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 or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
one-half of one redeemable Warrant |
||||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
INTEGRAL ACQUISITION CORPORATION 1
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024
TABLE OF CONTENTS
i
Unless otherwise stated in this Report (as defined below), or the context otherwise requires, references to:
• | “2021 Annual Report” are to our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC (as defined below) on April 1, 2022; |
• | “2022 Annual Report” are to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 31, 2023; |
• | “2023 Annual Report” are to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC on April 12, 2024; |
• | “2024 SPAC Rules” are to the new rules and regulations for SPACs (as defined below) adopted by the SEC on January 24, 2024, which became effective on July 1, 2024; |
• | “Amended and Restated Charter” are to our Amended and Restated Certificate of Incorporation, as amended and currently in effect; |
• | “Anchor Investors” are to certain qualified institutional buyers or institutional accredited investors (none of which are affiliated with any member of our Management Team (as defined below), our Sponsor (as defined below) or any other Anchor Investor) that purchased an aggregate of approximately $60.8 million of Units (as defined below) in our Initial Public Offering (as defined below), and became a member of our Sponsor at the closing of our Initial Public Offering; |
• | “ASC” are to the FASB (as defined below) Accounting Standards Codification; |
• | “ASC 260” are to FASB ASC Topic 260, “Earnings Per Share”; |
• | “ASC 405” are to FASB ASC Topic 405, “Liabilities”; |
• | “ASC 480” are to FASB ASC Topic 480, “Distinguishing Liabilities from Equity”; |
• | “ASC 740” are to FASB ASC Topic 740, “Income Taxes”; |
• | “ASC 815” are to FASB ASC Topic 815, “Derivatives and Hedging”; |
• | “ASC 820” are to FASB ASC Topic 820, “Fair Value Measurements and Disclosures”; |
• | “ASU” are to the FASB Accounting Standards Update; |
• | “ASU 2014-15” are to FASB ASU Topic 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern”; |
• | “ASU 2020-06” are to FASB ASU Topic 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging —Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”; |
ii
• | “ASU 2023-09” are to FASB ASU Topic 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”; |
• | “Board of Directors” or “Board” are to our board of directors; |
• | “Business Combination” are to a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses; |
• | “Carnegie Park” are to Carnegie Park Capital, LLC (and/or its affiliates); |
• | “Cartesian Escrow Parties” are to Cartesian Capital Group, LLC and Flybondi (as defined below), together; |
• | “Charter Amendment Proposals” are to the Founder Share Amendment Proposal (as defined below) and the Second Extension Amendment Proposal (as defined below), together; |
• | “Class A Common Stock” are to shares of our Class A common stock, par value $0.0001 per share; |
• | “Class B Common Stock” are to shares of our Class B common stock, par value $0.0001 per share; |
• | “Cohen & Company” are to Cohen & Company Capital Markets, a division of J.V.B. (as defined below); |
• | “Combination Period” are to the 36-month period, from the closing of the Initial Public Offering to November 5, 2024 (or such earlier date as determined by the Board), as extended by the Second Extension (as defined below), that we have to consummate an initial Business Combination; provided that the Combination Period may be further extended pursuant to an amendment to the Amended and Restated Charter and consistent with applicable laws, regulations and stock exchange rules; |
• | “Common Stock” are to the Class A Common Stock and the Class B Common Stock, together; |
• | “Company,” “our,” “we,” or “us” are to Integral Acquisition Corporation 1, a Delaware corporation; |
• | “Continental” are to Continental Stock Transfer & Trust Company, trustee of our Trust Account (as defined below) and warrant agent of our Public Warrants (as defined below); |
• | “Crescent Park” are to Crescent Park Management, L.P. as the investment advisor to Crescent Park Master Fund, L.P., Crescent Park FOF Partners, L.P. and Crescent Park Global Equity Master Fund, L.P. (and/or their affiliates); |
• | “DGCL” are to the Delaware General Corporation Law; |
• | “Exchange Act” are to the Securities Exchange Act of 1934, as amended; |
• | “Excise Tax” are to the U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023 as provided for by the IR Act (as defined below); |
• | “FASB” are to the Financial Accounting Standards Board; |
• | “FB Parent” are to FB Parent Limited, a limited company incorporated under the laws of England and Wales; |
iii
• | “Flybondi” are to Flybondi Limited, a limited company incorporated under the laws of England and Wales; |
• | “Flybondi Business Combination” are to the transactions contemplated by the Flybondi Business Combination Agreement (as defined below); |
• | “Flybondi Business Combination Agreement” are to the Business Combination Agreement, dated as of October 19, 2023, by and among us, Flybondi, FB Parent, Merger Sub (as defined below) and the Sellers (as defined below); |
• | “Flybondi Holdings” are to Flybondi Holdings plc, a public limited company incorporated under the laws of England and Wales; |
• | “Flybondi Holdings Substitution” are to the assignment, pursuant to the Flybondi Novation Agreement (as defined below), by FB Parent to Flybondi Holdings of all of its liabilities, agreements, obligations, rights and duties in, under, and arising from the Flybondi Business Combination Agreement; |
• | “Flybondi Novation Agreement” are to the assignment, novation and amendment agreement we entered into on July 2, 2024 with Flybondi Holdings, Flybondi, FB Parent and Merger Sub; |
• | “Flybondi Registration Statement” are to the Registration Statement on Form F-4, which will include a proxy statement/prospectus prepared by Flybondi Holdings, Flybondi and us, to be filed by Flybondi Holdings with the SEC in connection with the Flybondi Business Combination; |
