UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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As of November 20, 2023,
PLUM ACQUISITION CORP. I
Quarterly Report on Form 10-Q
Table of Contents
i
PART I—FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
PLUM ACQUISITION CORP. I
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| unaudited | ||||||||
| ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Investments held in Trust Account | ||||||||
| Debt discount | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES, REDEEMABLE ORDINARY SHARES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Due to related party | ||||||||
| Convertible promissory note – related party | ||||||||
| Promissory Note – related party | ||||||||
| Subscription liability | ||||||||
| Total current liabilities | ||||||||
| Warrant liabilities | ||||||||
| Deferred underwriting commissions liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 8) | ||||||||
| Class A Ordinary shares subject to possible redemption, | ||||||||
| SHAREHOLDERS’ DEFICIT | ||||||||
| Preference shares, $ | ||||||||
| Class A ordinary shares, $ | ||||||||
| Class B ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES, REDEEMABLE ORDINARY SHARES AND SHAREHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
PLUM ACQUISITION CORP. I
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Formation and operating expenses | $ | $ | $ | $ | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expense) income: | ||||||||||||||||
| Change in fair value of warrant liabilities | ( | ) | ( | ) | ||||||||||||
| Change in fair value of subscription liability | ( | ) | ||||||||||||||
| Change in fair value of Forward Purchase Agreement | ||||||||||||||||
| Issuance of Forward Purchase Agreement | ( | ) | ||||||||||||||
| Reduction of deferred underwriter fee payable | ||||||||||||||||
| Interest Expense – Debt Discount | ( | ) | ( | ) | ||||||||||||
| Interest income – trust account | ||||||||||||||||
| Total other (expense) income | ( | ) | ||||||||||||||
| Net (loss) income | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Weighted average shares outstanding, Class A ordinary shares subject to possible redemption | ||||||||||||||||
| $ | ( | ) | $ | $ | ( | ) | $ | |||||||||
| Weighted average shares outstanding, Class A ordinary shares | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | |||||||||||
| Weighted average shares outstanding, Class B ordinary shares | ||||||||||||||||
| $ | ( | ) | $ | $ | ( | ) | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
PLUM ACQUISITION CORP. I
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(Unaudited)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
| Class A | Class B | Additional | ||||||||||||||||||||||||||
| Ordinary Shares | Ordinary Shares | Paid-In | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance as of January 1, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Reduction of deferred underwriter fees | — | — | ||||||||||||||||||||||||||
| Accretion of Class A ordinary shares to redemption value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Accretion of Class A ordinary shares to redemption value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance as of June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Conversion of Class B shares to Class A shares | ( | ) | ( | ) | ||||||||||||||||||||||||
| Accretion of Class A ordinary shares to redemption value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | — | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022
| Class A | Class B | Additional | ||||||||||||||||||||||||||
| Ordinary Shares | Ordinary Shares | Paid-In | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance as of January 1, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance as of March 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Accretion of Class A ordinary shares to redemption value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance as of June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Accretion of Class A ordinary shares to redemption value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance as of September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PLUM ACQUISITION CORP. I
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
| Interest earned on investments held in Trust Account | ( | ) | ( | ) | ||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Reduction of deferred underwriter fees | ( | ) | ||||||
| Issuance of Forward Purchase Agreement | ||||||||
| Change in fair value of Forward Purchase Agreement | ( | ) | ||||||
| Change in fair value of subscription liability | ( | ) | ||||||
| Interest expense – debt discount | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expense | ||||||||
| Due to related party | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Extension payment deposit in Trust | ( | ) | ||||||
| Cash withdraw from Trust Account for redemptions | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from the subscription liability | ||||||||
| Redemption from Trust Account for ordinary shares | ( | ) | ||||||
| Proceeds from promissory note – related party | ||||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net Change in Cash | ||||||||
| Cash – Beginning of period | ||||||||
| Cash – End of period | $ | $ | ||||||
| Non-Cash investing and financing activities: | ||||||||
| Accretion of Class A ordinary shares subject to possible redemption | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
NOTE 1 — ORGANIZATION AND BUSINESS OPERATIONS
Plum Acquisition Corp. I (the “Company” or “Plum”) was incorporated as a Cayman Islands exempted company on January 11, 2021. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”). The Company has not selected any Business Combination target. The Company will not be limited to a particular industry or geographic region in its identification and acquisition of a target company. The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of September 30, 2023, the Company had not commenced any operations. All activity for the period from January 11, 2021 (inception) through September 30, 2023 relates to the Company’s formation and the initial public offering (“IPO”), which is described below, and subsequent to the Initial Public Offering, identifying a target company for a business combination. The Company believes it will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on investments in the Company’s Trust account and will recognize changes in the fair value of the warrant liabilities as other income (expense).
The Company’s Sponsor is Plum Partners,
LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s IPO was declared
effective on March 15, 2021 (the “Effective Date”). On March 18, 2021, the Company consummated the initial public
offering (the “Public Offering” or “IPO”) of
Simultaneously with the closing of the IPO,
the Company consummated the sale of
The Company granted the underwriter a
The underwriter partially exercised
the over-allotment option on April 14, 2021 and purchased
A total of $
5
Following the closing of
the Public Offering on March 18, 2021 and the partial exercise of the underwriter’s over-allotment option, $
The Company will provide shareholders (the
“Public Shareholders”) of its Class A ordinary shares, par value $
These Public Shares have been classified as temporary equity upon the completion of the IPO in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination if the Company receives the approval of an ordinary resolution.
The Company will have to December 18, 2023, or until June 18,
2024, if elected to extend the Termination Date up to nine times by an additional one month each time, to complete an initial Business
Combination. However, if the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 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 the Company to pay its taxes,
if any (less up to $
Extraordinary General Meeting and Redemption of Shares
On March 15,
2023, Plum held an Extraordinary General Meeting of its Shareholders (1) to amend Plum’s amended and restated memorandum
and articles of association (the “Articles”) to extend the date (the “Termination Date”) by which Plum has
to consummate a business combination (the “Articles Extension”) from March 18, 2023 (the “Original
Termination Date”) to June 18, 2023 (the “Articles Extension Date”) and to allow Plum, without another
shareholder vote, to elect to extend the Termination Date to consummate a business combination on a monthly basis for up to
nine times by an additional one month each time after the Articles Extension Date, by resolution of Plum’s board of
directors if requested by the Sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until
March 18, 2024, or a total of up to twelve months after the Original Termination Date, unless the closing of Plum’s
initial business combination shall have occurred prior to such date (the “Extension Amendment Proposal”) and (2) to
amend the Articles to eliminate from the Articles the limitation that Plum may not redeem Class A ordinary shares to the extent
that such redemption would result in Plum having net tangible assets (as determined in accordance with Rule 3a 51-1(g)(1)of the
Securities Exchange Act of 1934, as amended) of less than $
6
In connection with the vote to approve the
Extension Amendment Proposal, the holders of
The Sponsor, officers and directors have
agreed to (i) waive their redemption rights with respect to their Founder Shares, (ii) waive their redemption rights with respect
to their Founder Shares and public shares in connection with a shareholder vote to approve an amendment to the Company’s amended
and restated memorandum and articles of association (A) that would modify the substance or timing of the Company’s obligation
to provide holders of the Class A ordinary shares the right to have their shares redeemed in connection with the initial Business
Combination or to redeem
On September 13, 2023, Plum held an Extraordinary
General Meeting of its Shareholders (“September Shareholder Meeting”) (1) to amend the Articles to extend Articles Extension
Termination Date from the Articles Extension Date to December 18, 2023 (the “Second Articles Extension Date”) and to allow
the Company, without another shareholder vote, to elect to extend the Termination Date to consummate a business combination on a monthly
basis for up to six times by an additional one month each time after the Second Articles Extension Date, by resolution of the Company’s
board of directors if requested by the Sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until
June 18, 2024, or a total of up to nine months after the Termination Date, unless the closing of the Company’s initial business
combination shall have occurred prior to such date (the “Second Extension Amendment Proposal”) and (2) to authorize a reduction
in the funds held in the Trust Account to an amount equal to $
In connection with the vote to approve the Second
Extension Amendment Proposal, (i) the Sponsor, as the sole holder of Class B Ordinary Shares, voluntarily elected to convert all Class
B Ordinary Shares to Class A Ordinary Shares on a one-for-one basis in accordance with the Memorandum and Articles of Association (the
“Class B Conversion”) and (ii) the holders of
Liquidity, Capital Resources, and Going Concern
The Company’s liquidity needs up to
March 18, 2021 had been satisfied through a capital contribution from the Sponsor of $
As of September 30, 2023, the Company had
$
In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC 205-40, Presentation of Financial Statements—Going Concern”, management has determined that the Company has and will continue to incur significant costs in pursuit of its acquisition plans which raises substantial doubt about the Company’s ability to continue as a going concern. Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial Business Combination. If we are unable to complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Accounts. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
7
Further, management has determined that if the Company is unable to complete a Business Combination by December 18, 2023 or by June 18, 2024 if the Board of Directors adopts resolutions, upon request of the Sponsor, to extend the Termination Date up to nine times by an additional one month each time (the “Combination Period”), then the Company will cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution as well as the Company’s working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after the Combination Period. The Company intends to complete a Business Combination before the mandatory liquidation date.
