QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION R EP ORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
one-half of one redeemable warrant |
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| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
| Emerging growth company | ||||||
MARBLEGATE ACQUISITION CORP.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2023
TABLE OF CONTENTS
March 31, 2023 |
December 31, 2022 |
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(Unaudited) |
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ASSETS |
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Current assets |
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Cash |
$ | $ | ||||||
Prepaid expenses |
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Total Current Assets |
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Marketable securities held in Trust Account |
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TOTAL ASSETS |
$ |
$ |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current liabilities |
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Accounts payable and accrued expenses |
$ | $ | ||||||
Income taxes payable |
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Total Current Liabilities |
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Deferred legal fees |
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Working capital loan – related party |
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Warrant liability |
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Deferred underwriting fee payable |
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Total Liabilities |
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Commitments and Contingencies (Note |
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Class A common stock subject to possible redemption, $ |
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Stockholders’ Deficit |
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Preferred stock, $ |
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Class A common stock, $ |
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Class B common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
( |
) | ( |
) | ||||
Total Stockholders’ Deficit |
( |
) |
( |
) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
$ |
$ |
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For the Three Months Ended March 31, |
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2023 |
2022 |
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Formation and operational costs |
$ | $ | ||||||
Loss from operations |
( |
) |
( |
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Other income (expense): |
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Change in fair value of warrant liability |
( |
) | ||||||
Unrealized loss on marketable securities held in Trust Account |
( |
) | ||||||
Interest earned on marketable securities held in Trust Account |
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Total other income, net |
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Loss before provision for income taxes |
( |
) | ( |
) | ||||
Provision for income taxes |
( |
) | ||||||
Net loss |
$ |
( |
) |
$ |
( |
) | ||
Weighted average shares outstanding of Class A common stock |
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Basic and diluted net loss per share, Class A common stock |
$ |
( |
) |
$ |
( |
) | ||
Weighted average shares outstanding of Class B common stock and non-redeemable Class A common stock |
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Basic and diluted net loss per share, Class B common stock and non-redeemable Class A common stock |
$ |
( |
) |
$ |
( |
) | ||
Class A Common Stock |
Class B Common Stock |
Additional Paid-in |
Retained |
Total Stockholders’ |
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Shares |
Amount |
Shares |
Amount |
Capital |
Earnings |
Deficit |
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| Balance – January 1, 2023 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
| Remeasurement for Class A common stock to redemption amount |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
| Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
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| Balance – March 31, 2023 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
| |
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Class A Common Stock |
Class B Common Stock |
Additional Paid-in |
Retained |
Total Stockholders’ |
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Shares |
Amount |
Shares |
Amount |
Capital |
Earnings |
Deficit |
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| Balance – January 1, 2022 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
| Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
| |
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| Balance – March 31, 2022 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
| |
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For the Three Months Ended March 31, |
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2023 |
2022 |
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Cash Flows from Operating Activities: |
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Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Interest earned on marketable securities held in Trust Account |
( |
) | ( |
) | ||||
Unrealized loss on marketable securities held in Trust Account |
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Change in fair value of warrant liabilities |
( |
) | ||||||
Changes in operating assets and liabilities: |
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Prepaid expenses |
( |
) | ||||||
Other assets |
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Accounts payable and accrued expenses |
( |
) | ( |
) | ||||
Deferred legal fee |
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Income taxes payable |
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Net cash used in operating activities |
( |
) |
( |
) | ||||
Cash Flows from Financing Activities: |
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Proceeds from convertible promissory note—related party |
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Net cash provided by financing activities |
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Net Change in Cash |
( |
) |
( |
) | ||||
Cash – Beginning of period |
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Cash – End of period |
$ |
$ |
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Non-Cash investing and financing activities: |