• | “Flybondi Sponsor Support Agreement Amendment” are to Amendment No. 1 to the Sponsor Support Agreement, dated October 19, 2023, which we entered into on July 2, 2024, with the Sponsor and Flybondi to reflect the Flybondi Holdings Substitution; |
• | “First Extension” are to the extension of the date by which we must consummate our initial Business Combination from May 5, 2023 to November 3, 2023 (or such earlier date as determined by the Board), as approved by the stockholders at the First Special Meeting (as defined below); |
• | “First Extension Amendment Proposal” are to a proposal at the First Special Meeting to approve an amendment to the Amended and Restated Charter to extend the date by which we must consummate our initial Business Combination from May 5, 2023 to November 3, 2023 (or such earlier date as determined by the Board); |
• | “First Extension Promissory Note” are to that certain unsecured promissory note in the principal amount of up to $630,000 issued on May 8, 2023 to the Sponsor in connection with the First Extension; |
• | “First Nasdaq Notice” are to the deficiency notice from Nasdaq (as defined below) we received on June 28, 2023; |
• | “First Special Meeting” are to the special meeting of our stockholders held on May 3, 2023; |
• | “First Special Meeting Redemptions” are to the 8,470,059 Public Shares that were redeemed in connection with the vote to approve the First Extension Amendment Proposal, resulting in $87,843,748 (approximately $10.37 per share) being removed from the Trust Account to pay such redeeming Public Stockholders (as defined below); |
• | “Forward Purchase Shares” are to the shares of Class A Common Stock that were to be issued pursuant to the FPAs (as defined below); |
• | “Founder Share Conversion” are to the 2,874,999 shares of Class A Common Stock (consisting of 2,824,999 shares to our Sponsor and 50,000 shares to an Anchor Investor) issued on November 3, 2023, following the approval of the Founder Share Amendment Proposal by our stockholders at the Second Special Meeting (as defined below), upon the conversion of an equal number of shares of Class B Common Stock held by the Sponsor and such Anchor Investor as Founder Shares (as defined below); |
iv
• | “Founder Shares” are to the shares of Class B Common Stock initially purchased by our Sponsor prior to the Initial Public Offering and the shares of Class A Common Stock that (i) will be issued upon the automatic conversion of the shares of Class B Common Stock at the time of our Business Combination as described herein and (ii) were issued in connection with the Founder Share Conversion upon the conversion of an equal number of shares of Class B Common Stock (for the avoidance of doubt, such Class A Common Stock will not be “Public Shares” (as defined below)); |
• | “Founder Share Amendment Proposal” are to the proposal at the Second Special Meeting to approve an amendment to the Amended and Restated Charter to grant a holder of shares of Class B Common Stock the right to convert such shares into shares of Class A Common Stock on a one-for-one basis prior to the closing of a Business Combination; |
• | “FPA” are to each of the forward purchase agreements we entered into with Carnegie Park and Crescent Park, which were terminated by the FPA Termination Agreements (as defined below); |
• | “FPA Termination Agreements” are to the agreements we entered into with Carnegie Park and Crescent Park on December 8, 2023 and December 12, 2023, respectively, to mutually terminate and cancel the FPAs; |
• | “Initial Public Offering” or “IPO” are to the initial public offering that we consummated on November 5, 2021; |
• | “Initial Stockholders” are to holders of our Founder Shares prior to our Initial Public Offering; |
• | “Investment Company Act” are to the Investment Company Act of 1940, as amended; |
• | “IPO Promissory Note” are to that certain unsecured promissory note in the principal amount of up to $300,000 issued to our Sponsor on February 16, 2021; |
• | “IPO Registration Statement” are to the Registration Statement on Form S-1 initially filed with the SEC on June 14, 2021, as amended, and declared effective on November 2, 2021 (File No. 333-257058); |
• | “IR Act” are to the Inflation Reduction Act of 2022; |
• | “JOBS Act” are to the Jumpstart Our Business Startups Act of 2012; |
• | “Joining Sellers” are to other holders of Flybondi’s outstanding shares and/or options that join the Flybondi Business Combination Agreement by delivering a Seller Joinder (as defined below) after the date of the Flybondi Business Combination Agreement; |
• | “J.V.B.” are to J.V.B. Financial Group, one of our Anchor Investors; |
• | “Letter Agreement” are to the Letter Agreement, dated November 2, 2021, which we entered into with our Sponsor and our directors and officers; |
• | “Management” or our “Management Team” are to our executive officers and directors; |
• | “Market Value Standard” are to Nasdaq Listing Rule 5450(b)(2)(A); |
• | “Merger Sub” are to Gaucho MS, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of FB Parent; |
• | “Minimum Total Holders Rule” are to Nasdaq Listing Rule 5450(a)(2); |
• | “MVLS” are to the Market Value of Listing Securities; |
v
• | “Nasdaq” are to the Nasdaq Stock Market LLC; |
• | “Nasdaq Compliance Period” are to the 180 calendar days we had to regain compliance with the Market Value Standard pursuant to the First Nasdaq Notice; |
• | “Nasdaq Staff” are to the Listing Qualifications Department of Nasdaq; |
• | “Private Placement” are to the private placement of Private Placement Warrants (as defined below) that occurred simultaneously with the closing of our Initial Public Offering; |
• | “Private Placement Warrants” are to the warrants issued to our Sponsor in the Private Placement; |
• | “Promissory Notes” are to the First Extension Promissory Note and the Second Extension Promissory Note (as defined below), collectively; |
• | “Public Shares” are to the shares of Class A Common Stock sold as part of the Units in our Initial Public Offering (whether they were purchased in our Initial Public Offering or thereafter in the open market); |