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K as filed with the SEC on April 17, 2023, which contains the audited financial statements and notes thereto. The interim results for the period ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future interim periods.
The accompanying unaudited condensed consolidated financial statements of the Company include its wholly owned subsidiaries in connection with the initial Business Combination, namely Plum SPAC I Merger Sub, Inc., a Delaware corporation (“Merger Sub I”), and Plum SPAC 2 Merger Sub, LLC, a Delaware limited liability company (“Merger Sub II”). All inter-company accounts and transactions are eliminated in consolidation.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Merger Sub I and Merger Sub II. There has been no intercompany activity since inception.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting period.
8
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these unaudited condensed consolidated financial statements is the determination of the fair value of the subscription and forward purchase agreements and warrants liabilities. Such estimates may be subject to change as more current information becomes available and accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2023 and December 31, 2022.
Investments Held in Trust Account
At September 30, 2023 and December 31,
2022, funds held in the Trust Account include $
Convertible Promissory Note
The Company accounts for its convertible promissory note under ASC 815, “Derivatives and Hedging” (“ASC 815”). Under 815-15-25, the election can be at the inception of a financial instrument to account for the instrument under the fair value option under ASC 825, “Financial Instruments” (“ASC 825”). The Company has made such election for its convertible promissory note. Using fair value option, the convertible promissory note is required to be recorded at its initial fair value on the date of issuance and each balance sheet date thereafter. Differences between the face value of the note and fair value at issuance are recognized as either an expense in the consolidated statements of operations (if issued at a premium) or as a capital contribution (if issued at a discount). Changes in the estimated fair value of the notes are recognized as non-cash gains or losses in the consolidated statements of operations.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the federal
depository insurance coverage of $
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares features certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ deficit section of the Company’s consolidated balance sheets.
9
| Ordinary shares subject to possible redemption, December 31, 2022 | $ | |||
| Less: | ||||
| Redemptions of ordinary shares | ( | ) | ||
| Plus: | ||||
| Accretion adjustment of carrying value to redemption value | ||||
| Ordinary shares subject to possible redemption, September 30, 2023 | $ |
Offering Costs
The Company complies with the requirements of ASC340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Public Offering. Offering costs are charged to shareholders’ deficit or the consolidated statements of operations based on the relative value of the Warrants to the proceeds received from the Units sold upon the completion of the IPO.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, (excluding the promissory note and Warrants) which qualify as financial instruments under the Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the consolidated balance sheets.
Warrant Liabilities
The Company accounts for the Warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the Warrants and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the Warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the Warrants are indexed to the Company’s own ordinary shares and whether the holders of the Warrants could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the Warrants and as of each subsequent quarterly period end date while the Warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, such warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, liability-classified warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of such warrants are recognized as a non-cash gain or loss on the consolidated statements of operations.
The Company accounts for the Public and Private warrants in accordance with guidance contained in ASC815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability (See Note 6).
Forward Purchase Agreement
The Company evaluated the forward purchase
agreement (“FPA”) to determine if such instrument is a derivative or contain features that qualify as embedded derivatives,
pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative
instruments, including whether such instruments should be recorded as liabilities or as equity, will be re-assessed at the end of each
reporting period. The
10
On June 15, 2023, the Company received a termination notice (the “Notice”) from Sakuu Corporation (“Sakuu”), that terminated, effective June 14, 2023, the Business Combination Agreement, dated March 2, 2023, and in light of the termination of the Business Combination Agreement, the FPA was also terminated.
Subscription Agreement
On March 16, 2023, the Company entered
into a subscription agreement (the “Subscription Agreement”) with Polar Multi-Strategy Master Fund (the “Investor”)
and the Sponsor (collectively, the “Parties”), the purpose of which is for the Sponsor to raise up to $
On July 14, 2023, the Company entered into
an amended and restated subscription agreement (“A&R Subscription Agreement”) with Polar Multi-Strategy Master Fund (the
“Investor”) and Plum Partners, LLC (the “Sponsor” and, together with the Company and Investor, the “Parties”),
which amends and restates the Subscription Agreement. The purpose of the A&R Subscription Agreement remains for the Sponsor to raise
up to $
On July 25, 2023, the Company entered into
a second subscription agreement (“Second Subscription Agreement”) with the Investor and Sponsor, the purpose of which is for
the Sponsor to raise up to $
The Company recorded the fair value of the subscription liability on the consolidated balance sheets and the related expense on its consolidated statements of operations. The initial fair value of the subscription liability was estimated using a probability weighted expected return model (Note 7).
Fair Value Measurements
FASB ASC Topic 820 “Fair Value Measurements and Disclosures” (“ASC 820”) defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value. ASC 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances.
The fair value hierarchy is categorized into three levels based on the inputs as follows:
| Level 1 — | Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. |
| Level 2 — | Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. |
| Level 3 — | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
The fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the consolidated balance sheets. The fair values of cash and cash equivalents, prepaid assets, accounts payable and accrued expenses, and promissory note to related parties are estimated to approximate the carrying values as of September 30, 2023 and December 31, 2022 due to the short maturities of such instruments. See Note 7 for additional information on assets and liabilities measured at fair value.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of September 30, 2023 and December 31, 2022, there were no unrecognized tax benefits and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
11
The Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the periods presented. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Net (Loss) Income Per Ordinary Share
The Company complies with accounting and
disclosure requirements of ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred
to as Class A ordinary shares and Class B ordinary shares. Earnings and losses are shared pro rata between the two classes of
shares. The potential
| For the three months ended September 30, 2023 | For the nine months ended September 30, 2023 | |||||||||||||||||||||||
| Class A | Class A | |||||||||||||||||||||||
| ordinary share | ordinary share | |||||||||||||||||||||||
| subject | subject | |||||||||||||||||||||||
| to possible | to possible | |||||||||||||||||||||||
| redemption | Class A | Class B | redemption | Class A | Class B | |||||||||||||||||||
| Numerator | ||||||||||||||||||||||||
| Allocation of net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Denominator | ||||||||||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||
Recent Accounting Standards
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements.