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Remeasurement for Class A common stock to redemption amount |
$ | $ | ||||||
Gross proceeds |
$ | |||
Less: |
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Proceeds allocated to Public Warrants |
( |
) | ||
Class A common stock issuance costs |
( |
) | ||
Redemption of Class A common stock |
( |
) | ||
Plus: |
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Remeasurement of carrying value to redemption value |
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Class A common stock subject to possible redemption at December 31, 2022 |
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Plus: |
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Remeasurement of carrying value to redemption value |
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Class A common stock subject to possible redemption at March 31, 2023 |
$ | |||
Three Months Ended March 31, |
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2023 |
2022 |
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Class A |
Class B and non-redeemable Class A |
Class A |
Class B |
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Basic and diluted net loss per share of common stock |
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Numerator: |
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Allocation of net loss, as adjusted |
$ | ( |
$ | ( |
$ | ( |
$ | ( |
) | |||||||
Denominator: |
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Basic and diluted weighted average shares outstanding |
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Basic and diluted net loss per share of common stock |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| • | 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. |
| • | in whole and not in part; |
| • | at a price of $ |
| • | upon not less than |
| • | if, and only if, the last reported sale price of the shares of Class A common stock for any a period ending on the third trading day prior to the date on which the Company sends to the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $ |
March 31, 2023 |
December 31, 2022 |
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Level |
Amount |
Level |
Amount |
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Assets: |
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Marketable securities held in Trust Account |
1 | $ | 1 | $ | ||||||||||||
Liabilities: |
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Warrant Liability – Private Placement Warrants |
3 | $ | 3 | $ | ||||||||||||
March 31, 2023 |
December 31, 2022 |
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Stock price |
$ | $ | ||||||
Exercise price |
$ | $ | ||||||
Expected term (in years) |
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Volatility |
% | % | ||||||
Risk-free rate |
% | % | ||||||
Dividend yield |
% | % | ||||||
Warrant Liabilities |
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Fair value as of December 31, 2022 |
$ | |||
Change in fair value |
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Fair value as of March 31, 2023 |
$ | |||
Warrant Liabilities |
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Fair value as of December 31, 2021 |
$ | |
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Change in fair value |
( |
) | ||
Fair value as of March 31, 2022 |
$ | |||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this Quarterly Report on Form10-Q(the “Quarterly Report”) to “we,” “us” or the “Company” refer to Marblegate Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Marblegate Acquisition LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report Form10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the completion of a Business Combination (as defined below), the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, including that the conditions of a Business Combination are not satisfied. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its initial public offering (“Initial Public Offering”) and our Annual Report on Form10-K for the year ended December 31, 2022 (the “2022 Annual Report”), as filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 3, 2023 . The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on December 10, 2020 for the purpose of effecting an initial business combination. We intend to effectuate our business combination using cash from the remaining proceeds of the initial public offering and the sale of the private placement units, our capital stock, debt or a combination of cash, stock and debt.
Extension of Combination Period
We originally had up to 15 months from the closing of our initial public offering, or until January 5, 2023, to consummate an initial business combination. However, at the special meeting in lieu of the 2022 annual meeting of stockholders held on December 2, 2022 (“Extension Special Meeting”), our stockholders approved the amendment to the certificate of incorporation to extend the end of the Combination Period from January 5, 2023 to July 5, 2023 (or such earlier date as determined by our board of directors). In connection with the Extension Special Meeting, stockholders holding 28,989,609 public shares exercised their right to redeem their shares for a pro rata portion of the funds in the trust account. As a result, approximately $293.5 million (approximately $10.12 per public share) was removed from the trust account and paid to such holders and approximately $10.3 million remained in the trust account. Following the redemptions, as of March 31, 2023, we had 1,010,391 public shares outstanding.
Recent Developments
DePalma Business Combination
On February 14, 2023, we entered into a business combination agreement (as it may be amended or restated from time to time, the “DePalma Business Combination Agreement”), with Marblegate Asset Management, LLC, a Delaware limited liability company (“Marblegate”), Marblegate Capital Corporation, a Delaware corporation (“New MAC”), MAC Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of New MAC (“Merger Sub”), DePalma Acquisition I LLC, a Delaware limited liability company (“DePalma I”), and DePalma Acquisition II LLC, a Delaware limited liability company (“DePalma II,” and together with DePalma I, “DePalma”), pursuant to which, among other things, the parties agreed to the DePalma Business Combination under which we agreed to combine with DePalma in a series of transactions that will result in New MAC becoming a publicly-traded company whose shares are expected to trade on the Nasdaq Global Market.