• | “Public Stockholders” are to the holders of our Public Shares, including our Initial Stockholders and Management Team to the extent our Initial Stockholders and/or the members of our Management Team purchase Public Shares, provided that each Initial Stockholder’s and member of our Management Team’s status as a “Public Stockholder” will only exist with respect to such Public Shares; |
• | “Public Warrants” are to the redeemable warrants sold as part of the Units in our Initial Public Offering (whether they were subscribed for in our Initial Public Offering or purchased in the open market); |
• | “Registration Rights Agreement” are to the Registration Rights Agreement, dated November 2, 2021, which we entered into with the Sponsor and the holders party thereto; |
• | “Report” are to this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024; |
• | “Sarbanes-Oxley Act” are to the Sarbanes-Oxley Act of 2002; |
• | “SEC” are to the U.S. Securities and Exchange Commission; |
• | “Second Extension” are to the extension of the date by which we must consummate our initial Business Combination from November 3, 2023 to November 5, 2024 (or such earlier date as determined by the Board), as approved by our stockholders at the Second Special Meeting; |
• | “Second Extension Amendment Proposal” are to a proposal at the Second Special Meeting to approve an amendment to the Amended and Restated Charter to extend the date by which we must consummate an initial Business Combination from November 3, 2023 to November 5, 2024 (or such earlier date as determined by the Board); |
• | “Second Extension Promissory Note” are to that certain unsecured promissory note in the principal amount of up to $359,503 issued on November 8, 2023 to the Sponsor in connection with the Second Extension; |
• | “Second Nasdaq Notice” are to the deficiency notice from Nasdaq received by us on October 24, 2023; |
• | “Second Special Meeting” are to the special meeting in lieu of an annual meeting of our stockholders held on November 2, 2023; |
• | “Second Special Meeting Redemptions” are to the 1,831,599 Shares that were redeemed in connection with the vote to approve the Charter Amendment Proposals, resulting in $19,763,618 (approximately $10.79 per share) being removed from the Trust Account to pay such redeeming Public Stockholders; |
vi
• | “Securities Act” are to the Securities Act of 1933, as amended; |
• | “Seller Joinder” are to a joinder agreement executed by a Joining Seller and delivered to us, FB Parent and Flybondi after the date of the Flybondi Business Combination Agreement; |
• | “Sellers” are to the Joining Sellers and the Signing Sellers, together; |
• | “Services Agreement” are to the Services Agreement, dated November 2, 2021, we entered into with our Sponsor; |
• | “Signing Sellers” are to certain holders of Flybondi’s outstanding shares that have executed the Flybondi Business Combination Agreement on October 19, 2023; |
• | “SPACs” are to special purpose acquisition companies; |
• | “Sponsor” are to Integral Sponsor LLC, a Delaware limited liability company; |
• | “Treasury” are to the U.S. Department of the Treasury; |
• | “Trust Account” are to the U.S.-based trust account in which an amount of $116,725,000 from the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement Warrants in the Private Placement was placed following the closing of the Initial Public Offering; |
• | “Units” are to the units sold in our Initial Public Offering, which consist of one Public Share and one-half of one Public Warrant; |
• | “U.S. GAAP” are to the accounting principles generally accepted in the United States of America; |
• | “Warrant Agreement” are to the Warrant Agreement, dated November 2, 2021, which we entered into with Continental, as warrant agent; |
• | “Warrants” are to the Private Placement Warrants and the Public Warrants, together; |
• | “WCL Promissory Note” are to that certain unsecured promissory note in the principal amount of up to $1,500,000 we issued on July 10, 2023 to the Sponsor in connection with the Working Capital Loans (as defined below); and |
• | “Working Capital Loans” are to funds that, in order to provide working capital or finance transaction costs in connection with a Business Combination, the Initial Stockholders or an affiliate of the Initial Stockholders or certain of our directors and officers may, but are not obligated to, loan us. |
vii
June 30, 2024 |
December 31, 2023 |
|||||||
(Unaudited) | ||||||||
Assets |
||||||||
Cash |
$ | $ | ||||||
Prepaid franchise tax |
||||||||
Prepaid expenses |
||||||||
Total current assets |
||||||||
Cash held in Trust Account |
||||||||
Total Assets |
$ |
$ |
||||||
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit |
||||||||
Current liabilities: |
||||||||
Accrued expenses |
$ | $ | ||||||
Due to related party |
||||||||
Promissory Notes — Related Party |
||||||||
Working Capital Loans |
||||||||
Excise Tax payable |
||||||||
Income taxes payable |
||||||||
Total liabilities |
||||||||
Commitments and Contingencies (Note 4) |
||||||||
Class A Common Stock subject to possible redemption, |
||||||||
Stockholders’ Deficit |
||||||||
Preferred stock, $ |
||||||||
Class A Common Stock, $ |
||||||||
Class B Common Stock, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total stockholders’ deficit |
( |
) |
( |
) | ||||
Total Liabilities, Redeemable Common Stock and Stockholders’ Deficit |
$ |
$ |
||||||
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
Operating costs |
$ | $ | $ | $ | ||||||||||||
Loss from operations |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Other income (expenses): |
||||||||||||||||
Unrealized loss on change in fair value of FPA liability |
( |
) | ( |
) | ||||||||||||
Unrealized loss on Trust Account |
( |
) | ||||||||||||||
Interest income |
||||||||||||||||
Total other income, net |
||||||||||||||||
Loss before provision for income taxes |
( |
) | ( |
) | ( |
) | ||||||||||
Provision for income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net loss |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
Basic and diluted weighted average shares outstanding, Common Stock subject to redemption |
||||||||||||||||
