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Table of Contents
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM
10-Q
 
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
                    
to
                    
 
 
TALON 1 ACQUISITION CORP.
(Exact name of registrant as specified in its charter)
 
 
 
Cayman Islands
 
001-41001
 
98-1598139
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
2333 Ponce de Leon Blvd., Suite 630
Coral Gables, Florida 33134
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (786)
662-3114)
Not Applicable
(Former name or former address, if changed since last report)
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
  
Trading
Symbol(s)
  
Name of each exchange
on which registered
Units, each consisting of one Class A ordinary share and
one-half
of one redeemable warrant
  
TOACU
  
The Nasdaq Global Market
Class A ordinary shares, par value $0.0001 per share
  
TOAC
  
The Nasdaq Global Market
Redeemable warrants, each whole warrant exercisable for one Class A ordinary share, each at an exercise price of $11.50 per share
  
TOACW
  
The Nasdaq Global Market
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.     Yes  ☒    No  ☐
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).     Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, 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
under the Exchange Act.
 
Large accelerated filer      Accelerated filer  
       
Non-accelerated
filer
     Smaller reporting company  
       
         Emerging growth company  
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
under the Exchange Act).     Yes      No  ☐
As of August
 
22
, 2022,
 23,000,000 Class A ordinary shares, par value $0.0001 per share, and 5,750,000 Class B ordinary shares, par value $0.0001 per share, were issued and outstanding.
 
 
 

Table of Contents
Table of Contents
 
 
  
 
1
 
Item 1.
 
  
 
1
 
  
 
1
 
  
 
2
 
  
 
3
 
  
 
4
 
  
 
5
 
Item 2.
 
  
 
16
 
Item 3.
 
  
 
19
 
Item 4.
 
  
 
19
 
 
  
 
20
 
Item 1.
 
  
 
20
 
Items 1A.
 
  
 
20
 
Item 2.
 
  
 
20
 
Item 3.
 
  
 
21
 
Item 4.
 
  
 
21
 
Item 5.
 
  
 
21
 
Item 6.
 
  
 
22
 
 
  
 
23
 
 
i

Table of Contents
PART I.    FINANCIAL INFORMATION
 
 
Item 1.
Financial Statements
TALON 1 ACQUISITION CORP.
CONDENSED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
    
June 30, 2022
(unaudited)
   
December 31,
2021
 
Assets
                
Cash
   $ 553,671     $ 1,090,391  
Other current assets
     708,222       828,996  
    
 
 
   
 
 
 
Total current assets
     1,261,893       1,919,387  
Cash and investments held in Trust Account
     235,828,184       235,757,582  
Other
non-current
assets
              274,845  
    
 
 
   
 
 
 
Total Assets
   $ 237,090,077     $ 237,951,814  
    
 
 
   
 
 
 
Liabilities, Redeemable Common Stock, and Stockholders’ Deficit
                
Current liabilities:
                
Accounts payable and accrued expenses
   $ 204,416     $ 148,907  
Note payable
              90,043  
    
 
 
   
 
 
 
Total current liabilities
     204,416       238,950  
Deferred underwriting compensation
     8,050,000       8,050,000  
Derivative warrant liabilities
     3,712,500       12,392,500  
    
 
 
   
 
 
 
Total liabilities
     11,966,916       20,681,450  
Commitments and Contingencies (Note 5)
                
Class A ordinary shares subject to possible redemption, 23,000,000 shares at redemption value of $10.25 per share
     235,828,184       235,750,000  
Stockholders’ Deficit:
                
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
                  
Class A ordinary shares, $0.0001 par value; 800,000,000 shares authorized; none issued and outstanding
                  
Class B ordinary shares, $0.0001 par value; 199,000,000 shares authorized; 5,750,000 shares issued and outstanding
     575       575  
Additional
paid-in
capital
     677,016           
Accumulated deficit
     (11,382,614     (18,480,211
    
 
 
   
 
 
 
Total stockholders’ deficit
     (10,705,023     (18,479,636
 
 
 
 
 
 
 
 
 
Total Liabilities, Redeemable Common Stock, and Stockholders’ Deficit
   $ 237,090,077     $ 237,951,814  
    
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited condensed financial statements.
 
