, to extend the term we have to consummate our initial business combination and ifon a monthly basis for up to six times by an additional one month each time after September 13, 2023 until March 13, 2024 without providing our stockholders with voting or redemption rights relating thereto.
If we effectanticipate that we may not be able to consummate our initial business combination by December 13, 2023, we may, without another shareholder vote, elect to further extend the abilityTermination Date to consummate a Business Combination on a monthly basis for up to three times by an additional one month each time after December 13, 2023, by resolution of that target business to become profitable.
We are currently operating in a periodour board of economic uncertaintydirectors, if requested by our Sponsor, and capital markets disruption, which has been significantly impacted by geopolitical instability dueupon two calendar days’ advance notice prior to the ongoing military conflict between Russiaapplicable Termination Date, until March 13, 2024, unless the closing of our Business Combination shall have occurred prior thereto. In connection with each such extension, our Sponsor has agreed to deposit into the Trust account as a Contribution an amount equal to the lesser of (x) $90,000 or (y) $0.028 per public share multiplied by the number of public shares outstanding. Any such Contribution would evidenced by a non-interest bearing, unsecured convertible promissory note to our Sponsor and Ukraine. is repayable by us upon consummation of our Business Combination. Such loans may be converted into warrants of the post-business combination entity, which shall have terms identical to the Private Placement Warrants sold concurrently with our IPO, each exercisable for one Class A Ordinary Share at a purchase price of $11.50 per share, at a price of $1.50 per warrant at the option of the Contributor. If we do not consummate a Business Combination within the deadline prescribed by our Articles, any such promissory notes will be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven.
Our public stockholders will not be entitled to vote or redeem their shares in connection with any such extension. As a result, we may conduct such an extension even though a majority of our public stockholders do not support such an extension and will not be able to redeem their shares in connection therewith. This feature is different than the traditional special purpose acquisition company structure, in which any extension of the company’s period to complete a business financial conditioncombination requires a vote of the company’s stockholders and resultsstockholders have the right to redeem their public shares in connection with such vote.
Our sponsor and its affiliates or designees are not obligated to fund the trust account to extend the time for us to complete our initial business combination. Our sponsor may decide not to extend the term we have to consummate our initial business combination, in which case we would cease all operations except for the purpose of operationswinding up and we would redeem our public shares and liquidate, and the warrants will be worthless.
Our search for a business combination, and any target with which we ultimately consummate a business combination, may be materially and adversely affected by changes in geopolitical conditions and global economic uncertainty, including as a result of the Israel-Hamas conflict, the Russia-Ukraine war and other macroeconomic factors, including the impact thereof on the status of debt and equity markets.
Our search for a business combination, and any negativetarget business with which we ultimately consummate a business combination, is directly and indirectly affected by global macroeconomic and geopolitical conditions and the effect thereof on the industries and markets in which we, and any target business with which we ultimately consummate a business combination, operate. The outlook for the global economy over the medium term remains uncertain due to a number of factors, including high inflation, rising interest rates, supply chain disruption, the Israel-Hamas conflict, the Russia-Ukraine war, geopolitical tensions and trade barriers. In addition, we are exposed to risks arising out of terrorist attacks, natural disasters, unfavorable political, military or diplomatic events, armed conflicts (including the Israel-Hamas conflict and the Russia-Ukraine war, and related consequences for geopolitical stability, energy supply and prices, and cross-border financial transactions, including as a result of economic sanctions), pandemics and widespread public health crises, and the responses to them by governments and markets. Any of these events could materially and adversely affect, directly or indirectly, economies and financial markets worldwide, business operations and the conduct of commerce generally, the business of any potential target business with which we consummate a business combination and our ability to consummate a business combination, including if such events limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner.
For example, the Russia-Ukraine war has had an immediate impact on the global economy resulting in higher energy prices and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.
Russian military actions and the resulting sanctions could adversely affect the global economy andhigher inflation with significant disruption to financial markets and leadsupply chains for certain goods and services. Moreover, in connection with Russia’s invasion of Ukraine, the EU, the United States, and certain other governments around the world have responded by imposing various economic sanctions which restrict or prohibit certain business opportunities in Russia and Ukraine. The war has continued to instability and lack of liquidityescalate without any resolution foreseeable in capital markets, potentially making it more difficult for us to obtain additional funds.