Basic and diluted net loss per Common Stock subject to redemption |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
Basic and diluted weighted average shares outstanding, non-redeemable Common Stock |
||||||||||||||||
Basic and diluted net loss per non-redeemable Common Stock |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
Class A Common Stock |
Class B Common Stock |
Additional Paid-in |
Accumulated |
Total Stockholders’ |
||||||||||||||||||||||||
Stock |
Amount |
Stock |
Amount |
Capital |
Deficit |
Deficit |
||||||||||||||||||||||
Balance as of December 31, 2023 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Accretion of Class A Common Stock to redemption amount |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||
Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||
Balance as of March 31, 2024 (unaudited) |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Accretion of Class A Common Stock to redemption amount |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||
Escrow funding from Cartesian Escrow Parties |
— | — | — | — | ||||||||||||||||||||||||
Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||
Balance as of June 30, 2024 (unaudited) |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Class B Common stock |
Additional Paid-in |
Accumulated |
Total Stockholders’ |
|||||||||||||||||
Shares |
Amount |
Capital |
Deficit |
Deficit |
||||||||||||||||
Balance as of December 31, 2022 |
$ |
$ |
$ |
( |
) |
$ |
( |
) | ||||||||||||
Accretion of Class A Common Stock to redemption amount |
— | — | ( |
) | ( |
) | ||||||||||||||
Net income |
— | — | ||||||||||||||||||
Balance as of March 31, 2023 (unaudited) |
$ |
$ |
$ |
( |
) |
$ |
( |
) | ||||||||||||
Accretion of Class A Common Stock to redemption amount |
— | — | ( |
) | ( |
) | ||||||||||||||
Excise Tax payable |
— | — | ( |
) | ( |
) | ||||||||||||||
Net loss |
— | — | ( |
) | ( |
) | ||||||||||||||
Balance as of June 30, 2023 (unaudited) |
$ |
$ |
$ |
( |
) |
$ |
( |
) | ||||||||||||
For the Six Months Ended June 30, |
||||||||
2024 |
2023 |
|||||||
Cash flows from Operating Activities: |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Unrealized gain on Trust Account |
( |
) | ||||||
Unrealized loss on change in fair value of FPA liability |
||||||||
Interest earned on cash and investments held in Trust Account |
( |
) | ( |
) | ||||
Changes in current assets and current liabilities: |
||||||||
Prepaid expenses |
( |
) | ||||||
Accrued expenses |
||||||||
Income taxes payable |
||||||||
Franchise taxes payable |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net cash used in operating activities |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Cash flows from Investing Activities: |
||||||||
Extension funding of Trust Account |
( |
) | ( |
) | ||||
Funds withdrawn for redemptions |
||||||||
Cash withdrawn from Trust Account to pay taxes |
||||||||
|
|
|
|
|||||
Net cash (used in) provided by investing activities |
( |
) |
||||||
|
|
|
|
|||||
Cash flows from Financing Activities: |
||||||||
Funds withdrawn for redemptions |
( |
) | ||||||
Proceeds from issuance of convertible promissory note to related party |
||||||||
Escrow funding from Cartesian Escrow Parties |
— | |||||||
Proceeds from issuance of Promissory Notes to related party |
||||||||
|
|
|
|
|||||
Net cash provided by (used in) financing activities |
( |
) | ||||||
|
|
|
|
|||||
Net change in cash |
( |
) | ||||||
Cash, beginning of the period |
||||||||
|
|
|
|
|||||
Cash, end of the period |
$ |
$ |
||||||
|
|
|
|
|||||
Supplemental disclosure of noncash investing and financing activities: |
||||||||
Income Tax Paid |
$ | $ | ||||||
|
|
|
|
|||||
Accretion of Class A Common Stock to redemption amount |
$ | $ | ||||||
|
|
|
|
|||||
Excise Tax payable |
$ | $ | ||||||
|
|
|
|
• | 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. |
Class A Common Stock subject to possible redemption |
Shares |
Amount |
||||||
January 1, 2023 |
$ |
|||||||
Less: |
||||||||
Redemptions |
( |
) | ( |
) | ||||
Plus: |
||||||||
Remeasurement of carrying value to redemption value |
— | |||||||
December 31, 2023 |
$ |
|||||||
|
|
|
|
|||||
January 1, 2024 |
$ |
|||||||
Plus: |
||||||||
Remeasurement of carrying value to redemption value |
— | |||||||
|
|
|
|
|||||
June 30, 2024 |
$ |
|||||||
|
|
|
|
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||||||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||||||||||||||||||
Redeemable |
Non- Redeemable Class A |
Redeemable |
Non- Redeemable Class A |
Redeemable |
Non- Redeemable Class A |
Redeemable |
Non- Redeemable Class A |
|||||||||||||||||||||||||
Class A |
And Class B |
Class A |
And Class B |
Class A |
And Class B |
Class A |
And Class B |
|||||||||||||||||||||||||
Basic and diluted net loss per share |
||||||||||||||||||||||||||||||||
Numerator: |
||||||||||||||||||||||||||||||||
Allocation of net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||
Denominator: |
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• | in whole and not in part; |
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• | if, and only if, the reported last sale price of the Class A Common Stock equals or exceeds $ |
Changes in fair value of FPA classified as level 3 |
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January 1, 2023 |
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December 31, 2023 |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report including, without limitation, statements under this Item regarding our financial position, business strategy and the plans and objectives of Management for future operations, are forward-looking statements. When used in this Report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our Management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our Management, as well as assumptions made by, and information currently available to, our Management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto included in this Report under “Item 1. Financial Statements”.
Overview
We are a blank check company incorporated on February 16, 2021 as a Delaware corporation and formed for the purpose of effecting a Business Combination.