1

Table of Contents
TALON 1 ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

 
 
  
For the Three Months Ended

June 30, 2022
 
 
For the period from

April 20, 2021 (inception)

through June 30, 2021
 
General and administrative expenses
  
$
791,077
 
 
$
31,457
 
 
  
 
 
 
 
 
 
 
Loss from operations
  
 
(791,077
 
 
(31,457
 
  
 
 
 
 
 
 
 
Other income (expense):
  
     
 
     
Change in fair value of derivative warrant liabilities
  
 
3,712,500
 
 
     
Interest earned on cash and investments held in Trust Account
  
 
86,069
 
 
     
 
  
 
 
 
 
 
 
 
Total other income, net
  
 
3,798,569
 
 
 
—  
 
 
  
 
 
 
 
 
 
 
Net income (loss)
  
$
3,007,492
 
 
$
(31,457
 
  
 
 
 
 
 
 
 
Basic and diluted weighted average shares outstanding, Class A
  
 
23,000,000
 
 
 
—  
 
 
  
 
 
 
 
 
 
 
Basic and diluted net income per share, Class A
  
$
0.10
 
 
$
—  
 
 
  
 
 
 
 
 
 
 
Basic and diluted weighted average shares outstanding, Class B
  
 
5,750,000
 
 
 
5,750,000
 
 
  
 
 
 
 
 
 
 
Basic and diluted net income per share, Class B
  
$
0.10
 
 
$
(0.01
 
  
 
 
 
 
 
 
 
 
 
  
For the Six Months Ended

June 30, 2022
 
 
For the period from

April 20, 2021 (inception)

through June 30, 2021
 
General and administrative expenses
   $ 1,678,005     $ 31,457  
    
 
 
   
 
 
 
Loss from operations
     (1,678,005     (31,457
    
 
 
   
 
 
 
Other income (expense):
                
Change in fair value of derivative warrant liabilities
     8,680,000        
Interest earned on cash and investments held in Trust Account
     95,602        
    
 
 
   
 
 
 
Total other income, net
     8,775,602        
    
 
 
   
 
 
 
Net income (loss)

   $ 7,097,597     $ (31,457
)

    
 
 
   
 
 
 
Basic and diluted weighted average shares outstanding, Class A
     23,000,000        
    
 
 
   
 
 
 
Basic and diluted net income per share, Class A
   $ 0.25     $  
    
 
 
   
 
 
 
Basic and diluted weighted average shares outstanding,
 
Class B
     5,750,000       5,750,000  
    
 
 
   
 
 
 
Basic and diluted net income per share, Class B
   $ 0.25     $ (0.01
)
 
    
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited condensed financial statements.
 
2

Table of Contents
TALON 1 ACQUISITION CORP.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2022
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
Ordinary Shares
    
Additional

Paid-in

Capital
    
Accumulated

Deficit
   
Total
Stockholders’

Deficit
 
    
Shares
    
Amount
 
Balance as of December 31, 2021
     5,750,000      $ 575      $ —        $ (18,480,211   $ (18,479,636
Stock-based compensation
     —          —          377,600        —         377,600  
Net income
     —          —          —          4,090,105       4,090,105  
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Balance as of March 31, 2022 (unaudited)
     5,750,000      $ 575      $ 377,600      $ (14,390,106   $ (14,011,931
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Stock-based compensation
     —          —          377,600        —         377,600  
Change in value of class A ordinary shares subject to
possible
 
redemption

 
 
 
 
 
 
 
 
 (78,184
)
 
 
 
 
 
 
(78,184
)

Net income
     —          —          —          3,007,492       3,007,492  
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Balance as of June 30, 2022 (unaudited)
     5,750,000      $ 575      $ 677,016      $ (11,382,614   $ (10,705,023
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
FOR THE PERIOD FROM APRIL 20, 2021 (INCEPTION) THROUGH JUNE 30, 2021
 
 
  
Ordinary Shares
 
  
Additional

Paid-in

Capital
 
  
Accumulated

Deficit
 
 
Total

Stockholders’

Deficit
 
 
  
Shares
 
  
Amount
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
Balance as of April 20, 2021 (inception)
  
 
  
 
  
$
  
 
  
$
  
 
  
$
  
 
 
$
  
 
Issuance of founder shares
  
 
5,750,000
 
  
 
575
 
  
 
24,425
 
  
 
—  
 
 
 
25,000
 
Net loss
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
(31,457
 
 
(31,457
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
Balance as of June 30, 2021 (unaudited)
  
 
5,750,000
 
  
$
575
 
  
$
24,425
 
  
$
(31,457
 
$
(6,457
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
The accompanying notes are an integral part of these unaudited condensed financial statements.
 