NOTE 3 — INITIAL PUBLIC OFFERING
On March 18, 2021, the Company sold
On April 14, 2021, the Company sold
an additional
All of the
The Class A ordinary share is subject to SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company recognizes changes in redemption value immediately as they occur. Immediately upon the closing of the IPO, the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of redeemable ordinary share resulted in charges against additional paid-in capital and accumulated deficit.
12
NOTE 4 — PRIVATE PLACEMENTS
Simultaneously with the closing of the IPO,
the Sponsor purchased an aggregate of
The Private Placement Warrants have terms
and provisions that are identical to those of the warrants sold as part of the units in the IPO. The Private Placement Warrants (including
the Class A ordinary shares issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable
until
If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company in all redemption scenarios and exercisable by the holders on the same basis as the warrants included in the units sold in the IPO.
NOTE 5 — RELATED PARTY TRANSACTIONS
Founder Shares
On January 13, 2021, the Sponsor paid
$
The Sponsor and the Company’s directors
and executive officers have agreed not to transfer, assign or sell any of their Founder Shares until earliest of (A) year
after the completion of the initial Business Combination and (B) subsequent to the initial Business Combination, (x) if the
closing price of our Class A ordinary shares equals or exceeds $
Promissory Note — Related Party
On January 13, 2021, the Sponsor agreed
to loan the Company up to $
On March 16, 2023, Plum issued an unsecured
promissory note in the total principal amount of up to $
13
Working Capital Loans
In addition, in order to finance transaction
costs in connection with an intended Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s
officers and directors, and third parties have committed to loan the Company funds as may be required (“Working Capital Loans”).
If the Company completes a Business Combination, the Company will repay the Working Capital Loans out of the proceeds of the Trust Account
released to it. In the event that a Business Combination does not close, the Company may use a portion of the working capital held outside
the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital
Loans. Up to $
On January 31, 2022, the Company issued
an unsecured promissory note (the “Note”) in the principal amount of $
On July 11, 2022, the Company issued
an unsecured promissory note (the “Second Note”) in the principal amount of $
The Note and Second Note are reported at cost in the unaudited condensed consolidated financial statements as the fair value adjustment associated with the conversion is deemed to be immaterial.
In connection with the Subscription Agreements
(as described below), the Company issued unsecured promissory notes (“Convertible Promissory Notes”), dated as of March 17,
2023, and July 25, 2023, in the principal amount of up to $
Subscription Agreement
On March 16, 2023, the Sponsor
entered into a Subscription Agreement with Investor, pursuant to which Investor agreed to pay the Sponsor an aggregate of $
14
Subsequently, on May 23, 2023,
Investor agreed to pay the Sponsor an aggregate of $
On July 14, 2023, the Company entered
into an amended and restated subscription agreement (“A&R Subscription Agreement”) with Polar Multi-Strategy Master Fund
(the “Investor”) and Plum Partners, LLC (the “Sponsor” and, together with the Company and Investor, the “Parties”),
which amends and restates the subscription agreement entered into by the Parties on March 16, 2023. The purpose of the A&R Subscription
Agreement remains for the Sponsor to raise up to $
On July 25, 2023, the Company entered
into a second subscription agreement (“Second Subscription Agreement”) with the Investor and Sponsor, the purpose of which
is for the Sponsor to raise up to $
Subsequently, Investor agreed to pay
the Sponsor an aggregate of $
The Sponsor subsequently advanced these funds to the Company for working capital purposes during the Articles Extension.
Administrative Support Agreement
The Company will pay the Sponsor or
an affiliate of the Sponsor $
NOTE 6 — WARRANTS
The Public Warrants will become exercisable
at $
The Company has agreed that as soon
as practicable, but in no event later than
15
In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the Class A ordinary share underlying such unit.
Redemption of Warrants When the
Price per Class A Ordinary Share Equals or Exceeds $
Once the warrants become exercisable, the Company may redeem the outstanding warrants (except with respect to the Private Placement Warrants):
| ● | in whole and not in part; |
| ● | at
a price of $ |
| ● | upon
not less than |
| ● | if,
and only if, the last reported sale price of the Class A ordinary shares equals or exceeds $ |
Redemption of Warrants When the Price per Class A
Ordinary Share Equals or Exceeds $
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
| ● | in whole and not in part; |
| ● | at
$ |
| ● | if,
and only if, the closing price of the Class A ordinary shares equals or exceeds $ |
| ● | if
the closing price of the Class A ordinary shares for any |
In addition, if (x) the Company
issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing
of the initial Business Combination at an issue price or effective issue price of less than $
16
NOTE 7 — RECURRING FAIR VALUE MEASUREMENTS
Investments Held in Trust Account
As of September 30, 2023 and
December 31, 2022, the investments in the Company’s Trust Account consisted of $
Fair values of the Company’s investments are classified as Level 1 utilizing quoted prices (unadjusted) in active markets for identical assets.
Recurring Fair Value Measurements
The Company’s permitted investments consist of U.S. Money Market funds. Fair values of these investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets. The Company’s initial value of the warrant liability was based on a valuation model utilizing management judgment and pricing inputs from observable and unobservable markets with less volume and transaction frequency than active markets and classified as level 3. The subsequent measurement of the Public Warrants is classified as Level 1 due to the use of an observable market price of these warrants. The subsequent measurement of the Private Warrants is classified as Level 2 because these warrants are economically equivalent to the Public warrants, based on the terms of the Private Warrant agreement, and as such their value is principally derived by the value of the Public Warrants. Significant deviations from these estimates and inputs could result in a material change in fair value. For the three and nine months ended September 30, 2023, there were no transfers amongst level 1, 2, and 3 values during the period. At December 31, 2021, the Company reclassified the Public Warrants and Private Warrants from Level 3 to Level 1 and Level 2, respectively.
The fair value of the subscription liability was
$
The FPA liability is measured at fair
value using a probability weighted expected return model based on future projections of various potential outcomes. The FPA liability
is considered to be a Level 3 financial instrument. On June 15, 2023, the Company received a termination notice from Sakuu,
that terminated, effective June 14, 2023, the Business Combination Agreement, dated March 2, 2023. In light of the termination
of the Business Combination Agreement, the FPA was also terminated. As of September 30, 2023 and December 31, 2022 there was
The conversion feature of the Convertible Promissory Notes is measured at fair value using a Monte Carlo model that fair values the compound option. The fair value of the conversion feature of the Convertible Promissory Notes was as of September 30, 2023.
17
| September 30, 2023 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
| Assets | ||||||||||||||||
| Investments held in Trust Account—U.S. Money Market | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Public warrant liability | ||||||||||||||||
| Private warrant liability | ||||||||||||||||
| Subscription liability | ||||||||||||||||
| Sponsor loan conversion option | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| December 31, 2022 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
| Assets | ||||||||||||||||
| Investments held in Trust Account—U.S. Money Market | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Public warrant liability | ||||||||||||||||
| Private warrant liability | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Forward Purchase Agreement Liability
The estimated fair value of the FPA liability on March 1, 2023 (initial measurement) is determined using Level 3 inputs. The expected term was based on management assumptions regarding the timing and likelihood of completing a business combination. The FPA liability is discounted to net present values using risk free rates. Discount rates were based on current risk-free rates based on the estimated term.
