UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from to
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☐ Large accelerated filer | ☐Accelerated filer | |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
As of November 14, 2023, there were
MOUNTAIN & CO I ACQUISITION CORP.
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MOUNTAIN & CO I ACQUISITION CORP.
CONDENSED BALANCE SHEETS
September 30, 2023 | December 31, 2022 | |||||
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Assets | ||||||
Current Assets | ||||||
Cash | $ | | $ | | ||
Receivable from Sponsor | — | | ||||
Prepaid expenses | | | ||||
Total Current Assets | | | ||||
Investments held in Trust Account | | | ||||
Total Assets | $ | | $ | | ||
Liabilities, Redeemable Ordinary Shares, and Shareholders’ Deficit |
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Current liabilities | ||||||
Accrued offering costs and expenses | $ | | $ | | ||
Due to related party | | | ||||
Promissory note – related party | | | ||||
Total Current Liabilities |
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Deferred underwriting fee |
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Total Liabilities |
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Commitments and Contingencies (See Note 6) |
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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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Total Shareholders’ Deficit |
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Total Liabilities, Redeemable Ordinary Shares, and Shareholders’ Deficit | $ | | $ | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
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MOUNTAIN & CO I ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the | For the | |||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
Formation and operating costs | $ | | $ | | $ | | $ | | ||||
Loss from operations | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other income: | ||||||||||||
Interest income on trust account | | | | | ||||||||
Total other income | | | | | ||||||||
Net income (loss) | $ | | $ | | $ | | $ | ( | ||||
Weighted average shares outstanding of Class A ordinary shares subject to possible redemption |
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Basic and diluted net income (loss) per share, Class A ordinary shares subject to possible redemption | $ | | $ | | $ | | $ | ( | ||||
Weighted average shares outstanding of Class B ordinary shares |
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Basic and diluted net income (loss) per share, Class B ordinary shares | $ | | $ | | $ | | $ | ( |
The accompanying notes are an integral part of these unaudited condensed financial statements.
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MOUNTAIN & CO I ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
Ordinary Shares | Additional | Total | |||||||||||||||||
Class A | Class B | Paid-In | Accumulated | Shareholders’ | |||||||||||||||
| Shares |
| Amount |
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| Capital |
| Deficit |
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Balance as of December 31, 2022 |
| — | $ | — | | $ | | $ | — | $ | ( | $ | ( | ||||||
Accretion for Class A Common Stock to redemption | — | — | — | — | — | ( | ( | ||||||||||||
Net income | — | — | — | — | — | | | ||||||||||||
Balance as of March 31, 2023 | — | — | | | — | ( | ( | ||||||||||||
Accretion for Class A Common Stock to redemption | — | — | — | — | — | ( | ( | ||||||||||||
Net income |
| — | — | — | — | — | | | |||||||||||
Balance as of June 30, 2023 | — | $ | — | | $ | | $ | — | $ | ( | $ | ( | |||||||
Accretion for Class A Common Stock to redemption | — | — | — | — | — | ( | ( | ||||||||||||
Net income | — | — | — | — | — | | | ||||||||||||
Balance as of September 30, 2023 |
| — | $ | — | | $ | | $ | — | $ | ( | $ | ( |
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022
Ordinary Shares | Additional |
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Class A | Class B | Paid-In | Accumulated | Shareholders’ | |||||||||||||||
| Shares |
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Balance as of December 31, 2021 | — | $ | — | | $ | | $ | — | $ | ( | $ | ( | |||||||
Accretion for Class A Common Stock to redemption |
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Net loss |
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Balance as of June 30, 2022 | — | $ | — | | $ | | $ | — | $ | ( | $ | ( | |||||||
Accretion for Class A Common Stock to redemption | — | — | — | — | — | ( | ( | ||||||||||||
Net income | — | — | — | — | — | | | ||||||||||||
Balance as of September 30, 2022 | — | $ | — | | $ | | $ | — | $ | ( | $ | ( |
The accompanying notes are an integral part of these unaudited condensed financial statements.
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MOUNTAIN & CO I ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the Nine months Ended | ||||||
September 30, | ||||||
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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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Interest earned on investments held in Trust Account | ( | ( | ||||
Changes in current assets and liabilities: | ||||||
Prepaid expenses | | | ||||
Accrued expenses | | | ||||
Receivable from Sponsor |
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Due to related party | | | ||||
Net cash used in operating activities |
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Cash flows from Investing Activities: | ||||||
Extension contributions in Trust Account | ( | — | ||||
Cash withdrawn from Trust Account in connection with redemption | | — | ||||
Net cash provided by investing activities | | — | ||||
Cash flows from Financing Activities: | ||||||
Payment of redemptions | ( | — | ||||
Proceeds from the promissory note to related party | | — | ||||
Net cash used in financing activities | ( | — | ||||
Net change in cash |
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Cash, beginning of the period |
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Cash, end of the period | $ | | $ | | ||
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Supplemental Disclosure of Non-cash Financing Activities: |
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Accretion for Class A Common Stock to redemption | $ | | $ | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
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MOUNTAIN & CO I ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND LIQUIDITY
Mountain & Co. I Acquisition Corp. (the “Company”) was incorporated as a Cayman Islands exempted company on April 16, 2021. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar Business Combination with
As of September 30, 2023, the Company had not commenced any operations. All activity through September 30, 2023 relates to the Company’s formation and the initial public offering (“IPO”) described below. The Company will not generate any operating revenues at the earliest until after the completion of its initial Business Combination. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Public Offering (as defined below).
The Company’s sponsor is Mountain & Co. I Sponsor LLC, a Cayman Islands limited liability company (the “Sponsor”).