3

Table of Contents
TALON 1 ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
 
 
  
For the Six Months Ended

June 30, 2022
 
 
For the period from April 20, 2021

(inception) through June 30, 2021
 
Cash Flows from Operating Activities:
  
 
Net income (loss)

   $
7,097,597
 
 
$
(31,457

)
 
Adjustments to reconcile net income (loss) to net cash used in
operating activities:

        
 
 
 
 
Stock-based compensation
     755,200  
 
 
 
 
Change in fair value of derivative warrant liabilities
     (8,680,000
 
 
 
 
Interest income earned on cash and investments in Trust Account
     (95,602
 
 
 
 
Bank service fees from cash and investments in Trust Account
     25,000  
 
 
 
 
Changes in operating assets and liabilities:
        
 
 
 
 
Other current assets
     120,774  
 
 
6,054
 
Accounts payable and accrued expenses
     55,509  
 
 
 
 
Accrued offering and formation costs
               
Non-current
assets
     274,845  
 
 
 
 
    
 
 
 
 
 
 
 
Net cash used in operating activities
    
(446,677
 
 
(25,403
)
 
    
 
 
 
 
 
 
 
Cash Flows from Financing Activities:
        
 
 
 
 
Proceeds from issuance of Class B ordinary shares to Sponsor
              25,000  
Proceeds from loans from related parties

              26,000  
Repayment of loans from related parties

     (90,043
 
 
 
 
    
 
 
 
 
 
 
 
Net cash (used in) provided by financing

    
(90,043
 
 
51,000
 
 
  
 
 
 
 
 
 
 
Net (decrease) increase in cash

     (536,720
 
 
25,597
 
Cash, beginning of period
     1,090,391  
 
 
 
 
    
 
 
 
 
 
 
 
Cash, end of the period
  
$
553,671
 
 
$
25,597
 
Supplemental disclosure of non-cash financing activities

 
 
 
 
 
 
 
 
Change in value of Class A ordinary shares subject to possible redemptio
n

 
$

78,184
 
 
$
 
 
Accrued deferred financing costs
 
$

 
 
 
$

100,174
 
    
 
 
 
 
 
 
 
The accompanying notes are an integral part of these unaudited condensed financial statements.
 
4

Table of Contents
TALON 1 ACQUISITION CORP.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 1 — Organization, Business Operations and Going Concern
Talon 1 Acquisition Corp. (the “Company”) is a blank check company incorporated in Cayman Islands on April 20, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate
non-operating
income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering held in trust.
The Company’s sponsor is AVi8 Acquisition LLC, a Delaware limited liability company (the “Sponsor”). The Company commenced operations upon obtaining adequate financial resources through its initial public offering (the “Initial Public Offering”) of 23,000,000 units of the Company, each unit consisting of one Class A ordinary share and
one-half
of one warrant (each, a “Unit” and collectively, the “Units”), at $10.00 per Unit, which is discussed in Note
3
, and the sale of 13,250,000 warrants of the Company (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”), at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor that closed simultaneously with the Initial Public Offering. In total, the Company received $238,650,000 from the sale of Class A shares and private placement warrants, as described above. $235,750,000 was deposited into trust. The Company has incurred $2,378,023 in costs as of June 30, 2022
,
and has $553,671 remaining in its working capital account.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (as defined below) (excluding the amount of deferred underwriting discounts held in Trust and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company only intends to complete a Business Combination if the post- transaction company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”). Upon the closing of the Initial Public Offering, management has agreed that an amount equal to at least $10.25 per Unit sold in the Initial Public Offering, including the proceeds from the sale of the private placement warrants and the sale of forward purchase units, will be held in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180 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, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
The Company will provide the holders (the “Public Shareholders”) of the Company’s issued and outstanding Class A ordinary shares, par
value $0.0001
per share, sold in the Initial Public Offering (the “Public Shares”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholders meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.25 per Public Share). The per-share amount to be distributed to Public Shareholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). These Public Shares were recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” If the Company seeks shareholder approval, the Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, shareholder approval of the transaction is required by law, or the Company decides to obtain shareholder approval for business or legal reasons, the Company will offer to redeem the Public Shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the 
 