On June 15, 2023, the Company
received a termination notice from Sakuu, that terminated, effective June 14, 2023, the Business Combination Agreement, dated March 2,
2023. In light of the termination of the Business Combination Agreement, the FPA was also terminated. As of September 30, 2023 and
December 31, 2022 there was
| FPA | ||||
| Fair value as of January 1, 2023 | $ | |||
| Issuance of FPA liability | ||||
| Change in fair value | ||||
| Fair value as of March 31, 2023 | $ | |||
| Change in fair value | ( | ) | ||
| Fair value as of June 30, 2023 and September 30, 2023 | $ | |||
The changes in the fair value of the
forward purchase agreement liability for the three and nine month ended September 30, 2023 are $
Subscription Liability
The estimated fair value of the subscription liability on March 17, 2023 (initial measurement), May 23, 2023, July 14, 2023 and July 25, 2023 are determined using Level 3 inputs. The expected term was based on management assumptions regarding the timing and likelihood of completing a business combination. Management also estimated whether a business combination would be completed. The subscription liability is discounted to net present values using risk free rates. Discount rates were based on current risk-free rates based on the actual simulated term using the following U.S. Treasury rates and using the linearly interpolated treasury rates between quoted terms.
18
| March 17, | May 23, | July 14, | July 25, | September 30, | ||||||||||||||||
| 2023 | 2023 | 2023 | 2023 | 2023 | ||||||||||||||||
| Restricted term | ||||||||||||||||||||
| Risk free rate | % | % | % | % | % | |||||||||||||||
| Volatility | % | % | % | % | % | |||||||||||||||
| Stock price | $ | $ | $ | $ | $ | |||||||||||||||
| Strike price | $ | $ | $ | $ | $ | |||||||||||||||
| Term of debt conversion | ||||||||||||||||||||
| Probability of business combination | % | % | % | % | % | |||||||||||||||
The following table presents the changes in the fair value of the subscription purchase agreement (“SPA”) liability:
| SPA | ||||
| Fair value as of December 31, 2022 | $ | |||
| Issuance of subscription liability | ||||
| Change in fair value | ||||
| Fair value as of March 31, 2023 | $ | |||
| Change in fair value | ( | ) | ||
| Fair value as of June 30, 2023 | $ | |||
| Issuance of subscription liability | ||||
| Change in fair value | ||||
| Fair value as of September 30, 2023 | $ | |||
The changes in the fair value of the subscription purchase agreement
liability for the three and nine months ended September 30, 2023 are ($
NOTE 8 — COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the Founder Shares,
Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary
shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital
Loans) will be entitled to registration rights pursuant to a registration and shareholder rights agreement to be signed prior to or on
the effective date of the IPO. The holders of these securities are entitled to make up to three demands, excluding short form demands,
that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect
to registration statements filed subsequent to the Company’s completion of its initial Business Combination. However, the registration
and shareholder rights agreement provide that the Company will not permit any registration statement filed under the Securities Act to
become effective until termination of the applicable Lock-up period, which occurs (i) in the case of the Founder Shares, as described
in Note 5, and (ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares underlying
such warrants,
Underwriting Agreement
The Company granted the underwriter a
On March 18, 2021, the Company
paid the underwriter’s fee of $
19
In addition, the Underwriting Agreement
provides $
Waiver of Deferred Underwriting Discount
On January 16, 2023, Goldman Sachs, the underwriter of the Company’s
initial public offering, waived any entitlement it had to its deferred underwriting discount in the amount of $
Service Provider Agreements
From time to time the Company has entered into and may enter into agreements with various services providers and advisors, including investment banks, to help us identify targets, negotiate terms of potential Business Combinations, consummate a Business Combination and/or provide other services. In connection with these agreements, the Company may be required to pay such service providers and advisors fees in connection with their services to the extent that certain conditions, including the closing of a potential Business Combination, are met. If a Business Combination does not occur, the Company would not expect to be required to pay these contingent fees. There can be no assurance that the Company will complete a Business Combination.
Business Combination Agreement
On March 2, 2023, the Company entered into a Business Combination Agreement (as may be amended, supplemented, or otherwise modified from time to time and including the transactions contemplated thereby, collectively, the “Business Combination Agreement”), by and among the Company, Sakuu Corporation, a Delaware corporation (the “Sakuu”), Merger Sub I, and Merger Sub II. The Business Combination Agreement was terminated on June 14, 2023.
Subscription Agreement
As disclosed in the definitive proxy
statement filed by the Company on February 24, 2023 (the “Proxy Statement”), relating to the extraordinary general meeting
of shareholders (the “Shareholder Meeting”), the Sponsor agreed that if the Extension Amendment Proposal (as defined below)
is approved, it or one or more of its affiliates, members or third-party designees (the “Lender”) will deposit into the Trust
Account the lesser of (A) $
In addition, in the event that the
Company has not consummated an initial business combination by the Articles Extension Date (defined below), without approval of the Company’s
public shareholders, the Company may, by resolution of the Board, if requested by the Sponsor, and upon five days’ advance
notice prior to the applicable Termination Date (as defined below), extend the Termination Date up to nine times, each by one additional month
(for a total of up to nine additional months to complete a Business Combination), provided that the Lender will deposit into the
Trust Account for each such monthly extension, the lesser of (A) $
Accordingly, on March 16, 2023,
the Company entered into a subscription agreement (“Subscription Agreement”) with Polar Multi-Strategy Master Fund (the “Investor”)
and the Sponsor (collectively, the “Parties”), the purpose of which is for the Sponsor to raise up to $
| (a) | from time to time, the Company will request funds from the Sponsor for working capital purposes or for the Sponsor to fund an extension payment pursuant to the Company’s Amended and Restated Memorandum and Articles of Association (each a “Drawdown Request”). The Sponsor, upon on at least five (5) calendar days’ prior written notice (“Capital Notice”), may require a drawdown against the Investor’s Capital Commitment under a Drawdown Request (each a “Capital Call”); |
20
| (b) | in
consideration of the Capital Calls, Sponsor will transfer |
| (c) | each member of the Sponsor has the right to contribute any amount requested under each Drawdown Request (“Sponsor Capital Contribution”), provided that such Sponsor Capital Contributions will be made on terms no more favorable than the Investor’s Capital Commitment. In addition, the Company and Sponsor maintain the ability to enter into other agreements with each other or with other parties which shall provide for funding of the Company (through the issuance of equity, entry into promissory notes, or otherwise) outside of Drawdown Requests, provided that the terms of any such agreement between the Company or Sponsor with each other or any party or parties will be no more favorable than the terms under this Agreement; |
| (d) | any
amounts funded by the Sponsor to the Company under a Drawdown Request shall not accrue interest and shall be promptly repaid by the Company
to the Sponsor upon the Business Combination Closing. Following receipt of such sums from the Company, and in any event within 5 business days
of the Business Combination Closing, the Sponsor or Company shall pay to the Investor, an amount equal to all Capital Calls funded under
the Subscription Agreement (the “Business Combination Payment”). The Investor may elect at the Business Combination Closing
to receive such Business Combination Payment in cash or Class A ordinary shares at a rate of |
| (e) | on
the Business Combination Closing, the Sponsor will pay the Investor an amount equal to the reasonable attorney fees incurred by the Investor
in connection with the Subscription Agreement not to exceed $ |
On July 14, 2023, the Company
entered into an amended and restated subscription agreement (“A&R Subscription Agreement”) with Polar Multi-Strategy Master
Fund (the “Investor”) and Plum Partners, LLC (the “Sponsor” and, together with the Company and Investor, the “Parties”),
which amends and restates the subscription agreement entered into by the Parties on March 16, 2023. The purpose of the A&R Subscription
Agreement remains for the Sponsor to raise up to $
| (a) | from time to time, the Company will request funds from the Sponsor for working capital purposes or for the Sponsor to fund an extension payment pursuant to the Company’s Amended and Restated Memorandum and Articles of Association (each a “Drawdown Request”). The Sponsor, upon on at least five (5) calendar days’ prior written notice (“Capital Notice”), may require a drawdown against the Investor’s Capital Commitment under a Drawdown Request (each a “Capital Call”); |
| (b) | in
consideration of the Capital Calls, Sponsor will transfer (i) |
| (c) | each member of the Sponsor has the right to contribute any amount requested under each Drawdown Request (“Sponsor Capital Contribution”), provided that such Sponsor Capital Contributions will be made on terms no more favorable than the Investor’s Capital Commitment. In addition, the Company and Sponsor maintain the ability to enter into other agreements with each other or with other parties which shall provide for funding of the Company (through the issuance of equity, entry into promissory notes, or otherwise) outside of Drawdown Requests, provided that the terms of any such agreement between the Company or Sponsor with each other or any party or parties will be no more favorable than the terms under this Agreement; |
21
| (d) | any
amounts funded by the Sponsor to the Company under a Drawdown Request shall not accrue interest and shall be promptly repaid by the Company
to the Sponsor upon the Business Combination Closing. Following receipt of such sums from the Company, and in any event within 5 business days
of the Business Combination Closing, the Sponsor or Company shall pay to the Investor, an amount equal to all Capital Calls funded under
the A&R Subscription Agreement (the “Business Combination Payment”). The Investor may elect at the Business Combination
Closing to receive such Business Combination Payment in cash or Class A ordinary shares at a rate of |
| (e) | on
the Business Combination Closing, the Sponsor will pay the Investor an amount equal to the reasonable attorney fees incurred by the Investor
in connection with the A&R Subscription Agreement not to exceed $ |
| (f) | an
amount that is up to $ |
On July 25, 2023, the Company
entered into a subscription agreement (“Second Subscription Agreement”) with Polar Multi-Strategy Master Fund (the “Investor”)
and Plum Partners, LLC (the “Sponsor” and, together with the Company and Investor, the “Parties”), the purpose
of which is for the Sponsor to raise up to $
| (a) | from
time to time, the Company will request funds from the Sponsor for working capital purposes or for the Sponsor to fund an extension payment
pursuant to the Company’s Amended and Restated Memorandum and Articles of Association (each a “Drawdown Request”).