The registration statement for the Company’s IPO was declared effective on November 4, 2021 (the “Effective Date”). On November 9, 2021, the Company consummated its IPO of
Transaction costs related to the IPO and the exercise of the over-allotment option amounted to $
The Company must consummate an initial Business Combination with one or more operating businesses or assets with a fair market value equal to at least
The Company does not believe that its anticipated principal activities will subject them to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of
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part of the redemption of the public shares. If the Company does not invest the proceeds as discussed above, the Company may be deemed to be subject to the Investment Company Act. Although the Company expects to enter into an agreement with a target company for a business combination no later than
Following the closing of the IPO on November 9, 2021, and subsequent close of the over-allotment option exercise on November 12, 2021, a total of $
The Company will provide its public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon the completion of the initial Business Combination either (i) in connection with a general meeting called to approve the initial Business Combination or (ii) without a shareholder vote by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed initial Business Combination or conduct a tender offer will be made by the Company, solely in its discretion and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require the Company to seek shareholder approval under applicable law or stock exchange listing requirement or whether the Company were deemed to be a foreign private issuer (which would require a tender offer rather than seeking shareholder approval under SEC rules). The Company will provide its public shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of
The ordinary shares subject to redemption will be recorded at a redemption value and classified as temporary equity upon the completion of the Public Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $
If the Company has not consummated an initial Business Combination by March 9, 2024, the proceeds then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to pay income taxes, if any (less up to $
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articles of association will provide that, if the Company winds up for any other reason prior to the consummation of its initial Business Combination, the Company will follow the foregoing procedures with respect to the liquidation of the trust account as promptly as reasonably possible but not more than
business days thereafter, subject to applicable Cayman Islands law.The Sponsor, officers and directors have agreed to (i) waive their redemption rights with respect to their Founder Shares and public shares in connection with the completion of the initial Business Combination; (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) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the initial Business Combination or to redeem
On February 6, 2023, the Company held an extraordinary general meeting of shareholders, where our shareholders approved a special resolution (the “Extension Amendment Proposal”) to amend the Company’s amended and restated memorandum and articles of association to (i) extend from February 9, 2023 to November 9, 2023 (the “Extension”), the date by which the Company must consummate an initial business combination.
In connection with the vote to approve the Extension Amendment Proposal, shareholders holding
On September 14, 2023, we held an extraordinary general meeting of shareholders, where our shareholders approved a special resolution (the “Second Extension Amendment Proposal”) to amend the Company’s amended and restated memorandum and articles of association to (i) extend from November 9, 2023 to March 9, 2024 (the “Second Extended Date”), the date by which the Company must consummate an initial business combination (the “Second Extension”).
In connection with the Second Extension, the Sponsor agreed to advance to the Company (i) $
In connection with the vote to approve the Second Extension Amendment Proposal, shareholders holding
The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or Business Combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $
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provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Public Offering against certain liabilities, including liabilities under the Securities Act. However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and the Company believes that the Sponsor’s only assets are securities of the company. Therefore, the Company cannot assure you that the Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the trust account, the funds available for the initial Business Combination and redemptions could be reduced to less than $
Liquidity, Capital Resources and Going Concern
At September 30, 2023, the Company had $
The Company’s liquidity needs up to September 30, 2023 have been satisfied through the payment of certain offering costs by Sponsor of $
In addition, in order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans, as defined below (see Note 5). As of September 30, 2023 and December 31, 2022, there were
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Account Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, management has determined that the Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. In addition, the Company has until March 9, 2024 to consummate a Business Combination. Management considers that liquidity and capital resources available might not be sufficient to operate through March 9, 2024. Also, it is uncertain that the Company will be able to consummate a Business Combination by this date. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company.
Management has determined that the mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution, in addition to potential liquidity and capital shortage raise substantial doubt about the Company’s ability to continue as a going concern. The unaudited condensed financial statements do not include any adjustment that might result from the outcome of this uncertainty.
Risks and Uncertainties
On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a “pandemic”, or a worldwide spread of a new disease. Many countries imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus and have closed non-essential businesses. On May 5, 2023, the World Health Organization declared that COVID-19 no longer constitutes a public health emergency.
The extent to which COVID-19 may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the pandemic. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in unaudited condensed financial statements prepared in accordance with US 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 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 financial statements should be read in conjunction with the Company’s Form 10-K for the year ended December 31, 2022 as filed with the SEC on March 31, 2023, which contains the audited financial statements and notes thereto. The interim results for the three and nine months 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.
Emerging Growth Company Status
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 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 unaudited condensed 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 financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Investments Held in Trust Account
At September 30, 2023 and December 31, 2022, funds held in the Trust Account include $
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Offering Costs Associated with Initial Public Offering
Deferred offering costs consist of underwriter, accounting, filing and legal expenses incurred through the balance sheet date that are directly related to the IPO. Upon consummation, they were charged ratably to the underlying instruments they related to on a relative fair value basis. If the IPO had proved to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, would have been charged to operations. Offering costs amounted to $
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheets, primarily due to its short-term nature.
Fair Value Measurement
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The Company’s financial instruments are classified as either Level 1, Level 2 or Level 3. These tiers include:
● | 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. |
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 ASC Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable shares (including shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ deficit. The Company’s Class A ordinary shares sold in the IPO feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Such changes are reflected in additional paid-in capital, or in the absence of additional capital, in accumulated deficit. Accordingly, as of September 30, 2023 and December 31, 2022, there were
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The Class A ordinary shares subject to possible redemption reflected on the balance sheets as of September 30, 2023 and December 31, 2022 is reconciled in the following table:
September 30, | December 31, | |||||
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Proceeds from IPO | $ | | $ | | ||
Less: | ||||||
Proceeds allocated to Public Warrants |
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Class A ordinary shares issuance costs |
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Redemptions | ( | — | ||||
Plus: |
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Fair value of over-allotment option |
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Remeasurement of Class A ordinary shares to redemption value |
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Class A ordinary shares subject to possible redemption | $ | | $ | |
Warrants
The Company must account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB 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 whether the warrants 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 warrant holders 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 warrant issuance 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, the 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 of the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. The Company accounts for the warrants as equity-classified.