Pursuant to the DePalma Business Combination Agreement, and subject to the terms and conditions contained therein, among other things:
| (i) | immediately prior to the consummation of the transactions contemplated by the DePalma Business Combination Agreement, New MAC and the DePalma Companies will effect a series of reorganization transactions, resulting in the DePalma Companies becoming wholly-owned subsidiaries of New MAC; |
| (ii) | Merger Sub will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of New MAC, in accordance with the terms and subject to the conditions of the DePalma Business Combination Agreement; and |
| (iii) | upon the effectiveness of the DePalma Merger (the “Effective Time”), (x) each share of Class A common stock issued and outstanding immediately prior to the Effective Time shall be cancelled and converted into the right to receive the per share consideration allocable to each share of our common stock (the “Company Per Share Consideration”); (y) each share of Class B common stock issued and outstanding immediately prior to the Effective Time shall be cancelled and converted into the right to receive the Company Per Share Consideration, and (z) each warrant of the Company outstanding immediately prior to the Effective Time shall be cancelled and converted into the right to receive one warrant of New MAC, with New MAC assuming our obligations under the existing warrant agreement. |
21
The Business Combination is expected to close during the second half of 2023, following the receipt of the requisite stockholder approvals and the fulfilment of other customary closing conditions. For a full description of the DePalma Business Combination Agreement and the proposed DePalma Business Combination, please see “Item 1. Business.”
2023 Promissory Note
On February 13, 2023, we issued the 2023 Promissory Note in the principal amount of up to $1,100,000 to Marblegate SOMF for Working Capital Loans for advances Marblegate SOMF has made, and may make in the future, to us. The 2023 Promissory Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which we consummate our initial business combination and (ii) the date that our winding up is effective. At the election of Marblegate SOMF, at any time prior to payment in full of the principal balance of the note, all or a portion of the unpaid principal amount of the 2023 Promissory Note may be converted into Conversion Shares, equal to: (x) the portion of the principal amount of the 2023 Promissory Note being converted, divided by (y) $10.00, rounded up to the nearest whole number of shares. The Conversion Shares will be identical to the shares of Class A common stock included in the units issued by us to the sponsor and Cantor in the private placement. The Conversion Shares are entitled to the registration rights set forth in the 2022 Promissory Note (as described further below under “Liquidity, Capital Resources and Going Concern”).
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from December 10, 2020 (inception) through March 31, 2023 were organizational activities, those necessary to prepare for the initial public offering, described below, and identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our business combination. We generate non-operating income in the form of interest income on the funds held in the trust account, with Continental acting as trustee. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence and other expenses in connection with searching for and completing a business combination.
For the three months ended March 31, 2023, we had a net loss of $2,482,203, which consists of change in fair value of warrant liabilities of $42,770, operating and formation costs of $2,514,367 and provision for income taxes of $25,682, offset by interest income on marketable securities held in the trust account of $100,616.
For the three months ended March 31, 2022, we had a net loss of $145,550, which consists of operating and formation costs of $251,418, and an unrealized loss on marketable securities held in the trust account of $3,116, offset by interest income on marketable securities held in the trust account of $54,384 and change in fair value of warrant liabilities of $54,600.
Liquidity, Capital Resources and Going Concern
On October 5, 2021, we consummated the initial public offering of 30,000,000 units, generating gross proceeds of $300,000,000. Simultaneously with the closing of the initial public offering, we consummated the sale of 910,000 private placement units at a price of $10.00 per private placement unit in the private placement, generating gross proceeds of $9,100,000.
22
Following the initial public offering and the private placement, a total of $301,500,000 was placed in the trust account. We incurred $42,630,587 in initial public offering related costs, including $6,000,000 of underwriting fees, $15,000,000 of deferred underwriting fees, net of reimbursement, $1,015,137 of other offering costs including $509,600 for the fair value of the private placement warrants included in the private placement units, and $505,537 of offering costs, and $20,615,450 for the fair value of the founder shares attributable to certain anchor investors.
For the three months ended March 31, 2023, cash used in operating activities was $1,099,649. Net loss of $2,474,221 was affected by interest earned on marketable securities held in the trust account of $100,616, and change in fair value of warrant liabilities of $42,770. Changes in operating assets and liabilities provided $1,432,418 of cash from operating activities.