The Sponsor, upon on at least five (5) calendar days’ prior written notice (“Capital Notice”), may require
a drawdown against the Investor’s Capital Commitment under a Drawdown Request (each a “Capital Call”). An amount of
up to $ |
| (b) | in consideration of the Capital Calls, Sponsor will transfer 1 share of Class A ordinary share for each dollar the Investor funds pursuant to the Capital Call(s) in respect of the second contribution (together, the “Subscription Shares”) to the Investor at the closing of the Business Combination (the “Business Combination Closing”). The Subscription Shares shall be subject to the Lock-Up Period as defined in section 5 of the Sponsor Letter Agreement dated March 2, 2023 (the “Letter Agreement”). The Subscription Shares shall not be subject to any additional transfer restrictions or any additional lock-up provisions, earn outs, or other contingencies and shall promptly be registered pursuant to the first registration statement filed by the Company or the surviving entity in relation to the Business Combination; |
| (c) | each member of the Sponsor has the right to contribute any amount requested under each Drawdown Request (“Sponsor Capital Contribution”), provided that such Sponsor Capital Contributions will be made on terms no more favorable than the Investor’s Capital Commitment. In addition, the Company and Sponsor maintain the ability to enter into other agreements with each other or with other parties which shall provide for funding of the Company (through the issuance of equity, entry into promissory notes, or otherwise) outside of Drawdown Requests, provided that the terms of any such agreement between the Company or Sponsor with each other or any party or parties will be no more favorable than the terms under the Second Subscription Agreement; |
| (d) | any
amounts funded by the Sponsor to the Company under a Drawdown Request shall not accrue interest and shall be promptly repaid by the Company
to the Sponsor upon the Business Combination Closing. Following receipt of such sums from the Company, and in any event within 5 business days
of the Business Combination Closing, the Sponsor or Company shall pay to the Investor, an amount equal to all Capital Calls funded under
the Second Subscription Agreement (the “Business Combination Payment”). The Investor may elect at the Business Combination
Closing to receive such Business Combination Payment in cash or Class A ordinary shares at a rate of |
| (e) | on
the Business Combination Closing, the Sponsor will pay the Investor an amount equal to the reasonable attorney fees incurred by the Investor
in connection with the Second Subscription Agreement not to exceed $ |
22
In connection with the Second Subscription
Agreement, the Company issued an unsecured promissory note, dated as of July 25, 2023, in the principal amount of up to $
On July 14, 2023 and August 16,
2023, the board of directors of the Company elected to extend the date by which the Company must complete an initial business combination,
on each occasion by one month, from July 18, 2023 to September 18, 2023. As a result, the Sponsor deposited $
On September 15, 2023, the Company made a deposit
of $
Forward Purchase Agreement
Prior to the execution of the Business
Combination Agreement, the Company and Polar Multi-Strategy Master Fund (“Polar”) entered into a letter agreement dated March 1,
2023 (the “Forward Purchase Agreement”), pursuant to which Polar will purchase (either in the open market, or from the Company)
up to
Seller has agreed to waive any redemption rights with respect to any FPA Shares and separate shares in connection with the Business Combination.
The Forward Purchase Agreement provides that at Closing, the Company will pay to Polar, out of funds held in Trust Account, an amount equal to the sum of (x) the Public Shares (as defined in the Forward Purchase Agreement) multiplied by the Redemption Price (as defined in the Amended and Restated Certificate of Incorporation), and (y) the proceeds of the Private Shares (as defined in the Forward Purchase Agreement) purchased by Polar (collectively, such amount, the “Prepayment Amount”), to Polar.
At the maturity of the Forward Purchase
Agreement, which will be one year from the Closing unless accelerated or deferred (but up to two years) by Seller, the Company
will repurchase the Public and Private Shares then held by Seller for a price equal to the Redemption Price plus $
On June 15, 2023, the Company received a termination notice from Sakuu, that terminated, effective June 14, 2023, the Business Combination Agreement, dated March 2, 2023. In light of the termination of the Business Combination Agreement, the FPA was also terminated.
Release Agreement
On October 31, 2022, the Company entered into a termination agreement with a potential party to a business combination (“Target”), pursuant to which the Company and Target agreed to release each other from any obligations and claims related to a certain Amended and Restated Non-Binding Term Sheet, dated as of June 22, 2022 (“Term Sheet”), and related Term Sheet Extension Letter Agreements, dated July 18, 2022, July 22, 2022, August 1, 2022, and August 8, 2022.
NOTE 9 — SHAREHOLDERS’ DEFICIT
Preference
Shares — The Company is authorized to issue
23
Class A Ordinary Shares —
The Company is authorized to issue a total of
Class B Ordinary Shares —
The Company is authorized to issue a total of
The Class B ordinary shares will
automatically convert into Class A ordinary shares (which such Class A ordinary shares delivered upon conversion will not have
redemption rights or be entitled to liquidating distributions from the Trust Account if the Company does not consummate an initial Business
Combination) at the time of the initial Business Combination or earlier at the option of the holders thereof at a ratio such that the
number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted
basis,
NOTE 10 — SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the unaudited condensed consolidated financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements.
As approved by its stockholders at the extraordinary general meeting (the “EGM”), the “Company filed an Amended and Restated Memorandum and Articles of Association (the “A&R Charter”) on October 25, 2023, which (i) extended the date by which the Company has to consummate a business combination to December 18, 2023 and (ii) allowed the Company, without another shareholder vote, to elect to extend the Termination Date (as defined in the Proxy Statement) to consummate a business combination on a monthly basis for up to six times by an additional one month each time after December 18, 2023 (or such shorter period as necessary to comply with applicable listing requirements), by resolution of the Company’s board of directors, if requested by Plum Partners, LLC, and upon five days advance notice prior to the applicable termination date, until June 18, 2024, or a total of up to nine months after September 18, 2023, unless the closing of a business combination shall have occurred prior thereto.