Net Income (Loss) Per Ordinary Share
Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture by the Sponsor. As of September 30, 2023 and December 31, 2022, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted income (loss) per share is the same as basic loss per share for the period presented.
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||
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2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||
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Basic and diluted net income (loss) per share: |
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Numerator: |
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Allocation of net income (loss) | $ | | $ | | $ | | $ | | $ | | $ | | $ | ( | $ | ( | ||||||||
Denominator: | ||||||||||||||||||||||||
Weighted-average shares outstanding including ordinary shares subject to redemption |
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Basic and diluted net income (loss) per share | $ | | $ | | $ | | $ | | $ | | $ | | $ | ( | $ | ( |
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Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the unaudited condensed financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 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 recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were
There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s unaudited condensed financial statements.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards Update (“ASU”) 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) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. As a smaller reporting company, ASU 2020-06 is effective January 1, 2024 for fiscal years beginning after December 15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows. The Company has not adopted this guidance as of September 30, 2023.
Management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
NOTE 3. PUBLIC OFFERING
On November 9, 2021, the Company consummated the sale of
Each Unit consists of
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the IPO, the Company’s Sponsor purchased an aggregate of
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2021, the underwriters exercised their full over-allotment option exercise, which resulted in an additional
The Private Placement Warrants are identical to the warrants sold in the Public Offering except that, so long as they are held by the Sponsor or its permitted transferees, the private placement warrants (i) will not be redeemable by the Company, (ii) may not (including the Class A ordinary shares issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders 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 and exercisable by the holders on the same basis as the warrants included in the units being sold in the Public Offering. If the Company does not complete its initial Business Combination within the Combination Period, the private placement warrants will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Receivable from Sponsor
As of September 30, 2023 and December 31, 2022, the Company has outstanding receivable from Sponsor of $
Due to Related Party
As of September 30, 2023 and December 31, 2022, the Company has outstanding payable to a related party of $
Founder Shares
On April 23, 2021, Mountain & Co. Sponsor One LLP, an affiliate of the Company, paid $
On August 23, 2021, the Sponsor transferred
The initial shareholders have agreed not to transfer, assign or sell any of their Founder Shares and any Class A ordinary shares issuable upon conversion thereof until the earlier to occur of: (i)
Notwithstanding the foregoing, if (1) the closing price of the Class A ordinary shares equals or exceeds $
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any
Promissory Note — Related Party
On April 23, 2021, the Sponsor agreed to loan the Company up to $
On February 6, 2023, the Company issued to the Sponsor a promissory note (the “Note”) for $
Related Party Loans
In addition, in order to finance transaction costs in connection with an intended initial Business Combination, the sponsor or an affiliate of the sponsor or certain of its officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes its initial Business Combination, the Company would repay the Working Capital Loans. In the event that the initial 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
Administrative Support Agreement
Commencing on November 5, 2021, the Company will pay the Sponsor $
NOTE 6. COMMITMENTS & CONTINGENCIES
Registration Rights
The holders of the (i) Founder Shares, which were issued in a private placement prior to the closing of the Public Offering, (ii) Private Placement Warrants, which were issued in a private placement simultaneously with the closing of the Public Offering and the Class A ordinary shares underlying such Private Placement Warrants and (iii) private placement warrants that may be issued upon conversion of working capital loans will have registration rights to require the Company to register a sale of any of the Company’s
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securities held by them pursuant to a registration rights agreement to be signed prior to or on the effective date of the Public Offering. The holders of these securities are entitled to make up to
Underwriting Agreement
The Company granted the underwriters a
The underwriters were paid in cash for underwriting discount of two percent (
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.
The Company has recorded an accrual of $
As of September 30, 2023, $
Business Combination Agreement
On August 11, 2023, the Company entered into a Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), by and among the Company, Futbol Club Barcelona, a sport association (“FCB”), and Barça Produccions S.L., a Spanish limited liability corporation wholly owned by FCB (“BP”). The Business Combination Agreement provides for a series of transactions (collectively, the “Business Combination”), pursuant to which, among other things: (i) Sponsor will transfer all of the equity of a newly-formed Netherlands private limited liability company to be renamed Barça Media (“TopCo”), which shall own all of the equity interests of a Cayman Islands exempted company (“Merger Sub”) to BP for nominal consideration; (ii) FCB and BP will cause TopCo and Merger Sub to become a party to the Business Combination Agreement; and (iii) Merger Sub will merge with and into the Company (the “Merger”), with the Company as the surviving company (the “Surviving Company”) and, after giving effect to the Merger, become a wholly owned subsidiary of TopCo. Each issued and outstanding Class A ordinary share of the Company and Class B ordinary share of the Company will be converted into
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will be obtained in connection with the Business Combination. If these conditions are not satisfied, amended or waived by the parties pursuant to the terms of the Business Combination Agreement, then the Business Combination would not be consummated.
On September 8, 2023, Mountain, FCB and BP entered into an amendment to the Business Combination Agreement to amend certain conditions to the closing of the Business Combination.