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Company seeks shareholder approval in connection with a Business Combination, the initial shareholders (as defined below) have agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the initial shareholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.
The Certificate of Incorporation provides that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares, without the prior consent of the Company. The holders of the Founder Shares (the “initial shareholders”) have agreed not to propose an amendment to the Certificate of Incorporation (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination or to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (B) with respect to any other provision relating to shareholder’s rights or
pre-initial
Business Combination activity, unless the Company provides the Public Shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
The Company has until 15 months from the closing of the Initial Public Offering to consummate a Business Combination. However, if the Company is not able to consummate a Business Combination within 15 months, the Company, by resolution of the board of the Company, at the request of the Company’s Sponsor, may extend the period of time to consummate a Business Combination by an additional three months (for a total of 18 months to complete a Business Combination), subject to the Company’s Sponsor providing advance notice and depositing additional funds into the
Trust Account
as set out below (the “Combination Period”). Pursuant to the terms of the Company’s second amended and restated memorandum and articles of association and the
trust agreement
 
to be entered into between the Company and Continental Stock Transfer & Trust Company on the date of this prospectus, in order to extend the time available for the Company to consummate its initial Business Combination by an additional three months, the Company’s Sponsor or its affiliates or designees must provide advance notice at least five days prior to the date which is 15 months from the closing of our initial public offering and must deposit into the
Trust Account
 $2,300,000 ($0.10 per share), on or prior to the date which is 15 months from the closing of our initial public offering. In the event that the Company receives notice from its Sponsor at least five days prior to the deadline to effect the extension, the Company intends to issue a press release announcing such intention at least three days prior to the deadline. In addition, the Company intends to issue a press release the day after the deadline announcing whether or not the funds had been timely deposited. However, the Company’s initial shareholders and its affiliates or designees are not obligated to fund the
Trust Account
 to extend the time to consummate a Business Combination.
If the Company is unable to complete a Business Combination within 15 months from the Initial of the Initial Public Offering (the “Combination Period”) (or 18 months from the closing of the Initial Public Offering if the Company extends the period of time to consummate a business combination) and the Company’s shareholders have not amended the Certificate of Incorporation to extend such Combination Period, the Company will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the Public Shares, at a
per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then outstanding Public Shares, which redemption will completely extinguish Public Shareholder’s rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
The initial shareholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial shareholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to the deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.25. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement (a “Target”), reduce the amount of funds in the Trust Account to below (i) $10.25 per Public Share or (ii) the lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of interest which may be withdrawn to pay taxes, provided that such liability will not apply to any claims by a third party or Target that executed a waiver of any and all rights to seek access to the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933,
as amended (the “Securities Act”). In the event that
 
6

Table of Contents
an executed waiver is deemed to be unenforceable against a third party, our Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity and Capital Resources
As of June 30, 2022, the Company had $553,671 in cash and working capital of $1,057,477
.
 
The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. As of June 30, 2022, the Company had
 $235,828,184 cash and investments held in its
Trust Account
for use in a potential business combination. The Company has until February 8, 2023 to complete a business combination. If a business combination is not consummated by this date, there will be a mandatory liquidation, should a business combination not occur, and potential subsequent dissolution. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the caring amounts of assets or liabilities should the Company be required to liquidate after February 8, 2023.
Risks and Uncertainties
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy is not determinable as of the date of these unaudited condensed financial statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of the financial statements.
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the
“COVID-19
outbreak”). In March 2020, the WHO classified the
COVID-19
outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the
COVID-19
outbreak continues to evolve. Management continues to evaluate the impact of the
COVID-19
outbreak on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, 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 an emerging growth 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 an 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 that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
 