Our Sponsor, Integral Sponsor, LLC, is a Delaware limited liability company. The IPO Registration Statement was declared effective on November 2, 2021. On November 5, 2021, we consummated our Initial Public Offering of 11,500,000 Units, including the full exercise of the underwriters’ over-allotment option to purchase 1,500,000 Units, at a purchase price of $10.00 per Unit.
Simultaneously with the closing of the Initial Public Offering, we completed the private sale of an aggregate of 4,950,000 Private Placement Warrants (including 90,000 Private Placement Warrants issued in connection with the exercise in full by the underwriter of its option to purchase additional Units) to the Sponsor at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds to us of $4,950,000.
Upon the closing of the Initial Public Offering, Management agreed that an amount equal to at least $10.15 per Unit sold in the Initial Public Offering, including the proceeds of the Private Placement, would be held in the Trust Account with Continental acting as trustee, and would be initially invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act, which invest only in direct Treasury obligations. 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 from the Initial Public Offering and the Private Placement will not be released from the Trust Account until the earliest of (i) the completion of initial Business Combination, (ii) the redemption of the Public Shares if we are unable to complete an initial Business Combination within the Combination Period, subject to applicable law, or (iii) the redemption of the Public Shares properly submitted in connection with a stockholder vote to amend the Amended and Restated Charter to modify the substance or timing of our obligation to redeem 100% of the Public Shares if we have not consummated an initial Business Combination within the Combination Period or with respect to any other material provisions relating to stockholders’ rights or pre-initial Business Combination activity. The proceeds deposited in the Trust Account could become subject to the claims of our creditors, if any, which could have priority over the claims of our Public Stockholders.
If we are unable to complete the initial Business Combination within the Combination Period, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at 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 (which interest shall be net of taxes payable (excluding Excise Taxes) and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and the Board of Directors, liquidate and dissolve, subject, in each case, to our obligations under the DGCL to provide for claims of creditors and the requirements of other applicable laws.
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On January 24, 2024, the SEC adopted the 2024 SPAC Rules, which became effective on July 1, 2024, which will affect SPAC Business Combination transactions. The 2024 SPAC Rules require, among other matters, (i) additional disclosures relating to SPAC Business Combination transactions; (ii) additional disclosures relating to dilution and to conflicts of interest involving sponsors and their affiliates in both SPAC initial public offerings and Business Combination transactions; (iii) additional disclosures regarding projections included in SEC filings in connection with proposed Business Combination transactions; and (iv) the requirement that both the SPAC and its target company be co-registrants for Business Combination registration statements. In addition, the SEC’s adopting release provided guidance describing circumstances in which a SPAC could become subject to regulation under the Investment Company Act, including its duration, asset composition, business purpose, and the activities of the SPAC and its management team in furtherance of such goals. The 2024 SPAC Rules may materially affect our ability to negotiate and complete our initial Business Combination and may increase the costs and time related thereto.
Recent Developments
On July 2, 2024, we entered into (i) the Flybondi Novation Agreement with FB Parent, Flybondi Holdings, Merger Sub, Flybondi and the Joining Sellers. Pursuant to the Flybondi Novation Agreement, FB Parent assigned to Flybondi Holdings all of its liabilities, agreements, obligations, rights and duties in, under, and arising from the Flybondi Business Combination Agreement and (ii) the Flybondi Sponsor Support Agreement Amendment to reflect the Flybondi Holdings Substitution. The foregoing summary of the Flybondi Novation Agreement and Flybondi Sponsor Support Agreement Amendment is qualified in its entirety by reference to the complete text of the Flybondi Novation Agreement and Flybondi Sponsor Support Agreement Amendment, which are filed as Exhibits 10.1 and Exhibit 10.2, respectively, to this Report.
Since June 30, 2024 through the date of this Report, an aggregate of $59,917 has been deposited into the Trust Account pursuant to borrowings under the Second Extension Promissory Note for each month that has been needed to complete a Business Combination. In each of July and August 2024, $29,959 was deposited into the Trust Account pursuant to borrowings under the Second Extension Promissory Note.
Extensions of Our Combination Period
On May 3, 2023, we held the First Special Meeting. At the First Special Meeting, the stockholders approved the First Extension Amendment Proposal, which extended the date we had to consummate an initial Business Combination from May 5, 2023 to November 3, 2023. In connection with the vote to approve the First Extension Amendment Proposal, Public Stockholders holding 8,470,059 Public Shares properly exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account. As a result, $87,843,748 (approximately $10.37 per share) was removed from the Trust Account to pay such redeeming Public Stockholders in the First Special Meeting Redemptions.
In connection with the approval of the First Extension Amendment Proposal, we issued the First Extension Promissory Note in the aggregate principal amount of up to $630,000 to the Sponsor. The First Extension Promissory Note bears no interest and is repayable in full upon the date of the consummation of the initial Business Combination or our liquidation. Additionally, we agreed to make monthly deposits of $105,000 into the Trust Account for each calendar month (commencing on May 8, 2023) or portion thereof, that was needed by us to complete an initial Business Combination until November 3, 2023, and such amount will be distributed either to: (i) all of the holders of Public Shares upon our liquidation or (ii) Public Stockholders who elect to have their Pubic Shares redeemed in connection with the consummation of the Business Combination.
On November 2, 2023, we held the Second Special Meeting, at which the stockholders approved, among other things, the Charter Amendment Proposals. Following approval of the Second Extension Amendment Proposal, the Combination Period was extended from November 3, 2023 to November 5, 2024. In connection with the vote to approve the Charter Amendment Proposals, Public Stockholders holding 1,831,599 Public Shares properly exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account. As a result, $19,763,618 (approximately $10.79 per share) was removed from the Trust Account to pay such redeeming Public Stockholders.