On August 11, 2023, the Sponsor, directors and officers of the Company (the “D&Os”) and the Company entered into the sponsor support agreement, pursuant to which, among other things, each of the Sponsor and the D&Os has agreed to (i) vote in favor of the Business Combination Agreement and the transactions contemplated thereby and (ii) waive any adjustment to the conversion ratio set forth in the governing documents of the Company or any other anti-dilution protection with respect to the Company’s Class B ordinary shares.
On August 11, 2023, LIBERO Football Finance AG (“LIBERO”), Orpheus Media, S.L. (together with its affiliates, “Orpheus”), Blaugrana Invest, S.á.r.l. (together with its affiliates, “Blaugrana”), BP and the Company entered into definitive agreements, pursuant to which, among other things, LIBERO has agreed to purchase, and Orpheus and Blaugrana have agreed to sell,
On August 11, 2023, a holding company advised by NIPA Capital B.V. (“Holding”), Orpheus, Blaugrana, BP and the Company entered into definitive agreements, pursuant to which, among other things, Holding has agreed to purchase, and Orpheus and Blaugrana have agreed to sell, 590 ordinary shares of Bridgeburg in the aggregate that are owned by Orpheus and Blaugrana in exchange for cash payments by Holding directly to BP in an amount equal to approximately €
On August 11, 2023, the Company and PRIMARY metaverse d.o.o., a limited liability company organized in Croatia (the “Consultant”) entered into the consulting agreement, pursuant to which, among other things, the Consultant agreed to provide the Company with support in identifying third-party investors to backstop or assume certain payment obligations of Orpheus and Socios Deportes Services, S.L., for which the Consultant will be paid a fee of €
On August 9, 2023, the Company instructed Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account, to liquidate the U.S. government securities or money market funds held in the Trust Account and thereafter to hold all funds in the Trust Account in a deposit account with a financial institution in the United States. The interest rate on such deposit account is currently approximately
Forward Purchase Agreement
On July 31, 2023, the Company entered into a Forward Purchase Agreement (the “Forward Purchase Agreement”) and Subscription Agreement (the “FPA Subscription Agreement”) with Meteora Special Opportunity Fund I, LP (“MSOF”), Meteora Capital Partners, LP (“MCP”), Meteora Select Trading Opportunities Master, LP (“MSTO”), and Meteora Strategic Capital, LLC (“MSC”) (with MSOF, MCP, MSC and MSTO collectively referred to as “Seller”) for an OTC Equity Prepaid Forward Transaction. Pursuant to the terms of the Forward Purchase Agreement and FPA Subscription Agreement, Seller agreed to subscribe for and purchase, and the Company agreed to issue and sell to Seller, on the Closing, up to
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through the FPA Subscription Agreement and any Recycled Shares in connection with the Business Combination, extensions or otherwise that would require redemption by the Company of such shares.
On July 3, 2023, the Company entered into an engagement letter pursuant to which it agreed to pay to a capital markets advisor a fee of $
NOTE 7. SHAREHOLDERS’ DEFICIT
Preference Shares — The Company is authorized to issue
Class A Ordinary Shares — The Company is authorized to issue
Class B Ordinary Shares — The Company is authorized to issue
Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders except as required by law. Unless specified in the amended and restated memorandum and articles of association, or as required by applicable provisions of the Companies Act or applicable stock exchange rules, the affirmative vote of a majority of its ordinary shares that are voted is required to approve any such matter voted on by the Company’s shareholders. Approval of certain actions will require a special resolution under Cayman Islands law, being the affirmative vote of at least
The Founder Shares are designated as Class B ordinary shares and will automatically convert into Class A ordinary shares, which such Class A ordinary shares delivered upon conversion will not have any redemption rights or be entitled to liquidating distributions 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,
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herein will take effect as a compulsory redemption of Class B ordinary shares and an issuance of Class A ordinary shares as a matter of Cayman Islands law. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than
Warrants — Each whole warrant entitles the holder to purchase
The warrants will expire at 5:00 p.m., New York City time on the warrant expiration date, which is
The Company will not be obligated to deliver any shares of Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A ordinary shares is available, subject to the satisfying the Company’s obligations described below with respect to registration.
The Company is not registering the shares of Class A ordinary shares issuable upon exercise of the warrants at this time. However, the Company has agreed that as soon as practicable, but in no event later than
Redemption of warrants
The Company may redeem the Public Warrants:
● | in whole and not in part; |
● | at a price of $ |
● | if, and only if, the last reported sale price of the Class A ordinary shares equals or exceeds $ |
● | upon a minimum of |
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. If the Company calls the public warrants for redemption, as described above, its management will have the option to require any holder that wishes to exercise the public warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary
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shares issuable upon exercise of the public warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the public warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the public warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the trust account, holders of public warrants will not receive any of such funds with respect to their public warrants, nor will they receive any distribution from the Company’s assets held outside of the trust account with respect to such public warrants. Accordingly, the public warrants may expire worthless.
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 a Business Combination at an issue price or effective issue price of less than $
The Private Placement Warrants will be identical to the public warrants underlying the Units being sold in the Public Offering, except that (x) the Private Placement Warrants will not be transferable, assignable or salable and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until
The Company accounts for
NOTE 8. RECURRING FAIR VALUE MEASUREMENTS
Substantially all of the Company’s investments held in the Trust Account on the balance sheets consist of U. S. Money Market funds which are classified as cash equivalents. Fair values of these investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets.