Any of the above mentioned factors could affect our business, prospects, financial condition, and operating results.near future. The extentuncertain nature, magnitude, and duration of hostilities stemming from the Russia-Ukraine war, including the potential effects of sanctions limitations, possibility of counter-sanctions, retaliatory cyber-attacks on the world economy and markets, further disruptions to global supply chains and potential shipping delays, have contributed to increased market volatility and uncertainty, which could have an adverse impact on macroeconomic factors that affect our ability to consummate a business combination.
In addition, in October 2023, Hamas militants infiltrated Israel’s southern border from the Gaza Strip and carried out a series of attacks on civilian and military action, sanctionstargets. Additionally, Hamas launched extensive rocket assaults on Israeli population centers and resulting market disruptionsindustrial areas along Israel’s border with the Gaza Strip, as well as in other regions within the State of Israel. Subsequently, Israel’s security cabinet declared war against Hamas, and a military campaign against these terrorist organizations began, running concurrently with their ongoing rocket and terror attacks.
Certain members of our management team, board of directors, and staff are impossiblelocated in Israel. Although we have no geographical restrictions on the targets we can pursue for our Business Combination, we had previously expressed our intention to predict, butgive priority to Israel as one of our geographic focuses. While we do not currently anticipate that the recent conflict between Israel and Hamas will impact our ability to identify a suitable target company for our Business Combination, there can be no assurance that a further escalation of the conflict or unforeseen events will not affect our ability to complete a Business Combination. Any armed conflicts, acts of terrorism, or political instability involving Israel could be substantial. Any such disruptionspotentially have adverse implications for our ability to successfully conclude a business combination within the prescribed deadline specified in our Articles, or potentially, at all.
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Our ability to consummate a business combination may also magnifybe dependent on the ability to raise equity and debt financing, which may be impacted by any of the events described above, including as a result of increased market volatility and decreased market liquidity, and third-party financing being unavailable on terms acceptable to us or at all.
Finally, any of the events described above, including the ongoing impact of the recent conflict between Israel and Hamas and the Russia-Ukraine war, may also have the effect of heightening many of the other risks described in the Prospectus“Risk Factors” herein or in our 2022 Annual Report section, such as those related to the market for our securities and cross-border transactions.
You do not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Our public shareholders are entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion of an initial business combination, and then only in connection with those Class A ordinary shares that such shareholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the deadline prescribed in our Articles, or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares, and (iii) the redemption of our public shares if we have not consummated an initial business within the deadline prescribed in our Articles, subject to applicable law and as further described herein. Public shareholders who redeem their Class A ordinary shares in connection with a shareholder vote described in clause (ii) in the preceding sentence shall not be entitled to funds from the trust account upon the subsequent completion of an initial business combination or liquidation if we have not consummated an initial business combination within the deadline prescribed in our Articles, with respect to such Class A ordinary shares so redeemed. In no other circumstances a public shareholder has any right or interest of any kind in the trust account. Holders of warrants do not have any right to the proceeds held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
If the net proceeds from our IPO and the sale of the private placement warrants not being held in the trust account are insufficient to allow us to operate until the end of the Business Combination deadline prescribed in our Articles, it could limit the amount available to fund our search for a target business or businesses and our ability to complete our initial business combination, and we will depend on loans from our sponsor, its affiliates or members of our management team to fund our search and to complete our initial business combination.
The funds available to us outside of the trust account may not be sufficient to allow us to operate until the Business Combinationdeadline prescribed in our Articles, assuming that our initial business combination is not completed during that time. We expect to incur significant costs in pursuit of our acquisition plans. Management’s plans to address this need for capital through our IPO and potential loans from certain of our affiliates are discussed in the section of our 2022 Annual Report titled “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” However, our affiliates are not obligated to make loans to us in the future, and we may not be able to raise additional financing from unaffiliated parties necessary to fund our expenses. Any such event in the future may negatively impact the analysis regarding our ability to continue as a going concern at such time.