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Table of Contents
Cash and cash equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of June 30, 2022
 and December 31, 2021.
Cash and Investments held in Trust Account
The cash and investments held in Trust Account are invested in U.S. Treasury only money market funds or U.S. Treasury Bills and is carried at fair
value with the changes in fair value recorded in other income in the condensed statements of operations.
Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurement,” approximates the carrying amounts represented in the balance sheet.
Offering Costs Associated with Initial Public Offering
The Company complies with the requirements of ASC
340-10-S99-1
and SEC Staff Accounting Bulletin Topic 5A, “Expenses of Offering.” Offering costs consist of legal, accounting, underwriting and other costs incurred through the balance sheet date that are related to the Public Offering. Offering costs amounted to $13,200,196 and were allocated among Class A Common Stock subject to possible redemption, the Public Warrants and Private Warrants.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities during the reporting period. Actual results could differ from those estimates.
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary 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’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ deficit section of the Company’s balance sheet. The redemption value of the Class A ordinary shares is remeasured each accounting period to reflect the redemption value as of the balance sheet date with an off set to additional paid -in capital.
The following reflects Class A ordinary shares subject to possible redemption at June 30, 2022:
 
 
 
 
 
 
Gross proceeds
   $ 230,000,000  
Less:
        
Offering costs allocated to Class A
 ordinary shares subject to possible redemption
     (12,840,366
Proceeds allocated to public warrants
     (6,009,900
Plus:
        
Remeasurement of Class A ordinary shares subject to possible redemption to redemption value
     24,600,266  
    
 
 
 
Class A ordinary shares subject to possible redemption as of December 31, 2021
     235,750,000  
Remeasurement of Class A ordinary shares subject to possible redemption to redemption value
 
 
78,184
 
Class A ordinary shares subject to possible redemption
 as of
June 30, 2022

 
 
$
235,828,184
 
 
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Table of Contents
Net Income (Loss) Per Ordinary Share
The Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” The Company applies the
two-class
method in calculating earnings per share. Earnings and losses are shared pro rata between the two classes of shares. Net income per share is computed by dividing net income by the weighted average number of ordinary share outstanding during the period, excluding ordinary share subject to forfeiture. At June 30, 2022, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary share and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the periods presented
.
 
 
  
For the Three
months ended
June 30, 2022
 
  
For the period
from April 20, 2021
(inception) through
June 30, 2021
 
Class A ordinary shares
  
  
Numerator:
  
  
Allocation of net income (loss)
   $ 2,405,994     
$

 
Denominator:
                 
Basic and diluted weighted average shares outstanding
     23,000,000         
    
 
 
    
 
 
 
Basic and diluted earnings per share
   $ 0.10      $  
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
Class B ordinary shares
  
  
Numerator:
  
  
Allocation of net income (loss)
  
$
601,498
 
  
$

(31,457
Denominator:
  
  
Basic and diluted Weighted Average shares outstanding
  
 
5,750,000
 
  
 
5,750,000
 
  
 
 
 
  
 
 
 
Basic and diluted earnings per share
  
$
0.10
 
  
$
(0.01
 
 
 
 
 
 
 
 
 
 
 
  
For the six
months ended
June 30, 2022
 
  
For the period
from April 20, 2021
(inception) through
June 30, 2021
 
Class A ordinary shares
  
  
Numerator:
  
  
Allocation of net income (loss)
  
$
5,678,078
 
  
$
  
 
Denominator:
  
     
  
     
Basic and diluted weighted average shares outstanding
  
 
23,000,000
 
  
 
  
 
 
  
 
 
 
  
 
 
 
Basic and diluted earnings per share
  
$
0.25
 
  
$
  
 
 
  
 
 
 
  
 
 
 
     
Class B ordinary shares
  
     
  
     
Numerator:
  
     
  
     
Allocation of net income (loss)
  
$
1,419,519
 
  
$

(31,457
Denominator:
  
     
  
     
Basic and diluted Weighted Average shares outstanding
  
 
5,750,000
 
  
 
5,750,000
 
 
  
 
 
 
  
 
 
 
Basic and diluted earnings per share
  
$
0.25
 
  
$
(0.01
 
  
 
 
 
  
 
 
 
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the 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. Deferred tax assets were deemed immaterial as of June 30, 2022.
FASB 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. There were no unrecognized tax benefits as of June 30, 2022. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of June 30,
2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is considered an exempted Cayman Islands company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the period presented.
Derivative Warrant Liabilities
The Company accounts for the warrants issued in connection with the Initial Public Offering in accordance with the guidance contained in ASC
815-40.
Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. Accordingly, the Company will classify each warrant as a liability at its fair value. This liability is subject to
re-measurement
at each balance sheet date. With each such
re-measurement,
the derivative warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations.
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value, includes:
 
   
Level 1 – Observable inputs for identical assets or liabilities such as quoted prices in active markets;
 
   
Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable;
and
 
   
Level 3 – Unobservable inputs in which little or no market data exists, which are therefore developed by the Company using estimates and assumptions that reflect those that a market participant would use.
 
