QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) |
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Units, each consisting of one Class A ordinary share, $0.0001 par value, and one-third of one warrant |
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Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
Page No. |
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Item 1. |
5 | |||||
5 | ||||||
6 | ||||||
7 | ||||||
8 | ||||||
9 | ||||||
Item 2. |
24 | |||||
Item 3. |
27 | |||||
Item 4. |
27 | |||||
Item 1. |
28 | |||||
Item 1A. |
28 | |||||
Item 2. |
28 | |||||
Item 3. |
28 | |||||
Item 4. |
28 | |||||
Item 5. |
28 | |||||
Item 6. |
29 | |||||
• | our ability to select an appropriate target business or businesses; |
• | our ability to complete our initial business combination; |
• | our expectations around the performance of a prospective target business or businesses; |
• | our expectations and forecasts around the performance and trends of markets and industries; |
• | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; |
• | our directors and officers allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination; |
• | our potential ability to obtain additional financing to complete our initial business combination; |
• | our pool of prospective target businesses and the energy and mining industries; |
• | our ability to consummate an initial business combination due to the uncertainty resulting from the COVID-19 pandemic and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases); |
• | the ability of our directors and officers to generate a number of potential business combination opportunities; |
• | our public securities’ potential liquidity and trading; |
• | the lack of a market for our securities; |
• | the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; |
• | the trust account not being subject to claims of third parties; |
• | our financial performance following our IPO; and |
• | the other risks and uncertainties discussed under the heading “Risk Factors” and elsewhere in this report. |
• | “we,” “us,” “our” or our “company” are to ESM Acquisition Corporation, a Cayman Islands exempted company; |
• | “Affiliated Joint Acquisition” are to an acquisition opportunity pursued jointly with one or more entities affiliated with EMG or VBR and/or one or more investors in funds managed by EMG; |
• | “amended and restated memorandum and articles of association” are to our amended and restated memorandum and articles of association; |
• | “Companies Act” are to the Companies Act (As Revised) of the Cayman Islands as the same may be amended from time to time; |
• | “EMG” are to The Energy & Minerals Group; |
• | “Excess Shares” are to more than an aggregate of 15% of the shares sold in the IPO held by a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act); |
• | “Extension Period” are to any extended time that we have to consummate a business combination beyond 24 months from the date of our IPO as a result of a shareholder vote to amend our amended and restated memorandum and articles of association; |
• | “founder shares” are to our Class B ordinary shares initially purchased by our sponsor in a private placement prior to our IPO and our Class A ordinary shares that will be issued upon conversion thereof as provided therein; |
• | “initial shareholders” are to our sponsor and any other holders of our founder shares prior to our IPO; |
• | “IPO” refers to our initial public offering of units, which initially closed on March 21, 2021; |
• | “letter agreement” refer to the letter agreement, the form of which is filed as an exhibit to our IPO registration statement; |
• | “Market Value” means the volume weighted average trading price of our Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which we consummate our initial business combination; |
• | “Newly Issued Price” the price determined in good faith by our board of directors at which we issue additional ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination. |
• | “ordinary shares” are to our Class A ordinary shares and our Class B ordinary shares; |
• | “private placement warrants” are to the warrants issued to our sponsor in a private placement simultaneously with the closing of our IPO; |
• | “public shareholders” are to the holders of our public shares, including our sponsor, directors and officers to the extent our sponsor, directors or officers purchase public shares, provided their status as a “public shareholder” shall only exist with respect to such public shares; |
• | “public shares” are to our Class A ordinary shares sold as part of the units in our IPO (whether they are purchased in our IPO or thereafter in the open market); |
• | “Reference Value” means the last reported sale price of our Class A ordinary shares for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders; |
• | “specified future issuance” are to an issuance of a class of equity or equity-linked securities to specified purchasers, which may include affiliates of EMG and/or one or more investors in funds or separate accounts managed by EMG, that we may determine to make in connection with financing our initial business combination, to the extent permitted under applicable regulatory and contractual requirements related to those funds and accounts; |
• | “sponsor” are to ESM Sponsor, LP, a Cayman Islands exempted limited partnership, and an affiliate of our founder; |
• | “VBR” are to Vision Blue Resources, Ltd.; and |
• | “warrants” are to our redeemable warrants sold as part of the units in our IPO (whether they are purchased in our IPO or thereafter in the open market). |
March 31, 2022 |
December 31, 2021 |
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Assets |
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Current assets: |
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Cash |
$ | $ | ||||||
Prepaid expenses |
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Total current assets |
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Investments held in Trust Account |
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Total Assets |
$ |
$ |
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|
|
|
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Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit: |
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Current liabilities: |
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Accounts payable |