For the three months ended March 31, 2022, cash used in operating activities was $209,406. Net loss of $145,550 was affected by interest earned on marketable securities held in the trust account of $54,384, unrealized loss in marketable securities held in the trust account of $3,116 and change in fair value of warrant liabilities of $54,600. Changes in operating assets and liabilities provided $42,012 of cash from operating activities.
As of March 31, 2023, we had marketable securities held in the Trust Account of $10,426,464 (including approximately $272,034 of interest income, net of unrealized losses) consisting of investments in money market funds. Interest income on the balance in the trust account may be used by us to pay taxes. During the three months ended March 31, 2023, we did not withdraw any interest income from the trust account to pay franchise and income taxes.
We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (less deferred underwriting commissions and taxes payable), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of March 31, 2023, we had cash of $43,706 outside of the trust account. We have used and intend to continue to use the funds held outside the trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination, such as the DePalma Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, the sponsor, members of the sponsor, or certain of our officers, directors or their affiliates may, but are not obligated to, loan us Working Capital Loans, as may be required. If we complete a business combination, we would repay any Working Capital Loans. In the event that a business combination does not close, we may use a portion of the working capital held outside the trust account to repay any Working Capital Loans but no proceeds from our trust account would be used for such repayment. On June 30, 2022, we issued the 2022 Promissory Note to Marblegate SOMF, a member of our sponsor, for a Working Capital Loan for which we may borrow up to the principal sum of $600,000. The 2022 Promissory Note bears no interest and is due and payable upon the earlier of (i) the date on which we consummate our initial business combination or (ii) the date that the winding up of the Company is effective. At the option of the lender, at any time prior to payment in full of the principal balance of the 2022 Promissory Note, the lender may elect to convert up to $600,000 of the unpaid principal balance of the note into Conversion Shares, equal to (x) the portion of the principal amount of the note being converted, divided by (y) $10.00, rounded up to the nearest whole number of shares. The Conversion Shares will be identical to the shares of Class A common stock included in the units issued in the private placement. On July 1, 2022, February 2, 2023 and February 8, 2023, we borrowed $200,000, $200,000 and $200,000 under the 2022 Promissory Note, respectively. On February 13, 2023, the Company issued the 2023 Promissory Note (as defined in Note 5), an additional promissory note to Marblegate SOMF in the amount of $1,100,000. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, including the DePalma Business Combination, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. On February 13, 2023 and March 1, 2023, we borrowed $125,000 and $50,000 under the 2023 Promissory Note, respectively. As of March 31, 2023 and December 31, 2022, $775,000 and $200,000 are outstanding on the working capital loans, respectively.
We have incurred and will continue to incur significant costs in pursuit of our acquisition plans. We will likely need to raise additional capital through loans or additional investments from our sponsor, stockholders, officers, directors, or third parties. Our officers, directors and the sponsor may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet our working capital needs. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all. If we are unable to complete the business combination because we do not have sufficient funds available, we will be forced to cease operations and liquidate the trust account. In connection with our assessment of going concern considerations in accordance with ASU Topic 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” we have until July 5, 2023, to consummate a business combination. It is uncertain that we will be able to consummate a business combination by this time. If a business combination is not consummated by this date and an extension has not been requested by the sponsor and approved by our stockholders, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the liquidity issue and the mandatory liquidation raise substantial doubt about our ability to continue as a going concern. The financial statements and the notes thereto contained elsewhere in this Report do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be required to liquidate after July 5, 2023. We intend to complete a business combination before the mandatory liquidation date.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2023 or 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.
23
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the sponsor a total of up to $10,000 per month for secretarial and administrative support. We began incurring these fees on September 30, 2021 and will continue to incur these fees monthly until the earlier of the completion of the business combination and our liquidation.
24
The underwriters are entitled to a deferred fee of 5.0% of the gross proceeds of the initial 30,000,000 units sold in the Initial Public Offering, or $15,000,000. The deferred fee will be paid in cash upon the closing of a Business Combination from the amounts held in the trust account, subject to the terms of the underwriting agreement. Such fee will be waived by the underwriters in the event that we do not complete a Business Combination.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in conformity with GAAP 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:
Warrant Liabilities
We account for the warrants issued in connection with our initial public offering in accordance with the guidance contained in ASC Topic 815-40-15-7D, (“Derivatives and Hedging”), under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the private placement warrants are exercised or expire, and any change in fair value will be recognized in our statements of operations.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in accordance with the guidance in FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ deficit section of our balance sheets.