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Table of Contents
The Company recognized total warrant liabilities at June 30, 2022 of $3,712,500, which was a reduction of $8,680,000 since the valuation of $12,392,500 at December 31, 2021, and as such the Company recognized an unrealized gain through its statement of operations.
Concentration of Credit Risk
The Company’s cash is held on deposit in accounts at a large financial institution in amounts in excess of the Federal Deposit Insurance Corporation, or FDIC, insurance coverage limit of $250,000. At June 30, 2022 and December 31, 2021, the Company held $553,671 and $1,090,391, respectively, at the bank. The Company has not experienced losses on this account as of June 30, 2022.
Derivative Financial Instruments
The Company accounts for derivative instruments in the form of warrant liabilities on its balance sheet. The derivative warrant liabilities meet the requirements of a liability under ASC 480 and qualify as a derivative under ASC 815. The derivative warrant liabilities are recorded at fair value, with subsequent changes in fair value running through its income statement. At June 30, 2022 and December 31, 2021, the fair value of derivative warrant liabilities was $3,712,500 and $12,392,500, respectively. For the
 
six months
 ended June 30, 2022
and
for the period from April 20, 2021 (inception) through 
June 30, 2021
,
the Company recognized a $8,680,000
and $0, respectively,
 in change in fair value
 
of derivative warrant liabilities in the unaudited statements of operations
.
Stock-Based Compensation
Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation–Stock Compensation”, which requires recognition in the financial statements of the cost of employee, non-employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. For the six months ended June 30, 2022 and for the period from April 20, 2021 (inception) through June 30, 2021 the Company
recognized $755,200
 and $0, respectively,
of stock-based compensation related to founder shares in the general and administrative expenses line item in the
unaudited statements
 of operations.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“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 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. ASU
2020-06
is effective for fiscal years beginning after December 15, 2021 and should be applied on a full or modified retrospective basis. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted ASU
2020-06
on January 1, 2022 and it did not impact the Company’s financial position, results of operations, or cash flows.
The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements.
Note 3 — Initial Public Offering
On November 8, 2021, the Company consummated its IPO of 23,000,000 Units at a price of $10.00 per Unit. Each Unit consists of one share of Class A ordinary shares, and
one-half
of one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to purchase one share of Class A ordinary shares at a price of $11.50 per share, subject to adjustment (see Note 6).
 