$ | $ | ||||||
Accrued expenses |
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Total current liabilities |
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Derivative warrant liabilities |
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Deferred underwriting commissions |
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Total liabilities |
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Commitments and Contingencies |
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Class A ordinary shares subject to possible redemption; $ |
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Shareholders’ Deficit |
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Preference shares, $ |
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Class A ordinary shares, $ |
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Class B ordinary shares, $ |
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Additional paid-in capital |
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Accumulated deficit |
( |
) | ( |
) | ||||
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|
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Total shareholders’ deficit |
( |
) | ( |
) | ||||
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Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit |
$ |
$ |
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|
|
|
|
For The Three Months Ended March 31, 2022 |
For The Period From January 13, 2021 (Inception) through March 31, 2021 |
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General and administrative expenses |
$ | $ | ||||||
General and administrative expenses - related party |
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Loss from operations |
( |
) | ( |
) | ||||
Other income (expenses) |
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Change in fair value of derivative warrant liabilities |
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Offering costs - derivative warrant liabilities |
( |
) | ||||||
Income from investments held in Trust Account |
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Net income (loss) |
( |
) | ||||||
Deemed dividend - increase in redemption value of Class A ordinary shares subject to redemption |
( |
) | ||||||
Net income (loss) available to ordinary shareholders |
$ | $ | ( |
) | ||||
Weighted average shares outstanding of Class A ordinary shares, basic and diluted |
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Basic and diluted net income (loss) per share, Class A ordinary shares |
$ | $ | ( |
) | ||||
Weighted average shares outstanding of Class B ordinary shares, basic and diluted |
||||||||
Basic and diluted net income (loss) per share, Class B ordinary shares |
$ | $ | ( |
) | ||||
Ordinary Shares |
Additional |
Total |
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Class A |
Class B |
Paid-in |
Accumulated |
Shareholders’ |
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Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Deficit |
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Balance - December 31, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
Deemed dividend - increase in redemption value of Class A ordinary shares subject to redemption |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
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|
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Balance - March 31, 2022 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
|
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|
Ordinary Shares |
Additional |
Total |
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Class A |
Class B |
Paid-in |
Accumulated |
Shareholders’ |
||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Deficit |
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Balance - January 13, 2021 (inception) |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||
Issuance of Class B ordinary shares to Sponsor (1) |
— | — | — | |||||||||||||||||||||||||
Excess cash received over the fair value of the private placement warrants |
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Remeasurement of Class A ordinary shares subject to possible redemption amount |
— | — | — | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
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Balance - March 31, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
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(1) |
This number includes up to |
For The Three Months Ended March 31, 2022 |
For The Period From January 13, 2021 (Inception) through March 31, 2021 |
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Cash Flows from Operating Activities: |
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Net income (loss) |
$ | $ | ( |
) | ||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Change in fair value of derivative warrant liabilities |
( |
) | ( |
) | ||||
Offering costs - derivative warrant liabilities |
||||||||
General and administrative expenses paid by related party in exchange for issuance of Class B ordinary shares |
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Income from investments held in Trust Account |
( |
) | ( |
) | ||||
Changes in operating assets and liabilities: |
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Prepaid expenses |
( |
) | ||||||
Accounts payable |
( |
) | ||||||
Accrued expenses |
||||||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
Cash Flows from Investing Activities: |
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Cash deposited in Trust Account |
( |
) | ||||||
Net cash used in investing activities |
( |
) | ||||||
Cash Flows from Financing Activities: |
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Repayment of note payable to related party |
( |
) | ||||||
Proceeds received from initial public offering, gross |
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Proceeds received from private placement |
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Offering costs paid |
( |
) | ||||||
Net cash provided by financing activities |
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Net change in cash |
( |
) | ||||||
Cash - beginning of the period |
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Cash - end of the period |
$ |
$ |
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Supplemental disclosure of noncash financing activities: |