Net Loss Per Common Share
Net loss per common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period. The Company applies the two-class method in calculating losses per share. Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete an initial business combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in Ukraine. We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial business combination.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
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.
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Our management evaluated, with the participation of our current principal executive officer and principal financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of March 31, 2023, pursuant to Rule13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of March 31, 2023, our disclosure controls and procedures were effective.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 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.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this report include the risk factors described below and in our final prospectus for the Initial Public Offering, in our 2022 Annual Report, and in our Quarterly Report on Form 10-Q for the period ended September 30, 2022. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. As of the date of this Report, except as set forth below, there have been no material changes to the risk factors disclosed in final prospectus for the Initial Public Offering and our Annual Report on Form10-K for the period ended December 31, 2022, as filed with the SEC on April 3, 2023, except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
We have received a written notice (the “Notice”) from the Listing Qualifications Department of Nasdaq indicating that our minimum Market Value of Listed Securities (“MVLS”) was below the $50 million minimum requirement for continued listing on The Nasdaq Global Market. If we cannot regain compliance, our securities will be subject to delisting and the liquidity and the trading price of our securities could be adversely affected.
On March 31, 2023, we received a deficiency notice from the Listing Qualifications Department of Nasdaq indicating that we are no longer in compliance with the minimum MVLS of $50 million for continued listing on The Nasdaq Global Market, as set forth in Nasdaq Listing Rule 5450(b)(2)(A) (the “MVLS Requirement”). This notification had no immediate effect on the listing or trading of our common stock on The Nasdaq Global Market and our common stock will continue to trade under the symbol “GATE.” In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we have a period of 180 calendar days, or until September 27, 2023 (the “Compliance Period”), to regain compliance with the MVLS Requirement. If, at any time before the end of the Compliance Period, our listed securities close at an MVLS of $50 million or more for a minimum of 10 consecutive business days, Nasdaq will provide us written confirmation of compliance with the MVLS Requirement and this matter will be closed. We intend to monitor our MVLS and may, if appropriate, consider implementing available options to regain compliance with the MVLS Requirement, including in connection with consummation of the DePalma Business Combination. In the event we do not regain compliance with the MVPHS Requirement prior to the expiration of the Compliance Period, we will receive written notification that our securities are subject to delisting from The Nasdaq Global Market. At such time, we will have the opportunity to appeal the delisting decision in front of a Nasdaq Hearings Panel. If we timely appeal, our securities would remain listed pending such panel’s decision. There can be no assurance that, if we do appeal, such appeal would be successful. If we do not regain compliance, our securities will be subject to delisting and the liquidity and the trading price of our securities could be adversely affected.
If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
| • | a limited availability of market quotations for our securities; |
| • | reduced liquidity for our securities; |
| • | a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
| • | a limited amount of news and analyst coverage; |
| • | a decreased ability to issue additional securities or obtain additional financing in the future; and |
| • | being subject to regulation in each state in which we offer our securities, including in connection with our initial business combination. |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
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Item 5. Other Information
None
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form10-Q.
| * | Filed herewith. |
| ** | Furnished herewith. |
| ^ | Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, as amended, for any schedule or exhibit so furnished. |
| (1) | Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on February 21, 2023. |
| (2) | Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on February 17, 2023. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| MARBLEGATE ACQUISITION CORP. | ||||||
| Date: May 15, 2023 | By: | /s/ Andrew Milgram | ||||
| Name: | Andrew Milgram | |||||
| Title: | Chief Executive Officer and Executive Director | |||||
| (Principal Executive Officer) | ||||||
| Date: May 15, 2023 | By: | /s/ Jeffrey Kravetz | ||||
| Name: | Jeffrey Kravetz | |||||
| Title: | Chief Financial Officer | |||||
| (Principal Financial Officer and Principal Accounting Officer) | ||||||
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