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The following table presents information about the Company’s assets and were measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
|
| Quoted |
| Significant |
| Significant | ||||||
Prices In | Other | Other | ||||||||||
Active | Observable | Unobservable | ||||||||||
September 30, | Markets | Inputs | Inputs | |||||||||
| 2023 |
| (Level 1) |
| (Level 2) |
| (Level 3) | |||||
Assets: |
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Investments held in Trust Account | $ | | $ | | $ | — | $ | — |
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| Quoted |
| Significant |
| Significant | |||||
Prices In | Other | Other | ||||||||||
Active | Observable | Unobservable | ||||||||||
December 31, | Markets | Inputs | Inputs | |||||||||
| 2022 |
| (Level 1) |
| (Level 2) |
| (Level 3) | |||||
Assets: |
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Investments held in Trust Account | $ | | $ | | $ | — | $ | — |
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up through the date that the unaudited condensed financial statements was issued. Based upon this review, the Company did not identify any other subsequent events, except as noted below, that would have required adjustment or disclosure in the unaudited condensed financial statements.
In connection with the Second Extension, the Sponsor agreed to advance to the Company (i) $
On October 26, 2023, Mountain, FCB and BP entered into an Amended and Restated Business Combination Agreement (the “A&R Business Combination Agreement”). The A&R Business Combination Agreement, among others, amends certain closing conditions relating to the financial requirements that must be satisfied to complete the Business Combination with the objective to enhance structural flexibility. The previous minimum cash condition, designated to cover expenses, has been adjusted to require that the a newly-formed Netherlands private limited liability company to be renamed Barça Media has not less than €
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,” “Mountain & Co. I Acquisition Corp.,” “our,” “us” or “we” refer to Mountain & Co. I Acquisition Corp. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the completion of the Business Combination, the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
Overview
We are a blank check company incorporated on April 16, 2021 as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”).
Our Sponsor is Mountain & Co. I Sponsor LLC, a Cayman Islands limited liability company (the “Sponsor”).
Our registration statement was declared effective on November 4, 2021. On November 9, 2021, we consummated our initial public offering (the “IPO”) of 20,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”) at $10.00 per Unit and the sale of 12,000,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to our Sponsor that closed simultaneously with the IPO. On November 12, 2021, the underwriters exercised their full over-allotment option, resulting in an additional 3,000,000 Units purchased and $30,000,000 in additional gross proceeds for aggregate Units purchased of 23,000,000 and aggregate gross proceeds of $230,000,000 from both the IPO and over-allotment option exercise. Substantially concurrently with the exercise of the over-allotment option, we completed the private sale of 1,500,000 additional Private Placement Warrants to our Sponsor at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds to us of $1,500,000.
Transaction costs related to our IPO and the exercise of the over-allotment option amounted to $13,406,427 consisting of $4,600,000 of underwriting commissions, $8,050,000 of deferred underwriting fees and $756,427 of other cash offering costs.
Following the closing of our IPO on November 9, 2021, and subsequent close of the over-allotment option exercise on November 12, 2021, a total of $236,900,000, comprised of $225,400,000 of the net proceeds from the IPO, including $8,050,000 of the underwriters’ deferred discount, and $11,500,000 of the proceeds of the sale of the Private Placement Warrants, was placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee (the “Trust Account”). The proceeds held in the Trust Account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement governing the Trust Account, the trustee is not permitted to invest in other securities or assets. 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 IPO and the sale of the Private Placement Warrants will not be released from the Trust Account until the earliest of (i) the completion of the initial Business Combination, (ii) the redemption of our public shares if we are
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unable to complete the initial Business Combination, subject to applicable law, or (iii) the redemption of our public shares properly submitted in connection with a shareholder vote to amend our amended and restated memorandum and articles of association to (A) modify the substance or timing of our obligation to allow redemption in connection with the initial Business Combination or to redeem 100% of our public shares if we have not consummated an initial Business Combination by November 30, 2023, or (B) with respect to any other material provisions relating to shareholders’ 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 shareholders.
On February 6, 2023, the Company held an extraordinary general meeting of shareholders, where our shareholders approved a special resolution (the “Extension Amendment Proposal”) to amend the Company’s amended and restated memorandum and articles of association to (i) extend from February 9, 2023 to November 9, 2023 (the “Extension”), the date by which the Company must consummate an initial business combination.
In connection with the vote to approve the Extension Amendment Proposal, shareholders holding 10,784,962 public shares exercised their right to redeem such shares for a pro rata portion of the funds in the trust account. As a result, approximately $113.0 million (approximately $10.48 per share) was removed from the trust account to pay such redeeming holders, representing 46.9% of the public shares. 53.1% of the public shares issued in our IPO remain outstanding.
On September 14, 2023, we held an extraordinary general meeting of shareholders, where our shareholders approved a special resolution (the “Second Extension Amendment Proposal”) to amend the Company’s amended and restated memorandum and articles of association to (i) extend from November 9, 2023 to March 9, 2024 (the “Second Extended Date”), the date by which the Company must consummate an initial business combination (the “Second Extension”).
In connection with the Second Extension, the Sponsor agreed to advance to the Company (i) $300,000 plus (ii) $300,000 for each subsequent calendar month commencing on October 9, 2023, and on the 9th day of each subsequent month, or portion thereof, that the Company requires to complete a Business Combination, to be deposited in the trust account on or before the 9th day of each calendar month, until the Second Extended Date. On September 14, 2023, the Company amended and restated that certain promissory note, dated February 6, 2023 (the “Amended and Restated Note”) previously issued by the Company to the Sponsor in respect of such advances and the Sponsor has waived any and all rights to the monies held in the trust account with respect to those advances. The Amended and Restated Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of the Company’s initial business combination, or (b) the date of the liquidation of the Company. At the option of the Sponsor, up to $1,500,000 of the loan would be convertible into warrants identical to the Company’s private placement warrants, at $1.00 per warrant. Any amendments to the Amended and Restated Note and the loan may be made with the written consent of the Sponsor and the Company. For example, if we determine that we no longer expect to complete a business combination within the prescribed time frame, the Sponsor and the Company may agree to discontinue such loans.