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An aggregate of
On October 18, 2023, the parties to the A&R
Subscription Agreement entered into Amendment No. 1 to the A&R Subscription Agreement, in which the parties amended the consideration
of a Capital Call made pursuant to the A&R Subscription Agreement to the following: (a)
On October 18, 2023, the parties to the Second Subscription Agreement
entered into Amendment No. 1 to the Second Subscription Agreement, in which the parties (a) limited the total amount of the Investor’s
Capital Commitment that may be called subject to the Second Subscription Agreement to $
On November 16, 2023, the Company entered into
a subscription agreement (“Fourth Subscription Agreement”) with Palmeira Investment Limited (the “Investor”) and
Plum Partners, LLC (the “Sponsor” and, together with the Company and Investor, the “Parties”), the purpose of
which is for the Sponsor to raise up to $
In connection with the Second Fourth Subscription
Agreement, the Company issued an unsecured promissory note, dated as of November 12, 2023, in the principal amount of up to $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Plum Acquisition Corp. I. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Plum Partners, LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements other than statements of historical fact included in this Form 10-Q including statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company on January 11, 2021 and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We intend to consummate an initial business combination using cash from the proceeds of our Public Offering (the “Public Offering”) that closed on March 18, 2021 (the “Closing Date”) and the Private Placement, and from additional issuances of, if any, our equity and our debt, or a combination of cash, equity and debt.
Recent Developments
On June 15, 2023, we received a termination notice (the “Notice”) from Sakuu Corporation (“Sakuu”), that terminated, effective June 14, 2023, the Business Combination Agreement, dated March 2, 2023, by and among Plum, Sakuu, Plum SPAC 1 Merger Sub, Inc. and Plum SPAC 2 Merger Sub, LLC (the “Business Combination Agreement”) and (b) in light of the termination of the Business Combination Agreement, Plum’s Board of Directors determined that it will not extend the deadline for Plum to consummate a business combination beyond June 18, 2023 and proceed to liquidate and dissolve Plum as soon as practicable in accordance with Plum’s Charter.
Subsequent we were approached with an opportunity to explore a business combination with another operating company. our Board of Directors promptly met and discussed the merits of this opportunity, and thereafter decided to extend the deadline to consummate a business combination transaction for another month beyond June 18, 2023, to provide us with an additional thirty (30) days to properly investigate and evaluate this and other opportunities for a business combination transaction. Accordingly, we will now have until June 18, 2024 to consummate a business combination transaction.
Results of Operations
For the three months ended September 30, 2023, we had a loss from operations of $353,372. In addition to the loss from operations, we recognized other expense $4,252,471 consisting of an unrealized loss on our warrant liabilities of $334,975, change in fair value of SPA of $2,079,310, interest expense – debt discount of $2,467,496 offset by interest earned on cash held in the Trust Account of $626,310.
For the three months ended September 30, 2022, we had a loss from operations of $633,050. In addition to the loss from operations, we recognized other income of $3,118,342 consisting of an unrealized gain on our warrant liabilities of $1,674,871 and interest earned on cash held in the Trust Account of $1,443,471.
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For the nine months ended September 30, 2023, we had a loss from operations of $2,085,609. In addition to the loss from operations, we recognized other income $1,035,971 consisting of change in fair value of SPA of $557,645, change in fair value of FPA of $308,114, reduction of deferred underwriter fee payable of $328,474 and interest earned on cash held in the Trust Account of $4,344,597 offset by an unrealized loss on our warrant liabilities of $379,216, issuance of FPA of $308,114 and interest expense – debt discount of $3,815,529.
For the nine months ended September 30, 2022, we had a loss from operations of $2,686,622. In addition to the loss from operations, we recognized other income of $10,422,422 consisting of an unrealized gain on our warrant liabilities of $8,499,501 and interest earned on cash held in the Trust Account of $1,922,921.
Through September 30, 2023, our efforts have been limited to organizational activities, activities relating to identifying and evaluating prospective acquisition candidates and activities relating to general corporate matters. We have not generated any realized income, other than interest income. The change in fair value of our warrant liabilities had no impact on cash. As of September 30, 2023, $35,096,667 was held in the Trust Account, cash outside of Trust Account of $92,722 and $3,976,694 accounts payable and accrued expenses.
Except with respect to interest earned on the funds held in the Trust Account that may be released to us to pay taxes, if any, the proceeds in the Trust will not be released from the Trust Account (1) to us, until the completion of our initial Business Combination, or (2) to the Public Shareholders, until the earliest of (i) the completion of our initial Business Combination, and then only in connection with those Class A ordinary shares that such shareholders properly elected to redeem, subject to the limitations, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial Business Combination or to redeem 100% of the public shares if we do not complete an initial Business Combination within 27 months from the closing of the IPO (or up to 36 months from the closing of our initial public offering if we extend the period of time to consummate a business combination) (the “Combination Period”) or (B) with respect to any other provision relating to the rights of holders of the Class A ordinary shares, and (iii) the redemption of the public shares if we have not consummated a Business Combination within the Combination Period, subject to applicable law.
Liquidity, Capital Resources and Going Concern
As of September 30, 2023, we had cash outside our Trust Account of $92,722, available for working capital needs. We intend to use the funds held outside the Trust Account for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
In March and April 2021, we sold 31,921,634 units (the “Units” and, with respect to the shares of Class A ordinary shares included in the Units being offered, the “Public Shares”) at $10.00 per Unit, generating gross proceeds of $319,216,340. In connection with the vote to approve the Extension Amendment Proposal, the holders of 26,693,416 Class A ordinary shares properly exercised their right to redeem their shares for cash at a redemption price of $10.23 per share, for an aggregate redemption amount of $273,112,311.62.
Additionally, we sold 6,256,218 warrants (the “Private Warrants”), at a price of $1.50 per Private Warrant, generating gross proceeds of $9,384,327. Following the sale of our Units and the sale of the Private Warrants, a total of $319,216,340 ($10.00 per Unit) was placed in the Trust Account. We incurred $18,336,269 in Initial Public Offering related costs, including $6,384,327 of underwriting fees, $11,172,572 of deferred underwriting discount and $779,370 of other costs with $564,701 which was allocated to the Public Warrants and Private Warrants, included in the consolidated statements of operations and $17,771,568 included in temporary equity.
On January 31, 2022, the Company issued an unsecured promissory note (the “Dinsdale Note”) in the principal amount of $500,000 to Mike Dinsdale. The Dinsdale Note does not bear interest and is repayable in full upon consummation of a Business Combination. The Company may draw on the Dinsdale Note from time to time, in increments of not less than $50,000, until the earlier of March 18, 2023 or the date on which the Company consummates a Business Combination. If the Company does not complete a Business Combination, the Dinsdale Note shall not be repaid and all amounts owed under it will be forgiven. Upon the consummation of a Business Combination, the Mr. Dinsdale shall have the option, but not the obligation, to convert the principal balance of the Dinsdale Note, in whole or in part, into private placement warrants (as defined in that certain Warrant Agreement, dated March 18, 2021, by and between the Company and Continental Stock Transfer & Trust Company), at a price of $1.50 per private placement warrant. The Dinsdale Note is subject to customary events of default, the occurrence of which automatically trigger the unpaid principal balance of the Dinsdale Note and all other sums payable with regard to the Dinsdale Note becoming immediately due and payable. The Dinsdale Note was issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
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On July 11, 2022, the Company issued an unsecured promissory note (the “Burns Note”) in the principal amount of $500,000 to Ursula Burns. The Burns Note does not bear interest and is repayable in full upon consummation of a Business Combination. Up to fifty percent (50%) of the principal of the Burns Note may be drawn down from time to time at the Company’s option prior to August 25, 2022 and any or all of the remaining undrawn principal of the Burns Note may be drawn down from time to time at the Company’s option after August 25, 2022, in each case in increments of not less than $50,000. If the Company does not complete a Business Combination, the Burns Note shall not be repaid and all amounts owed under it will be forgiven. Upon the consummation of a Business Combination, Ms. Burns shall have the option, but not the obligation, to convert the principal balance of the Burns Note, in whole or in part, into private placement warrants (as defined in that certain Warrant Agreement, dated March 18, 2021, by and between the Company and Continental Stock Transfer & Trust Company), at a price of $1.50 per private placement warrant. The Burns Note is subject to customary events of default, the occurrence of which automatically trigger the unpaid principal balance of the Burns Note and all other sums payable with regard to the Burns Note becoming immediately due and payable.