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In connection with the approval of the Second Extension Amendment Proposal, we issued the Second Extension Promissory Note in the aggregate principal amount of up to $359,503 to the Sponsor. The Second Extension Promissory Note bears no interest and is repayable in full upon the date of the consummation of the initial Business Combination or our liquidation. Additionally, we have deposited and will continue to deposit $29,958.55 into the Trust Account for each calendar month (commencing on November 8, 2023 and ending on the 5th day of each subsequent month), or portion thereof, that is needed by us to complete an initial Business Combination until November 5, 2024, and such amount will be distributed either to: (i) all of the holders of Public Shares upon our liquidation or (ii) Public Stockholders who elect to have their Pubic Shares redeemed in connection with the consummation of the Business Combination.
As of June 30, 2024, we had deposited an aggregate of $869,668 to fund the Trust Account. For the three and six month ended June 30, 2024, an aggregate of $89,876 and $179,752, respectively, was deposited in the Trust Account. For the three and six month ended June 30, 2023, an aggregate of $210,000 and $210,000, respectively, was deposited in the Trust Account.
We may seek to further extend the Combination Period consistent with applicable laws, regulations and stock exchange rules. Such an extension would require the approval of the Public Stockholders, who will be provided the opportunity to redeem all or a portion of their Public Shares. Such redemptions will likely have a material adverse effect on the amount held in the Trust Account, our capitalization, principal stockholders and other impacts on us, such as our ability to maintain our listing on the Nasdaq Capital Market.
Founder Share Conversion
Following the approval of the Founder Share Amendment Proposal at the Second Special Meeting, on November 3, 2023, we issued an aggregate of 2,874,999 shares of Class A Common Stock (consisting of 2,824,999 shares to the Sponsor and 50,000 shares to an Anchor Investor) upon the conversion of an equal number of shares of Class B Common Stock, held by the Sponsor and such Anchor Investor, respectively. The 2,874,999 shares of Class A Common Stock issued in connection with the Founder Share Conversion are subject to the same restrictions as applied to the Class B Common Stock before the Founder Share Conversion, including, among other things, certain transfer restrictions, waiver of redemption rights and the obligation to vote in favor of a Business Combination, as described in the IPO Registration Statement. Following the Founder Share Conversion, the First Special Meeting Redemptions and the Second Special Meeting Redemptions, there were 4,073,341 shares of Class A Common Stock issued and outstanding and one share of Class B Common Stock issued and outstanding. As a result, the Sponsor holds approximately 69.4% of the issued and outstanding Class A Common Stock.
Flybondi Business Combination
On October 19, 2023, we entered into the Flybondi Business Combination Agreement, with Flybondi, FB Parent, Merger Sub and the Signing Sellers. After the date of the Flybondi Business Combination Agreement, the Joining Sellers may join the Flybondi Business Combination Agreement by executing and delivering a Seller Joinder.
The Flybondi Business Combination Agreement provides for, among other things, the following transactions: (i) FB Parent will acquire the shares of Flybondi held by the Sellers in exchange for the issuance by FB Parent of new ordinary shares of FB Parent, and (ii) we will merge with and into Merger Sub, with us continuing as the surviving entity and as a wholly-owned subsidiary of FB Parent, and each of our issued and outstanding securities immediately prior to such merger will be cancelled and converted into the right of the holder thereof to receive a substantially equivalent security of FB Parent.
For a full description of the Flybondi Business Combination Agreement and the proposed Flybondi Business Combination, please see “Item 1. Business” of the 2023 Annual Report.
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Results of Operations
As of June 30, 2024, we had not commenced any operations. All activity for the period from February 16, 2021 (inception) through June 30, 2024 relates to our formation and the Initial Public Offering and, since the closing of the Initial Public Offering, the search for a prospective and consummation of an initial Business Combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after the completion of our initial Business Combination, at the earliest. We will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering and held in our Trust Account. We incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended June 30, 2024, we had net loss of $394,417, which consisted of operating costs of $523,160 and provision for income tax of $43,068, partially offset by interest income from the Trust Account of $171,811.
For the six months ended June 30, 2024, we had net loss of $654,452, which consisted of operating costs of $908,571 and provision for income tax of $87,143, partially offset by interest income from the Trust Account of $341,262.
For the three months ended June 30, 2023, we had net loss of $545,851, which consisted of operating costs of $544,039, an unrealized loss on the change in the fair value of the FPA liability of $642,739, provision for income tax of $157,082 and unrealized loss on the Trust Account of $319,129, offset by Trust Account interest income of $1,117,138.
For the six months ended June 30, 2023, we had net loss of $94,791, which consisted of operating costs of $872,259, an unrealized loss on the change in the fair value of the FPA liability of $862,581 and provision for income tax of $409,366, offset by Trust Account interest income of $1,917,032 and unrealized gain on the Trust Account of $132,383.
Factors That May Adversely Affect our Results of Operations
Our results of operations and our ability to complete an initial Business Combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, public health considerations, and geopolitical instability, such as the military conflicts in Ukraine and the Middle East. We cannot at this time predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial Business Combination.
Liquidity, Capital Resources and Going Concern
As of June 30, 2024, we had $73,267 in our operating bank account, $900,000 in a segregated account for the payment of Excise Taxes, and a working capital deficit of $3,397,790 (including $900,000 in cash received from Cartesian Escrow Parties for the payment of excise taxes).