In connection with the vote to approve the Second Extension Amendment Proposal, shareholders holding 701,973 public shares exercised their right to redeem such shares for a pro rata portion of the funds in the trust account. As a result, approximately $7.8 million (approximately $11.05 per share), was removed from the trust account to pay such redeeming holders, representing 49.9% of the public shares in the aggregate. 50.1% of the public shares issued in our IPO remain outstanding.
Our Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or other similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.30 per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.30 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. However, we have not asked our Sponsor to reserve for such indemnification obligations, nor have we independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and we believe that our Sponsor’s only assets are our securities. Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the trust account, the funds available for the initial Business Combination and redemptions could be reduced to less than $10.30 per public share. In such event, we may not be able to complete the initial Business Combination, and you would receive such lesser amount per
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share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Results of Operations
As of September 30, 2023, we had not commenced any operations. All activity for the three and nine months ended September 30, 2023 relates to our formation and IPO. We will not generate any operating revenues at the earliest until after the completion of our initial Business Combination. We will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from our IPO. We have selected December 31 as our fiscal year end.
For the three months ended September 30, 2023, we had a net income of $1,244,832, which consisted of interest earned on trust account of $2,106,298, offset by formation and operating costs $861,466.
For the nine months ended September 30, 2023, we had a net income of $3,674,012, which consisted of interest earned on trust account of $5,701,602, offset by formation and operating costs $2,027,590.
For the three months ended September 30, 2022, we had a net income of $442,827, which consisted of interest earned on trust account of $742,534, offset by formation and operating costs $299,707.
For the nine months ended September 30, 2022, we had a net loss of $314,477, which included formation and operating costs of $1,170,196, offset by interest earned on trust account of $855,719.
Proposed Business Combination
Business Combination Agreement
On August 11, 2023, the Company entered into the a Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”)with Futbol Club Barcelona, a sport association (asociación deportiva) (“FCB”) and Barça Produccions S.L., a Spanish limited liability corporation wholly owned by FCB (“BP”), pursuant to which, among other things: (i) Sponsor will transfer all of the equity of a newly-formed Netherlands private limited liability company to be renamed Barça Media (“TopCo”), which shall own all of the equity interests of a Cayman Islands exempted company (“Merger Sub”), to BP for nominal consideration; (ii) FCB and BP will cause TopCo and Merger Sub to become a party to the Business Combination Agreement; and (iii) Merger Sub will merge with and into the Company (the “Merger”), with the Company as the surviving company (the “Surviving Company”) and, after giving effect to the Merger, become a wholly owned subsidiary of TopCo. Each issued and outstanding Class A ordinary share of the Company and Class B ordinary share of the Company will be converted into one Class A ordinary share of the Surviving Company, and immediately thereafter, each of the resulting Class A ordinary shares of the Surviving Company will be immediately exchanged for one ordinary share in the share capital of TopCo, and each outstanding warrant to purchase one Class A ordinary share of the Company at a price of $11.50 per share will, by its terms, convert into a Converted Warrant (as defined in the Business Combination Agreement). Bridgeburg Invest, S.L., a Spanish limited liability corporation and an indirect subsidiary of FCB, will assume, prior to the consummation of the Merger, the assets and liabilities associated with FCB’s content creation platform. There can be no assurance that the business combination will be consummated.
On September 8, 2023, Mountain, FCB and BP entered into an amendment to the Business Combination Agreement to amend certain conditions to the closing of the Business Combination. On October 26, 2023, Mountain, FCB and BP entered into an Amended and Restated Business Combination Agreement (the “A&R Business Combination Agreement”). The A&R Business Combination Agreement, among others, amends certain closing conditions relating to the financial requirements that must be satisfied to complete the Business Combination with the objective to enhance structural flexibility. The previous minimum cash condition, designated to cover expenses, has been adjusted to require that the a newly-formed Netherlands private limited liability company to be renamed Barça Media (“TopCo”) has not less than €90 million in cash at closing of the Business Combination, which will be reduced by any cash received by FCB in connection with the contemplated transactions, and will be measured prior to the payment of any transaction expenses. The minimum proceeds condition (i.e., the requirement that FCB or its affiliates receive €40 million) can now be met through various sources, and is only required to be satisfied as of the closing of the business combination. Furthermore, FCB’s previous unilateral termination right has been removed. As amended, the A&R Business Combination Agreement provides for a termination right by FCB if funding of €40 million has not been received or committed by December 31, 2023.
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There can be no assurance that additional third-party funding necessary to satisfy the Proceeds Condition will be obtained by the Proceeds Condition Deadline. Furthermore, until the Proceeds Condition is satisfied, FCB may, in its sole and absolute discretion, terminate the Business Combination Agreement at any time.
Please see Item 1A “Risk Factors” below for further disclosure on risks related to the Business Combination and Note 9 “Subsequent Events” above for further information. The Business Combination is described in more detail in the Company’s Current Report on Form 8-K, filed on August 11, 2023 (Acc. No. 0001104659-23-090538) and the Company’s Current Report on Form 8-K, filed on September 8, 2023 (File No. 001-41021).
Related Agreements
On August 11, 2023, the Sponsor, directors and officers of the Company (the “D&Os”) and the Company entered into the sponsor support agreement, pursuant to which, among other things, each of the Sponsor and the D&Os has agreed to (i) vote in favor of the Business Combination Agreement and the transactions contemplated thereby and (ii) waive any adjustment to the conversion ratio set forth in the governing documents of the Company or any other anti-dilution protection with respect to the Company’s Class B ordinary shares.