Of the net proceeds from our IPO and the sale of the private placement warrants, only approximately $1,400,000 are available to us initially outside the trust account to fund our working capital requirements. We believe that the funds available to us outside of the trust account, together with funds available from loans from our sponsor, its affiliates or members of our management team are sufficient to allow us to operate until the Business Combinationdeadline prescribed in our Articles; however, we cannot assure you that our estimate is accurate, and our sponsor, its affiliates or members of our management team are under no obligation to advance funds to us in such circumstances. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
In the event that our offering expenses exceed our estimate of $600,000, we may fund such excess with funds not to be held in the trust account. In such case, unless funded by the proceeds of loans available from our sponsor, its affiliates or members of our management team the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $600,000, the amount of funds we hold outside the trust account would increase by a corresponding amount. The amount held in the trust account will not be impacted as a result of such increase or decrease. If we are required to seek additional capital, we would need to borrow funds from our sponsor, its affiliates, members of our management team or other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our management team nor their affiliates is under any obligation to us in such circumstances. Any such advances may be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination. Up to $1,500,000 of such loans may be convertible into warrants of the post-business combination entity at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor, its affiliates or members of our management team as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account. If we have not consummated our initial business combination within the deadline prescribed in our Articles because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public shareholders may only receive an estimated $10.20 per public share, or possibly less, on our redemption of our public shares, and our warrants will expire worthless. See “- If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $10.20 per public share” and other risk factors in our 2022 Annual Report and herein.
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To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, we will, on or prior to the 24-month anniversary of the effective date of the registration statement relating to our IPO, instruct the trustee to liquidate the securities held in the Trust Account and instead hold all funds in the Trust Account in cash items until the earlier of the consummation of our Business Combination or our liquidation.
The funds in the Trust Account have, since our IPO, been held only in U.S. government treasury bills with a maturity of one hundred and eighty-five (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 of 1940, as amended. However, to mitigate the risk of us being deemed to have been operating as an unregistered investment company under the Investment Company Act, we intend to, on or prior to the 24-month anniversary of the effective date of the registration statement relating to our IPO, or December 8, 2023, instruct Continental, to liquidate the U.S. government treasury obligations or money market funds held in the Trust Account and thereafter to maintain the funds in the Trust Account in cash in an interest-bearing demand deposit account at a bank until the earlier of the consummation of our Business Combination or the Annual Reportliquidation of our Company. Interest on such deposit account is currently approximately 5.0% per annum, but such deposit account carries a variable rate and we cannot assure you that such rate will not decrease or increase significantly. As a result, any decision to liquidate the investments held in the Trust Account and thereafter to hold all funds in the Trust Account in cash items would reduce the dollar amount our public shareholders would receive upon any redemption or liquidation of our Company.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
restrictions on the nature of our investments; and
restrictions on the issuance of securities,
each of which may make it difficult for us to complete our initial business combination.
In addition, we may have imposed upon us burdensome requirements, including:
registration as an investment company with the SEC;
adoption of a specific form of corporate structure; and
reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to.
In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business is to identify and complete a business combination and thereafter to operate the post-transaction business or assets for the year endedlong term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be 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 Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. Our securities are not for persons who are seeking a return on investments in government securities or investment securities. The trust account is intended as a holding place for funds pending the earliest to occur of either: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the deadline prescribed in our Articles, or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares; or (iii) absent our completing an initial business combination within the deadline prescribed in our Articles, our return of the funds held in the trust account to our public shareholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
Notwithstanding the foregoing, on March 30, 2022, the SEC issued proposed rules relating to, among other items, the extent to which SPACs could become subject to regulation under the Investment Company Act. The SEC’s proposed rules would provide a safe harbor for SPACs from the definition of “investment company” under Section 3 (a) (1) (A) of the Investment Company Act, provided that they satisfy certain conditions that limit a SPAC’s duration, asset composition, business purpose and activities. The duration component of the proposed safe harbor rule would require the SPAC to file a Current Report on Form 8-K with the SEC announcing that it has entered into an agreement with the target company (or companies) to engage in an initial business combination no later than 18 months after the effective date of the SPAC’s registration statement for its initial public offering. The SPAC would then be required to complete its initial business combination no later than 24 months after the effective date of its registration statement for its
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initial public offering. The SEC has indicated that it believes that there are serious questions concerning the applicability of the Investment Company Act to special purpose acquisition companies, 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 a result, it is possible that a claim could be made in the future that we have been operating as an unregistered investment company. These rules, if adopted, whether in the form proposed or in revised form, may materially adversely affect our ability to negotiate and complete our initial business combination and may increase the costs and time related thereto. It is also possible that the investment of funds from the IPO during our life as a blank check company, and the earning and use of interest from such investment, both of which will likely continue until we consummate an initial business combination, could increase the likelihood of us being found to have been operating as an unregistered investment company more than if we sought to potentially mitigate this risk by holding such funds as cash.