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Table of Contents
Note 4 — Related Party Transactions
Founder Shares
In April 2021, the sponsor acquired 5,750,000 founder shares (the “Founder Shares”) for an aggregate purchase price of $25,000, consisting of 5,750,000 Class B founder shares. Prior to the initial investment in the company of $25,000 by our sponsor, we had no assets, tangible or intangible. The per share purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the aggregate number of founder shares issued. On July 23, 2021, our sponsor transferred, for no consideration, 50,000 founder shares to each of our three independent directors, 10,000 founder shares to each of the two members of the Company’s board of advisors, 50,000 founder shares to Ryan Goepel, our Chief Financial Officer, and 75,000 founder shares to Jeremy Falk, our Chief Operating Officer. The fair value of the founder shares at June 30, 2022 is $1,888,000. The founder shares are accounted for as stock-based compensation, amortized
on a
straight-line
basis
over the life of the
Company
, or 15 months.
Class B Founder Shares
The Class B founder shares will automatically convert into Class A ordinary shares on the first business day following the completion of our initial business combination, at a ratio such that the number of Class A ordinary shares issuable upon conversion of all Class B founder shares will equal, in the aggregate on an
as-converted
basis, 15% of the sum of (i) the total number of all Class A ordinary shares issued and outstanding upon completion of our initial public offering (including any over-allotment shares if the underwriters exercise their overallotment option), plus (ii) the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion of the Class B founder shares plus (iii) the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities (as defined herein) or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial business combination, excluding (x) any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in the initial business combination, and (y) any private placement warrants issued to our sponsor, its affiliates or any member of our management team upon conversion of working capital loans. Prior to our initial business combination, only holders of our Class B ordinary shares will be entitled to vote on the appointment of directors.
Employee Compensation
The Company has an agreement with three key employees to pay Mr. Falk, Mr. Wegel, and Mr. Goepel $20,000, $5,000, and $2,500 per month, respectively, in respect of services to be provided to us in advance of the completion of our initial business combination.
Related Party Extension Loans
As discussed in Note 1, the Company may extend the period of time to consummate a Business Combination by an additional three months (for a total of 18 months to complete a Business Combination). In order to extend the time available for the Company to consummate a Business Combination, the Company’s sponsor and its affiliates or designees must deposit into the Trust Account $0.10 per unit for an aggregate of $2,300,000. Any such payments would be made in the form of a loan. The terms of the loan in connection with the loan have not yet been negotiated. If the Company completes a Business Combination, the Company would repay such loaned amounts out of the proceeds of the Trust Account released to the Company. If the Company does not complete a Business Combination, the Company will not repay such loan.
Promissory Note
On April 30, 2021, the Company entered into a promissory note with the Sponsor, pursuant to which the Company could borrow up to $300,000. Entire principal balance of the note was payable on the earlier of (i) the date on which the Company consummates and in initial public offer of its securities or (ii) December 21, 2021.
The promissory note does not bear interest and did not require collateral. The Company borrowed a total o
f $104,693
from inception through December 31, 2021 and repaid $14,850 during the same period. The outstanding balance of the promissory note was
 $90,043
 
as of December 31, 2021, which was repaid in full during the six months ended June 30, 2022.
Private Placement Warrants
The Sponsor has purchased an aggregate of 13,250,000 Private Placement Warrants, at a price of $1.00 per Private Placement Warrant, or approximately $13.25 million in the aggregate in a private placement that occurred simultaneously with the closing of the Initial Public Offering. Each Private Placement Warrant is exercisable for one whole share of Class A ordinary shares at a price of $11.50 per ordinary share. A portion of the proceeds from the sale of the private placement warrants to the Sponsor was added to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be
non-redeemable
(except as described below in Note 6 under “Warrants — Redemption of warrants when the price per share of Class A ordinary shares equals or exceeds $10.00”) so long as they are held by the initial purchasers or their permitted transferees.
 
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The purchasers of the Private Placement Warrants will agree, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants (except to permitted transferees) until 30 days after the completion of the initial Business Combination.
Working Capital Loans
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of June 30, 2022 and December 31, 2021, the Company had $0 in borrowings under the Working Capital Loans.
Note 5 — Commitments & Contingencies
Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans), are entitled to registration rights pursuant to a registration rights agreement. These holders are entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that we will not be required to effect or permit any registration or cause any registration statement to become effective until termination of the applicable
lock-up
period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters were entitled to an underwriting discount of $0.20 per Unit, or $4,600,000 in the aggregate, payable upon the closing of the Initial Public Offering. An additional fee of $0.35 per Unit, or $8,050,000 in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Note 6 — Warrant Liabilities
Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or holders are permitted to exercise their warrants on a cashless basis under certain circumstances as a result of (i) the Company’s failure to have an effective registration statement by the 60th business day after the closing of the initial Business Combination or (ii) a notice of redemption described under “Redemption of warrants when the price per share of Class A ordinary shares equals or exceeds $10.00”). The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of its initial Business Combination, the Company will use its commercially reasonable efforts to file with the SEC and have an effective registration statement covering the Class A ordinary shares issuable upon exercise of the warrants and will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of the Company’s initial Business Combination and to maintain a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed. If the shares issuable upon exercise of the warrants are not registered under the Securities Act in accordance with the above requirements, the Company will be required to permit holders to
 