On March 16, 2023, the Company issued an unsecured promissory note in the total principal amount of up to $250,000 (the “Roy Note”) to Mr. Kanishka Roy, individually and as a member of Plum Partners LLC. Mr. Roy funded the initial principal amount of $250,000 on March 14, 2023. The Roy Note does not bear interest and matures upon the consummation of the Company’s initial business combination with one or more businesses or entities. In the event the Company does not consummate a business combination, the Roy Note will be repaid upon the Company’s liquidation only from amounts remaining outside of the Company’s trust account, if any. The Roy Note is subject to customary events of default, the occurrence of which automatically trigger the unpaid principal balance of the Roy Note and all other sums payable with regard to the Roy Note becoming immediately due and payable.
As of September 30, 2023, we had investments held in the Trust Account of $35,096,667 (including $9,039,899 of income) consisting of money market funds.
For nine months ended September 30, 2023, cash used in operating activities was $709,623. Net loss of $1,049,638 which consisted of change in fair value of FPA of $308,114, reduction of deferred underwriter fee payable of $328,474, change in fair value of SPA of $557,645, and interest earned on cash held in the Trust Account of $4,344,597, was primarily offset by an unrealized loss on our warrant liabilities of $379,216, issuance of FPA of $308,114, interest expense – debt discount of $3,815,529 and other operational activities including amounts due to related party of $1,375,986.
For nine months ended September 30, 2022, cash used in operating activities was $748,365. Net income of $7,735,800 was primarily offset by an unrealized gain on our warrant liabilities of $8,499,501 and interest earned on cash held in the Trust Account of $1,922,921. Other operational activities including amounts due to related party generated $1,938,257.
We intend to use substantially all of the funds held in the Trust Account, to acquire a target business and to pay our expenses relating thereto. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
Further, our Sponsor, officers and directors or their respective affiliates have committed to loan us funds as may be required (the “Working Capital Loans”). If we complete a business combination, we will repay the Working Capital Loans. In the event that a business combination does not close, we may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a business combination, without interest, or, at the lender’s discretion, or converted upon consummation of a business combination into additional Private Warrants at a price of $1.50 per Private Warrant. As of September 30, 2023, $1,000,000 Working Capital Loans have been issued (Note 5).
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In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC205-40, Presentation of Financial Statements—Going Concern”, management has determined that the Company has and will continue to incur significant costs in pursuit of its acquisition plans which raises substantial doubt about the Company’s ability to continue as a going concern. Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial Business Combination. If we are unable to complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Accounts. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Further, management has determined that if the Company is unable to complete a Business Combination by December 18, 2023, or June 18, 2024 if elected to extend the Termination Date up to nine times by an additional one month each time (the “Combination Period”), then the Company will cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution as well as the Company’s working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after the Combination Period. The Company intends to complete a Business Combination before the mandatory liquidation date.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of September 30, 2023. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial agreements involving assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
Critical Accounting Estimates
The accompanying unaudited condensed financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
Warrant Liabilities
We account for the Warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the Warrants and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the Warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the Warrants are indexed to the Company’s own ordinary shares and whether the holders of the Warrants could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the Warrants and as of each subsequent quarterly period end date while the Warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, such warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, liability-classified warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of such warrants are recognized as a non-cash gain or loss on the statements of operations. We account for the Public and Private warrants in accordance with guidance contained in ASC815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability.
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Convertible Promissory Note
The Company accounts for its convertible promissory note under ASC 815, “Derivatives and Hedging” (“ASC 815”). Under 815-15-25, the election can be at the inception of a financial instrument to account for the instrument under the fair value option under ASC 825, “Financial Instruments” (“ASC 825”). The Company has made such election for its convertible promissory note. Using fair value option, the convertible promissory note is required to be recorded at its initial fair value on the date of issuance and each balance sheet date thereafter. Differences between the face value of the note and fair value at issuance are recognized as either an expense in the condensed statements of operations (if issued at a premium) or as a capital contribution (if issued at a discount). Changes in the estimated fair value of the notes are recognized as non-cash gains or losses in the condensed statements of operations.
Redeemable Shares of Class A Ordinary shares
All of the 31,921,634 shares of Class A ordinary shares included in the Units sold as part of the Public Offering contain a redemption feature as described in the prospectus for the Public Offering. In accordance with FASB ASC 480, “Distinguishing Liabilities from Equity”, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. The Charter provides a minimum net tangible asset threshold of $5,000,001. The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security at the end of each reporting period. Increases or decreases in the carrying amount of redeemable shares will be affected by charges against additional paid-in capital.
Net Income Per Ordinary Share
The Company has two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Earnings and losses are shared pro rata between the two classes of shares. The potential ordinary shares for outstanding warrants to purchase the Company’s shares were excluded from diluted earnings per share for the three and nine months ended September 30, 2023 and 2022 because the warrants are contingently exercisable, and the contingencies have not yet been met. As a result, diluted net (loss) income per common share is the same as basic net (loss) income per common share for the periods.
Recent accounting standards
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
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As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2023. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2023 due to the material weakness in our internal controls during the year ended 2022 over accounting and reporting complex financial instruments including the proper classification of warrants as liabilities and redeemable Class A ordinary shares as temporary equity and prepaid expenses between current and non-current, and under accrual of liabilities. These material weaknesses in our internal controls have not been remediated as of September 30, 2023. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited interim financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the periods presented.
Regarding the restatement to the September 30, 2021 quarterly financial statements included in the Company’s Form 10-Q, as filed with the SEC on November 22, 2021, the change in fair value of warrants on the Company’s condensed statement of operations for the three months ended September 30 2021 and for the period from January 11, 2021 (inception) to September 30 2021 and warrant liability on the Company’s condensed balance sheet as of September 30, 2021 were misstated. The Company restated its financial statements in an amendment to the Q3 Form 10-Q. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited interim financial statements were prepared in accordance with U.S. generally accepted accounting principles.
Regarding the restatements to the March 31, 2021, and June 30, 2021 quarterly financial statements included in the Company’s Form 10-Qs, as filed with the SEC on June 4, 2021 and August 16, 2021, respectively, as well as the Company’s balance sheet included on the Company’s Form 8-K, as filed with the SEC on March 24, 2021, certain redemption provisions not solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of the Class A ordinary shares in permanent equity. The Company restated its financial statements to classify all Class A ordinary shares as temporary equity and any related impact, as the threshold in its charter would not change the nature of the underlying shares as redeemable and thus would be required to be disclosed outside of permanent equity. It is noted that the non-cash adjustments to the financial statements do not impact the amounts previously reported for our cash and cash equivalents or total assets. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited interim financial statements were prepared in accordance with U.S. generally accepted accounting principles.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the three months ended September 30, 2023 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. In light of the material weakness, we have enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors.
Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our Annual Report on Form 10-K filed with the SEC on April 17, 2023. As of the date of this Report, there have been no material changes to the risk factors disclosed in such Annual Report on Form 10-K and our Quarterly Report on Form 10-Q filed with the SEC on May 16, 2022. We may disclose additional factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
The disclosure set forth under Part II, Item 5 regarding the potential issuances of private placement warrants under the unsecured promissory note and shares in satisfaction of the Business Combination Payment is incorporated herein by reference. Such securities were offered and may be issued in reliance on Section 4(a)(2) of the Securities Act, as a transaction not involving a public offering.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
On October 18, 2023, the parties to the A&R Subscription Agreement entered into Amendment No. 1 to the A&R Subscription Agreement, in which the parties amended the consideration of a Capital Call made pursuant to the A&R Subscription Agreement to the following: (a) 431,735 shares of Class A Common Stock of the SPAC (the “Initial Shares”) free and clear of any liens or other encumbrances, other than pursuant to the Letter Agreement and the Investor shall not be subject to forfeiture, surrender, claw-back, transfers, disposals, exchanges, or earn-outs for any reason on the Initial Shares; (b) 71,956 shares of Class A Common Stock of the SPAC that must be held by the Investor until the VWAP of the Class A Common Stock equals or exceeds $12.50 for any 20 trading days within any 30 days trading period within 10 years from the consummation of the De-SPAC (the “$12.50 Shares”); and (c) 71,956 shares of Class A Common Stock of the SPAC that must be held by the Investor until the VWAP of the Class A Common Stock equals or exceeds $15.00 for any 20 trading days within any 30 days trading period within 10 years from the consummation of the De-SPAC (the “$15 Shares” and together with the Initial Shares and the $12.50 Shares, the “Subscription Shares”).
On October 18, 2023, the parties to the Second Subscription Agreement entered into Amendment No. 1 to the Second Subscription Agreement, in which the parties (a) limited the total amount of the Investor’s Capital Commitment that may be called subject to the Second Subscription Agreement to $750,000 and (b) amended the consideration of a Capital Call made pursuant to the Second Subscription Agreement to the following: (a) 448,169 shares of Class A Common Stock of the SPAC (the “Initial Shares”) free and clear of any liens or other encumbrances, other than pursuant to the Letter Agreement and the Investor shall not be subject to forfeiture, surrender, claw-back, transfers, disposals, exchanges, or earn-outs for any reason on the Initial Shares; (b) 74,695 shares of Class A Common Stock of the SPAC that must be held by the Investor until the VWAP of the Class A Common Stock equals or exceeds $12.50 for any 20 trading days within any 30 days trading period within 10 years from the consummation of the De-SPAC (the “$12.50 Shares”); and (c) 74,695 shares of Class A Common Stock of the SPAC that must be held by the Investor until the VWAP of the Class A Common Stock equals or exceeds $15.00 for any 20 trading days within any 30 days trading period within 10 years from the consummation of the De-SPAC (the “$15 Shares” and together with the Initial Shares and the $12.50 Shares, the “Subscription Shares”).
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In connection with the Second Subscription Agreement, the Company issued an unsecured promissory note, effective as of October 18, 2023, in the principal amount of up to $340,000 to Sponsor, which may be drawn down by the Company from time to time prior to the consummation of the Company’s Business Combination. The note does not bear interest, matures on the date of consummation of the Business Combination and is subject to customary events of default. The note will be repaid only to the extent that the Company has funds available to it outside of its trust account established in connection with its initial public offering and is convertible into private placement warrants of the Company at a price of $1.50 per warrant at the option of the Sponsor.
On October 18, 2023, the Company entered into a subscription agreement (“Third Subscription Agreement”) with Polar Multi-Strategy Master Fund (the “Investor”) and Plum Partners, LLC (the “Sponsor” and, together with the Company and Investor, the “Parties”), the purpose of which is for the Sponsor to raise up to $340,000 from the Investor to fund the Extension (defined below) and to provide working capital to the Company during the Extension (“Investor’s Capital Commitment”). As such, subject to, and in accordance with the terms and conditions of the Third Subscription Agreement, the Parties agreed,
| (a) | from time to time, the Company will request funds from the Sponsor for working capital purposes or for the Sponsor to fund an extension payment pursuant to the Company’s Amended and Restated Memorandum and Articles of Association (each a “Drawdown Request”). The Sponsor, upon on at least five (5) calendar days’ prior written notice (“Capital Notice”), may require a drawdown against the Investor’s Capital Commitment under a Drawdown Request (each a “Capital Call”). An amount of up to $200,000 of the Investor’s Capital Commitment was deemed the subject of a Capital Call concurrently with the execution of the Third Subscription Agreement, and an amount that is up to the balance of the Investor’s Capital Commitment may be called upon the filing of a registration statement by the SPAC or the surviving entity in relation to the business combination. |
| (b) | in consideration of the Capital Calls, Sponsor will transfer 0.9 share of Class A ordinary share for each dollar the Investor funds pursuant to the Capital Call(s) in respect of the second contribution (together, the “Subscription Shares”) to the Investor at the closing of the Business Combination (the “Business Combination Closing”). The Subscription Shares shall be subject to the Lock-Up Period as defined in section 5 of the Sponsor Letter Agreement dated March 2, 2023 (the “Letter Agreement”). The Subscription Shares shall not be subject to any additional transfer restrictions or any additional lock-up provisions, earn outs, or other contingencies and shall promptly be registered pursuant to the first registration statement filed by the Company or the surviving entity in relation to the Business Combination; |
| (c) | each member of the Sponsor has the right to contribute any amount requested under each Drawdown Request (“Sponsor Capital Contribution”), provided that such Sponsor Capital Contributions will be made on terms no more favorable than the Investor’s Capital Commitment. In addition, the Company and Sponsor maintain the ability to enter into other agreements with each other or with other parties which shall provide for funding of the Company (through the issuance of equity, entry into promissory notes, or otherwise) outside of Drawdown Requests, provided that the terms of any such agreement between the Company or Sponsor with each other or any party or parties will be no more favorable than the terms under the Third Subscription Agreement; |
| (d) | any amounts funded by the Sponsor to the Company under a Drawdown Request shall not accrue interest and shall be promptly repaid by the Company to the Sponsor upon the Business Combination Closing. Following receipt of such sums from the Company, and in any event within 5 business days of the Business Combination Closing, the Sponsor or Company shall pay to the Investor, an amount equal to all Capital Calls funded under the Third Subscription Agreement (the “Business Combination Payment”). The Investor may elect at the Business Combination Closing to receive such Business Combination Payment in cash or Class A ordinary shares at a rate of 1 Class A ordinary share for each $10 of the Capital Calls funded under the Third Subscription Agreement. If the Company liquidates without consummating the Business Combination, any amounts remaining in the Sponsor or Company’s cash accounts, not including the Company’s Trust Account, will be paid to the Investor within five (5) days of the liquidation; and |
| (e) | on the Business Combination Closing, the Sponsor will pay the Investor an amount equal to the reasonable attorney fees incurred by the Investor in connection with the Third Subscription Agreement not to exceed $5,000. |
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Item 6. Exhibits.
| * | Filed herewith. |
| ** | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
| (1) | Incorporated by reference to the registrant’s Current Report on Form 8-K, filed with the SEC on March 6, 2023. |
| (2) | Incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K, filed with the SEC on July 18, 2023. |
| (3) | Incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K, filed with the SEC on July 26, 2023. |
| (4) | Incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K, filed with the SEC on July 26, 2023. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this 22nd day of November 2023.
| Plum Acquisition Corp. I | ||
| By: | /s/ Michael Dinsdale | |
| Name: | Michael Dinsdale | |
| Title: | Chief Financial Officer | |
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