If we have not consummated an initial business combination within the deadline prescribed in our Articles, our public shareholders may be forced to wait beyond such period before redemption from our trust account.
If we have not consummated an initial business combination within the deadline prescribed in our Articles, the proceeds then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), will be used to fund the redemption of our public shares, as further described herein. Any redemption of public shareholders from the trust account will be effected automatically by function of our amended and restated memorandum and articles of association prior to any voluntary winding up. If we are required to wind up, liquidate the trust account and distribute such amount therein, pro rata, to our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the Companies Act. In that case, investors may be forced to wait beyond the expiration of the deadline prescribed in our Articles before the redemption proceeds of our trust account become available to them, and they receive the return of their pro rata portion of the proceeds from our trust account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless, prior thereto, we consummate our initial business combination or amend certain provisions of our amended and restated memorandum and articles of association, and only then in cases where investors have sought to redeem their Class A ordinary shares. Only upon our redemption or any liquidation will public shareholders be entitled to distributions if we do not complete our initial business combination and do not amend certain provisions of our amended and restated memorandum and articles of association. Our amended and restated memorandum and articles of association provide that, if we wind up for any other reason prior to the consummation of our initial business combination, we will follow the foregoing procedures with respect to the liquidation of the trust account as promptly as reasonably possible but not more than ten business days thereafter, subject to applicable Cayman Islands law.
Since our sponsor, executive officers and directors will lose their entire investment in us if our initial business combination is not completed (other than with respect to public shares they acquired during or may acquire after our IPO), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
On February 2, 2021, an affiliate of our Sponsor paid $25,000, or approximately $0.003 per share, to cover certain of our expenses in consideration of 7,187,500 Class B ordinary shares, par value $0.0001. On November 8, 2021, 1,437,500 Class B ordinary shares were cancelled by the Company resulting in a decrease in the total number of Class B ordinary shares outstanding from 7,187,500 shares to 5,750,000 shares. Such shares were subsequently transferred to our sponsor in exchange for $25,000, or approximately $0.004 per share. In March 2021, our sponsor transferred 25,000 Class B ordinary shares to each of our independent directors and 100,000 Class B ordinary shares to each of our CEO Shmuel Chafets and our Chairman Dr. Gerhard Cromme. In addition, in November 2021, our Sponsor transferred 25,000 Class B ordinary shares to our CFO Heiko Dimmerling. Prior to the initial investment in the company of $25,000 by the sponsor, the company had no assets, tangible or intangible. The per share price of the founder shares was determined by dividing the amount contributed to the Company by the number of founder shares issued. The founder shares will be worthless if we do not complete an initial business combination. In addition, our Sponsor purchased an aggregate of 6,666,667 private placement warrants, each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.50 per warrant, or $10,000,000 in the aggregate, in a private placement that closed simultaneously with the closing of our IPO. In connection with the exercise of the over-allotment option on December 31, 2021.29, 2021, our sponsor purchased an additional aggregate amount of 397,242 private placement warrants, each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.50 per warrant, or $595,863 in the aggregate, in a private placement.
If we do not consummate an initial business within the deadline prescribed in our Articles, the private placement warrants will expire worthless. The personal and financial interests of our executive officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination. This risk may become more acute as the end of the deadline prescribed in our Articles nears, which is the deadline for our consummation of an initial business combination.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated memorandum and articles of association or governing instruments in a manner that will make it easier for us to complete our initial business combination that our shareholders may not support.