Prior to the completion of the Initial Public Offering, our liquidity needs had been satisfied through (i) a loan under the IPO Promissory Note issued to the Sponsor totaling $252,950 and (ii) the issuance of 2,875,000 Class B Common Stock at approximately $0.009 per share for gross proceeds of $25,000. The IPO Promissory Note has been repaid and no other borrowings are permitted. Subsequent to the consummation of the Initial Public Offering, our liquidity needs have been satisfied through the issuance of the Private Placement Warrants, which generated gross proceeds of $4,950,000 and the WCL Promissory Note.
On May 8, 2023, we issued the First Extension Promissory Note to the Sponsor in an amount of up to $630,000 to be deposited into the Trust Account ($105,000 per month following the 5th of each month through November 3, 2023) for the benefit of the Public Stockholders who did not redeem their Public Shares in connection with the First Extension. The First Extension Promissory Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which we consummate Business Combination and (ii) the date of our liquidation. At June 30, 2024 and December 31, 2023, we had $355,000 of borrowings under the First Extension Promissory Note.
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On November 8, 2023, we issued the Second Extension Promissory Note in the aggregate principal amount of up to $359,503 to the Sponsor. The Second Extension Promissory Note bears no interest and is repayable in full upon the earlier to occur of (i) the date on which we consummate a Business Combination and (ii) the date of our liquidation. Additionally, we will continue to deposit $29,958.55 into the Trust Account for each calendar month (commencing on November 8, 2023 and ending on the 5th day of each subsequent month), or portion thereof, that is needed by us to complete an initial Business Combination until November 5, 2024, and such amount will be distributed either to: (i) all of the holders of Public Shares upon our liquidation or (ii) holders of Public Shares who elect to have their Public Shares redeemed in connection with the consummation of the initial Business Combination. At June 30, 2024 and December 31, 2023, we had $239,665 and $59,917, respectively, of borrowings under the Second Extension Promissory Note.
In addition, in order to finance transaction costs in connection with an intended initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us Working Capital Loans as may be required on a non-interest basis. If we complete an initial Business Combination, we would repay such Working Capital Loans. In the event that the initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants. Prior to the completion of our initial Business Combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.
On July 10, 2023, we issued the WCL Promissory Note to the Sponsor in an amount of up to $1,500,000 in connection with the Working Capital Loans. The WCL Promissory Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which we consummate a Business Combination and (ii) the date of our Company. In the event that the initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans, but no proceeds from the Trust Account would be used to repay the Working Capital Loans. As of June 30, 2024 and December 31, 2023, we owed $1,390,335 and $910,083, respectively, under the WCL Promissory Note and reported the amounts as Working Capital Loans on the condensed balance sheets in “Item 1. Financial Statements”.
Included on the unaudited condensed balance sheet at June 30, 2024 in “Item 1. Financial Statements” is $900,000 of cash release to us by the Cartesian Escrow Parties for the payment of our Excise Tax liability. Such amount was released to us solely for the purpose paying our Excise Tax liability and (i) under conditions as stipulated in the Flybondi Business Combination Agreement and (ii) is being held by us in a segregated bank account.
On October 31, 2023, we instructed Continental to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in an interest-bearing demand deposit account at JPMorgan Chase Bank, N.A., with Continental continuing to act as trustee, until the earlier of: (i) the consummation of a Business Combination or (ii) our liquidation. As a result, following the liquidation of investments in the Trust Account, the remaining proceeds from the Initial Public Offering and Private Placement are no longer invested in U.S. government securities or money market funds invested in U.S. government securities.
In connection with our assessment of going concern considerations in accordance with ASU 2014-15, Management has determined that the mandatory liquidation and subsequent dissolution, should we be unable to complete a Business Combination within the Combination Period, and insufficient cash, raises substantial doubt about our ability to continue as a going concern. Following the Second Special Meeting, we have until November 5, 2024 to consummate a Business Combination. It is uncertain that we will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after the end of the Combination Period.
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Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
Administrative Services Agreement
On November 2, 2021, we agreed to pay the Sponsor a total of $20,000 per month for office space, utilities, and secretarial and administrative support pursuant to the Services Agreement. Upon completion of the Business Combination or our liquidation, we will cease paying these monthly fees. Total administrative fee for the three and six months ended June 30, 2024 is $60,000 and $120,000, respectively. At June 30, 2024 and December 31, 2023, $80,000 and $80,000 is reported on the condensed balance sheets in “Item 1. Financial Statements” as due to the Sponsor for the administrative fees due, respectively.
Registration Rights Agreement
Pursuant to the Registration Rights Agreement, the holders of the (i) Founder Shares, (ii) Private Placement Warrants, and (iii) warrants that may be issued upon conversion of the Working Capital Loans (and in each case holders of their underlying securities, as applicable) will have registration rights to require us to register a sale of any of our securities held by them prior to the consummation of our initial Business Combination. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
Consulting and Advisory Services
On May 28, 2021, we entered into a letter agreement with J.V.B., pursuant to which, we engaged Cohen & Company to provide consulting and advisory services in connection with the Initial Public Offering in return for a transaction fee to be paid to J.V.B. in an amount equal to 10.0% of the aggregate underwriting discount and commissions earned by the underwriters in connection with the Initial Public Offering to be paid simultaneously with the actual payment of such underwriting discount and commissions to the underwriters upon (i) the closing of the Initial Public Offering and (ii) the completion of the initial Business Combination. J.V.B. was one of the Anchor Investors that purchased Units in the Initial Public Offering and became a member of the Sponsor at the closing of our Initial Public Offering and holds an indirect interest in a specified number of the Founder Shares held by the Sponsor.
On November 4, 2021, we paid J.V.B. $85,000 in cash from funds outside of the Trust Account. Funds due to J.V.B. upon the completion of the initial Business Combination ($605,000 in the aggregate) were to be paid by the underwriters of the Initial Public Offering.