On August 11, 2023, LIBERO, Orpheus, Blaugrana, BP and the Company entered into definitive agreements, pursuant to which, among other things, LIBERO has agreed to purchase, and Orpheus and Blaugrana have agreed to sell, 294 ordinary shares of Bridgeburg that are owned by Orpheus and Blaugrana in exchange for cash payments by LIBERO to BP in an amount equal to approximately (i) €20 million ($21.2 million) in the aggregate on or before August 11, 2023, but not before the execution of the Business Combination Agreement and (ii) €20 million ($21.2 million) in the aggregate on or before August 21, 2023.
On August 11, 2023, a holding company advised by NIPA Capital B.V. (“Holding”), Orpheus, Blaugrana, BP and the Company entered into definitive agreements, pursuant to which, among other things, Holding has agreed to purchase, and Orpheus and Blaugrana have agreed to sell, 590 ordinary shares of Bridgeburg in the aggregate that are owned by Orpheus and Blaugrana in exchange for cash payments by Holding directly to BP in an amount equal to approximately €20 million ($21.2 million) on August 11, 2023 and the assumption by Holding of Orpheus’ obligation (pursuant to that certain sale and purchase agreement, dated August 11, 2022, between Orpheus and BP) to pay €30 million ($21.2 million) to BP on June 15, 2024 and €30 million ($31.8 million) to BP on June 15, 2025. In connection with and subject to the closing of the Business Combination, Holding will also purchase from the Sponsor 5,750,000 warrants to purchase ordinary shares of TopCo and 2,537,500 ordinary shares of TopCo.
On August 11, 2023, the Company and PRIMARY metaverse d.o.o., a limited liability company organized in Croatia (the “Consultant”) entered into the consulting agreement, pursuant to which, among other things, the Consultant agreed to provide the Company with support in identifying third-party investors to backstop or assume certain payment obligations of Orpheus and Socios Deportes Services, S.L., for which the Consultant will be paid a fee of €4.1 million ($4.3 million). As a result of the Consultant’s efforts to identify third-party investors, LIBERO, the Sponsor and a guarantor (the “Guarantor”) entered into the Backstop Agreement, pursuant to which, in exchange for certain warrants the Sponsor will provide to the Guarantor and the Consultant, the Guarantor will pay any remaining balance of the Secondary Payment Amount (as defined in the Backstop Agreement) outstanding as of August 21, 2023, so long as the Company and BP have entered into and publicly announced a business combination agreement.
On August 9, 2023, the Company instructed Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account, to liquidate the U.S. government securities or money market funds held in the Trust Account and thereafter to hold all funds in the Trust Account in a deposit account with a financial institution in the United States. The interest rate on such deposit account is currently approximately 4.60% per annum, but such deposit account carries a variable rate, and the Company cannot assure investors that such rate will not decrease or increase significantly.
On July 31, 2023, the Company entered into a Forward Purchase Agreement (the “Forward Purchase Agreement”) and Subscription Agreement (the “FPA Subscription Agreement”) with Meteora Special Opportunity Fund I, LP (“MSOF”), Meteora Capital Partners, LP (“MCP”), Meteora Select Trading Opportunities Master, LP (“MSTO”), and Meteora Strategic Capital, LLC (“MSC”) (with MSOF, MCP, MSC and MSTO collectively referred to as “Seller”) for an OTC Equity Prepaid Forward Transaction. Pursuant to the terms of the Forward Purchase Agreement and FPA Subscription Agreement, Seller agreed to subscribe for and purchase, and the Company agreed to issue and sell to Seller, on the Closing, up to 12,500,000 Class A ordinary shares of the Company, less the number of Class A ordinary shares of the Company purchased by Seller separately from third parties through a broker in the open market at prices no higher than the redemption price. Seller has agreed to waive any redemption rights under the
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Company’s Amended and Restated Articles of Association with respect to any Class A ordinary shares of the Company purchased through the FPA Subscription Agreement and any Recycled Shares in connection with the Business Combination, extensions or otherwise that would require redemption by the Company of such shares.
On July 3, 2023, the Company entered into an engagement letter pursuant to which it agreed to pay to a capital markets advisor a fee of $4 million, subject to and conditional upon the closing of a business combination, and certain other conditions.
Liquidity, Capital Resources and Going Concern
Our liquidity needs up to September 30, 2023 have been satisfied through the payment of certain offering costs by the Sponsor of $25,000 for the Founder Shares and the loan under an unsecured promissory note from the Sponsor of $500,000. As of September 30, 2023, we had $91,629 in our operating bank account, and a working capital deficit of $5,458,434.
In addition, in order to finance transaction costs in connection with the Business Combination, our Sponsor or an affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, provide us Working Capital Loans, as defined below (see Note 5). As of September 30, 2023 and December 31, 2022, there were no amounts outstanding under Working Capital Loans.
In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Account Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, management has determined that we have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. In addition, we have until March 9, 2024 to consummate a Business Combination. Management considers that liquidity and capital resources available might not be sufficient to operate through March 9, 2024. Also, it is uncertain that we will be able to consummate a Business Combination by this date. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company.
We have determined that the mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution, in addition to potential liquidity and capital shortage raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.
Risks and Uncertainties
On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a “pandemic”, or a worldwide spread of a new disease. Many countries imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus and have closed non-essential businesses. On May 5, 2023, the World Health Organization declared that COVID-19 no longer constitutes a public health emergency.