In order to effectuate a business combination, blank check companies have, in the recent past, amended various provisions of their charters and governing instruments, including their warrant agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds, extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending our amended and restated memorandum and articles of association will require at least a special resolution of our shareholders as a matter of Cayman Islands law, meaning the approval of holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the company, and amending our warrantagreement will require a vote of holders of at least 65% of the public warrants and, solely with respect to any amendment to the terms of the private placement warrants or any provision of the warrant agreement with respect to the private placement warrants, 65% of the number of the then outstanding private placement warrants. In addition, our amended and restated memorandum and articles of association require us to provide our public shareholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated memorandum and articles of association (A) that would modify the
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substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the deadline prescribed in our Articles, or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares. To the extent any of such amendments would be deemed to fundamentally change the nature of any of the securities offered through this registration statement, we would register, or seek an exemption from registration for, the affected securities.
The provisions of our amended and restated memorandum and articles of association that relate to the rights of holders of our Class A ordinary shares (and corresponding provisions of the agreement governing the release of funds from our trust account) may be amended with the approval of a special resolution which requires the approval of the holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the company, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated memorandum and articles of association to facilitate the completion of an initial business combination that some of our shareholders may not support.
Some other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including those which relate to the rights of a company’s shareholders, without approval by a certain percentage of the company’s shareholders. In those companies, amendment of these provisions typically requires approval by between 90% and 100% of the company’s shareholders. Our amended and restated memorandum and articles of association provide that any of its provisions related to the rights of holders of our Class A ordinary shares (including the requirement to deposit proceeds of our IPO and the sale of the private placement warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public shareholders as described herein) may be amended if approved by special resolution, meaning holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the company, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of at least 65% of our ordinary shares; provided that the provisions of our amended and restated memorandum and articles of association governing the appointment or removal of directors prior to our initial business combination may only be amended by a special resolution passed by not less than two-thirds of our ordinary shares who attend and vote at our general meeting which shall include the affirmative vote of a simple majority of our Class B ordinary shares. Our Sponsor and its permitted transferees, if any, will participate in any vote to amend our amended and restated memorandum and articles of association and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated memorandum and articles of association which govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our ability to complete a business combination with which you do not agree. Our shareholders may pursue remedies against us for any breach of our amended and restated memorandum and articles of association.
Our sponsor, executive officers and directors have agreed, pursuant to agreements with us, that they will not propose any amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the deadline prescribed in our Articles, or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares, unless we provide our public shareholders with the opportunity to redeem their Class A ordinary shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any, divided by the number of the then-outstanding public shares. Our shareholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, do not have the ability to pursue remedies against our sponsor, executive officers or directors for any breach of these agreements. As a result, in the event of a breach, our shareholders would need to pursue a shareholder derivative action, subject to applicable law.
We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination with which a substantial majority of our shareholders do not agree.
Our Articles do not provide a specified maximum redemption threshold and, unlike other similar special purpose acquisition companies, we can redeem our shares irrespective of whether such redemption would cause our net tangible assets to be less than $5,000,001. As a result, we may be able to complete our initial business combination even though a substantial majority of our public shareholders do not agree with the transaction and have redeemed their shares or, if we seek shareholder approval of our initial business combination and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered into privately-negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or their affiliates. In the event the aggregate cash consideration we would be required to pay for all Class A ordinary shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, all Class A ordinary shares submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not Applicable.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
21
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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 10-Q.
* Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TARGET GLOBAL ACQUISITION I CORP. | ||||||
| Date: November | By: | /s/ Shmuel Chafets | ||||
| Name: | Shmuel Chafets | |||||
| Title: | Chief Executive Officer (Principal Executive Officer) | |||||
| Date: November 13, 2023 | By: | /s/ Heiko Dimmerling | ||||
| Name: | Heiko Dimmerling | |||||
| Title: | Chief Accounting Officer (Principal Financial | |||||