On November 9, 2023, our Company and J.V.B. mutually agreed to terminate this arrangement. No further transactions fees will be payable to J.V.B. under this engagement of services.
Underwriter Agreement
The underwriters of the Initial Public Offering were entitled to a deferred underwriting commission of $0.50 on the first 10,000,000 Units sold in the Initial Public Offering and $0.70 per Unit per Unit sold thereafter, or $6,050,000 in the aggregate. On August 28, 2023, the underwriters waived any right to receive the deferred underwriting commission and will therefore receive no additional underwriting commissions in connection with the Flybondi Business Combination. As a result, $6,050,000 was recorded to accumulated deficit in relation to the reduction of the deferred underwriter fee. As of June 30, 2024 and December 31, 2023, the deferred underwriting fee is $0.
We comply with ASC 405 and derecognized the deferred underwriting commission liability upon being released of the obligation by the underwriters. To account for the waiver of the deferred underwriting commission, we reduced the deferred underwriter commission liability to $0 and reversed the previously recorded cost of issuing the instruments in the Initial Public Offering, which included a reduction in the accumulated deficit and increased income available to Class B Common Stock by $6,050,000, which was previously allocated to the Class A Common Stock subject to redemption and accretion recognized at the date of the Initial Public Offering.
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Anchor Investment
The Anchor Investors purchased an aggregate of approximately $60.8 million of the Units in the Initial Public Offering at the public offering price. There can be no assurance that the Anchor Investors will retain their Units prior to or upon the consummation of the initial Business Combination. In addition, none of the Anchor Investors has any obligation to vote any of their Public Shares in favor of the initial Business Combination.
The Anchor Investors have not been granted any stockholder or other rights that are in addition to those granted to our other Public Stockholders, and were only issued equity interests in our Sponsor, with no right to control our Sponsor or vote or dispose of any securities held by our Sponsor. Further, unlike some anchor investor arrangements of other blank check companies, the Anchor Investors are not required to (i) hold any Units, Class A Common Stock or Public Warrants they may have purchased in the Initial Public Offering or thereafter for any amount of time, (ii) vote any shares of Class A Common Stock they may own at the applicable time in favor of our initial Business Combination or (iii) refrain from exercising their right to redeem their Public Shares at the time of our initial Business Combination. The Anchor Investors have the same rights to the funds held in the Trust Account with respect to any Public Shares they hold as the rights afforded to our other Public Stockholders.
Forward Purchase Agreements
On August 23, 2021, pursuant to the FPAs, Crescent Park, which is one of the Anchor Investors, and Carnegie Park agreed to purchase up to 2,500,000 Forward Purchase Shares in the case of Crescent Park, and up to 500,000 Forward Purchase Shares in the case of Carnegie Park at $10.00 per share (as such price per share may be reduced to $9.20 per share or further reduced to below $9.20 per share with respect to all or part of the Forward Purchase Shares) for gross proceeds up to $30,000,000 in the aggregate if all of the Forward Purchase Shares were purchased at $10.00 per share (or up to $27,600,000 in the aggregate if all of the Forward Purchase Shares were purchased at $9.20 per share or up to a lower amount in the aggregate if all of the Forward Purchase Shares were purchased at less than $9.20 per share) in private placements that would occur concurrently with the consummation of the initial Business Combination.
On December 8, 2023 and December 12, 2023, we and each of Carnegie Park and Crescent Park entered into the FPA Termination Agreements to mutually terminate and cancel the FPAs.
Critical Accounting Policies and Estimates
We account for income taxes under ASC 740. ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. We assess the likelihood that deferred tax assets will be recovered from the existing deferred tax liabilities or future taxable income. To the extent we believe that recovery will not meet the more likely than not threshold, it establishes a valuation allowance.
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.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under 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 Management, including our Chief Executive Officer and Chief Financial Officer (together, the “Certifying Officers”), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
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Under the supervision and with the participation of our Management, including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective as of the end of the quarterly period ended June 30, 2024, due to identified material weaknesses related to errors in fair value calculation of certain financial instruments and unrecorded liabilities, including New York State taxes. Management plans to enhance internal controls and procedures, including enhancing access to accounting literature, identification and consideration of third-party professionals with whom to consult regarding complex accounting applications and implementing additional layers of reviews in the financial close process.
In light of these material weaknesses, 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 including making greater use of 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. We believe our efforts will enhance our controls relating to accounting for complex financial transactions, but we can offer no assurance that our controls will not require additional review and modification in the future as industry accounting practice may evolve over time.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
Other than as discussed above, there have been no changes to our internal control over financial reporting during the quarterly period ended June 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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• | our ability to complete an initial Business Combination with a target company contemplating a Nasdaq listing, as we would be a less attractive acquiror absent a listing on a national exchange; |
• | a limited availability of market quotations for our securities; |
• | reduced liquidity for our securities; |
• | a determination that our Class A Common Stock is a “penny stock,” which will require brokers trading in our Class A Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
• | a limited amount of news and analyst coverage; and |
• | a decreased ability to issue additional securities or obtain additional financing in the future. |
Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Report.
* | Filed herewith. |
** | Furnished herewith. |
(1) | Incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the SEC on July 9, 2024. |
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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.
Dated: August 14, 2024 | INTEGRAL ACQUISITION CORPORATION 1 | |||||
By: | /s/ Enrique Klix | |||||
Name: | Enrique Klix | |||||
Title: | Chief Executive Officer | |||||
(Principal Executive Officer) | ||||||
Dated: August 14, 2024 | By: | /s/ Oliver Matlock | ||||
Name: | Oliver Matlock | |||||
Title: | Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) |