The extent to which COVID-19 may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the pandemic. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2023 and December 31, 2022. 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 purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
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Administrative Support Agreement
Commencing on November 5, 2021, we agreed to pay the Sponsor $10,000 per month for office space, utilities, secretarial and administrative services provided to the members of our management team. Upon completion of the initial Business Combination or our liquidation, we will cease paying these monthly fees. For the three and nine months ended September 30, 2023, we had incurred $30,000 and $90,000 of administrative support expense pursuant to this agreement. For the three and nine months ended September 30, 2022, we had incurred $30,000 and $90,000 of administrative support expense pursuant to this agreement.
Registration Rights
The holders of the (i) Founder Shares, which were issued in a private placement prior to the closing of the IPO, (ii) Private Placement Warrants, which were issued in a private placement simultaneously with the closing of the IPO and the Class A ordinary shares underlying such Private Placement Warrants and (iii) Private Placement Warrants that may be issued upon conversion of working capital loans and extension loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of working capital loans and extension loans) will have registration rights to require us to register a sale of any of our securities held by them pursuant to a registration and shareholder rights agreement that has been signed in conjunction with the consummation of our IPO. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of the initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
Critical Accounting Policies
The preparation of unaudited condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Offering Costs Associated with IPO
Deferred offering costs consist of underwriter, accounting, filing and legal expenses incurred through the balance sheet date that are directly related to our IPO. Upon consummation, they were charged ratably to the underlying instruments they related to on a relative fair value basis. If our IPO had proved to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, would have been charged to operations. Offering costs amounted to $13,406,427 and were charged to temporary equity, outside of shareholders’ deficit, upon the completion of our IPO on November 9, 2021.
Ordinary Class A Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable shares (including shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ deficit. Our Class A ordinary shares sold in our IPO feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events.
We recognize changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Such changes are reflected in additional paid-in capital, or in the absence of additional capital, in accumulated deficit. Accordingly, as of September 30, 2023 and December 31, 2022, there were no Class A ordinary shares issued or outstanding.
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Net Income (Loss) Per Ordinary Share
We apply the two-class method in calculating earnings per share. The contractual formula utilized to calculate the redemption amount approximates fair value. The Class feature to redeem at fair value means that there is effectively only one class of shares. Changes in fair value are not considered a dividend for the purposes of the numerator in the earnings per share calculation. Net income (loss) per ordinary share is computed by dividing the pro rata net income (loss) between our Class A ordinary shares and our Class B ordinary shares by the weighted average number of shares of ordinary shares outstanding for each of the periods. The calculation of diluted income (loss) per share of ordinary shares does not consider the effect of the warrants issued in connection with our IPO since the exercise of the warrants is contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. As of September 30, 2023 and December 31, 2022, we did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in our earnings. As a result, diluted income (loss) per share is the same as basic income (loss) per share for the period presented.
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standards Update (“ASU”) 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) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. As a smaller reporting company, ASU 2020-06 is effective January 1, 2024 for fiscal years beginning after December 15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. We are currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows. We have not adopted this guidance as of September 30, 2023.
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed financial statements.
Inflation
We do not believe that inflation had a material impact on our business, revenues or operating results during the period presented.
Emerging Growth Company Status
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
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. We have 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, we, 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 our unaudited condensed financial statements with another public company which is neither an emerging growth company nor an emerging growth company
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which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
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 designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.
As previously discussed in the form 10-K for the year ended December 31, 2022, management identified material weaknesses related to errors in accounting for exercise of the over-allotment option, lack of management review controls and timely account-level reconciliations, as well as lack of controls to assure proper searches for possible undisclosed related parties and/or related party transactions between our sponsor, members of management and/or other insiders acting on behalf, and for the benefit of our Company. These material weaknesses remained non remediated as of September 30, 2023.
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.
Changes in Internal Control over Financial Reporting
Other than identified above, there was no change in our internal control over financial reporting that occurred during the fiscal quarter 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.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our prospectus filed with the SEC on October 21, 2021 and in our Annual Report for the year ended December 31, 2022, with the exception of those discussed below. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
There is no assurance when or if the Business Combination will be completed.
Completion of the Business Combination is subject to the satisfaction or waiver of a number of conditions as set forth in the A&R Business Combination Agreement, including shareholder approvals, a proceeds condition and other closing conditions. There can be no assurance that the conditions to completion of the Business Combination will be satisfied or waived. In addition, each of the Company and FCB may unilaterally terminate the Business Combination Agreement under certain circumstances set forth in the Business Combination Agreement, and the Company and FCB may agree at any time to terminate the A&R Business Combination Agreement. In particular, FCB may terminate the A&R Business Combination Agreement if funding of €40 million has not been received by or committed to FCB by December 31, 2023. The ability of the Company to issue equity or obtain financing in connection with the Business Combination or in the future is also uncertain.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not Applicable.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
No. |
| Description of Exhibit |
---|---|---|
2.1† | ||
2.2 | ||
3.1 | ||
10.1* | ||
10.2* | ||
10.3* | ||
10.4* | ||
10.5* | ||
10.6* | ||
10.7* | ||
10.8* | ||
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No. |
| Description of Exhibit |
---|---|---|
10.9 | ||
10.10 | ||
31.1** | ||
31.2** |
| |
| ||
32.1** |
| |
| ||
32.2** | ||
101.INS** | Inline XBRL Instance Document | |
101.SCH** | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL** | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF** | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB** | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE** | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104** | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
† | Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request. |
* | Certain portions of this exhibit have been omitted in accordance with Regulation S-K Item 601(b)(10)(iv) of Regulation S-K. The Registrant agrees to furnish supplementally an unredacted copy of such an exhibit to the SEC upon its request. |
** | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 14, 2023
| MOUNTAIN & CO. I ACQUISITION CORP. | |
|
| |
| By: | /s/ Alexander Hornung |
| Name: | Alexander Hornung |
| Title: | Chief Financial Officer |
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