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Offering costs included in accrued expenses |
$ | $ | ||||||
Offering costs included in note payable |
$ | $ | ||||||
Prepaid expenses paid by related party under promissory note |
$ | $ | ||||||
Deferred underwriting commissions |
$ | $ | ||||||
Remeasurement on Class A ordinary shares subject to possible redemption |
$ | ( |
) | $ | ( |
) |
• | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
• | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
• | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
For The Three Months Ended March 31, 2022 |
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Class A |
Class B |
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Basic and diluted net income per ordinary share: |
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Numerator: |
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Allocation of net income available to ordinary shareholders |
$ | $ | ||||||
Denominator: |
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Basic and diluted weighted average ordinary shares outstanding |
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|
|
|
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Basic and diluted net income per ordinary share |
$ | $ | ||||||
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|
|
|
For The Three Months Ended March 31, 2021 |
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Class A |
Class B |
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Basic and diluted net loss per ordinary share: |
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Numerator: |
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Allocation of net loss |
$ | ( |
) | $ | ( |
) | ||
Denominator: |
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Basic and diluted weighted average ordinary shares outstanding |
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|
|
|
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Basic and diluted net loss per ordinary share |
$ | ( |
) | $ | ( |
) | ||
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|
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|
Gross proceeds from the Initial Public Offering |
$ | |||
Less: |
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Fair value of Public Warrants at issuance |
( |
) | ||
Offering costs allocated to Class A ordinary shares subject to possible redemption |
( |
) | ||
Plus: |
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Remeasurement on Class A ordinary shares subject to possible redemption amount |
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Class A ordinary shares subject to possible redemption as of December 31, 2021 |
$ | |||
Class A ordinary shares subject to possible redemption as of December 31, 2021 |
$ | |||
Remeasurement on Class A ordinary shares subject to possible redemption amount |
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Class A ordinary shares subject to possible redemption as of March 31, 2022 |
$ | |||
• | in whole and not in part; |
• | at a price of $ |
• | upon a minimum of |
• | if, and only if, the last reported sale price (the “closing price”) of Class A ordinary shares equals or exceeds $ |
• | in whole and not in part; |
• | at a price of $ |
• | upon a minimum of |
• | if, and only if, the closing price of Class A ordinary shares equals or exceeds $ |
• | if the closing price of the Class A ordinary shares for any |
Description |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
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Assets: |
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Investments held in Trust Account-U.S. Treasury securities |
$ | $ | — | $ | — | |||||||
Liabilities: |
||||||||||||
Derivative warrant liabilities-Public warrants |
$ | $ | — | $ | — | |||||||
Derivative warrant liabilities-Private placement warrants | $ | — | $ | $ | — |
Description |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
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Assets: |
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Investments held in Trust Account-U.S. Treasury securities |
$ | $ | — | $ | — | |||||||
Liabilities: |
||||||||||||
Derivative warrant liabilities-Public warrants |
$ | $ | — | $ | — | |||||||
Derivative warrant liabilities-Private placement warrants |
$ | — | $ | $ | — |
Level 3 - Derivative warrant liabilities at January 13, 2021 (inception) |
$ | |||
Issuance of Public Warrants |
||||
Issuance of Private Placement Warrants |
||||
Change in fair value of derivative warrant liabilities |
( |
) | ||
Level 3 - Derivative warrant liabilities at March 31, 2021 |
$ |
• |
may significantly dilute the equity interest of investors in our IPO, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one |
• |
may subordinate the rights of holders of ordinary shares if preference shares are issued with rights senior to those afforded our ordinary shares; |
• |
could cause a change of control if a substantial number of our ordinary shares is issued, which could result in the resignation or removal of our present directors and officers; |
• |
may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; |
• |
may adversely affect prevailing market prices for our units, ordinary shares and/or warrants; and |
• |
may not result in adjustment to the exercise price of our warrants. |
• |
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
• |
acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
• |
our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
• |
our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding; |
• |
our inability to pay dividends on our ordinary shares; |
• |
using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares, expenses, capital expenditures, acquisitions and other general corporate purposes; |
• |
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
• | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and |
• | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. |
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. |
Dated: May 16, 2022 | ESM ACQUISITION CORPORATION | |||||
By: | /s/ Sir Michael Davis | |||||
Name: | Sir Michael Davis | |||||
Title: | Chief Executive Officer (Principal Executive Officer) | |||||
By: | /s/ Jeffrey A. Ball | |||||
Name: | Jeffrey A. Ball | |||||
Title: | Chief Financial Officer (Principal Financial and Accounting Officer) |