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exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding the above, if the Company’s Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
The Private Placement Warrants are identical to the Public Warrants, except that, so long as they are held by the Sponsor or its permitted transferees, (i) they will not be redeemable by the Company, (ii) they (including the Class A ordinary shares issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of the initial Business Combination, (iii) they may be exercised by the holders on a cashless basis and (iv) are subject to registration rights.
Redemption of warrants when the price per share of Class A ordinary shares equals or exceeds $18.00: Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):
 
   
in whole and not in part;
 
   
at a price of $0.01 per warrant;
 
   
upon a minimum of 30 days’ prior written notice of redemption; and
 
   
if, and only if the last reported sale price of Class A ordinary shares for any 20 trading days within a
30-trading
day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted).
The Company will not redeem the warrants as described above unless an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants is effective and a current prospectus relating to those Class A ordinary shares is available throughout the
30-day
redemption period. Any such exercise would not be on a cashless basis and would require the exercising warrant holder to pay the exercise price for each warrant being exercised.
Redemption of warrants when the price per share of Class A ordinary shares equals or exceeds $10.00: Once the warrants become exercisable, the Company may redeem the outstanding warrants:
 
   
in whole and not in part;
 
   
at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption, provided that holders will be able to exercise their warrants on a cashless basis after receiving notice of redemption but prior to redemption and receive that number of Class A ordinary shares to be determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A ordinary shares;
 
   
if, and only if the Reference Value equals or exceeds $10.00 per share (as adjusted); and
 
   
if, and only if the Reference Value is less than $18.00 per share (as adjusted), the private placement warrants must also be concurrently called for redemption on the same terms as the outstanding public warrants. The “fair market value” of Class A ordinary shares shall mean the volume-weighted average price of Class A ordinary shares for the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 Class A ordinary shares per warrant (subject to adjustment).
In no event will the Company be required to net cash settle any warrant. 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 warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
 
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As of June 30, 2022 and December 31, 2021, the Company recognized a $3,712,500 and $12,392,500, respectively,
derivative
 
warrant liability on its balance sheet. This is a reduction in the liability of $8,680,000 since its last valuation, with the change in fair value reported on the Company’s statement of operations as an unrealized gain.
Note 7 — Stockholders’ Deficit
Class A Ordinary Shares - The Company is authorized to issue 800,000,000 Class A ordinary shares with a par value of $0.0001 per share. As of June 30, 2022 and December 31, 2021, there were no Class A ordinary shares issued and outstanding, excluding 23,000,000 shares subject to possible redemption.
Class B Ordinary Shares - The Company is authorized to issue 199,000,000 Class B ordinary shares with a par value of $0.0001 per share. On June 30, 2022 and December 31, 2021, 5,750,000 Class B ordinary shares were issued and outstanding. Each Class B ordinary share has 10 votes.
Holders of the Class A ordinary shares and holders of the 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 or stock exchange rule; provided that only holders of the Class B ordinary shares shall have the right to vote on the election of the Company’s directors prior to the initial Business Combination.
Preferred Shares - The Company is authorized to issue 1,000,000 preferred shares, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of June 30, 2022 and December 31, 2021, there were no preferred shares issued or outstanding.
Note 8 — Fair Value Measurements
The Company follows the guidance in ASC Topic 820 for its financial assets and liabilities that are
re-measured
and reported at fair value at each reporting period, and
non-financial
assets and liabilities that are
re-measured
and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
 
 
 
 
   
Level 1:    Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
   
Level 2:    Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
   
Level 3:    Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
 
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Description
  
Level
    
June 30,
2022
    
December 31,
2021
 
Assets:
                          
Cash held in Trust Account
     1      $ 235,828,184      $ 235,757,582  
Liabilities
                          
Warrant Liability – Public Warrants
     1      $ 1,725,000      $ 5,635,000  
Warrant Liability – Private Placement Warrants
     3      $ 1,987,500      $ 6,757,500  
The warrants are accounted for as liabilities in accordance with ASC
815-40
and are presented within
derivative
 
warrant liabilities on the accompanying balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the change in fair value of warrant liabilities in the statements of operations.
The Public Warrants and Private Placement Warrants were valued as of December 31, 2021 using a Monte Carlo simulation, and the Private Placement Warrants were valued as of June 30, 2022 using a Monte Carlo simulation, which is considered to be a Level 3 fair value measurement. The Monte Carlo simulation’s primary unobservable input utilized in determining the fair value of the Warrants is the probability of consummation of the Business Combination. The probability assigned to the consummation of the Business Combination was 33%, which was estimated based on the observed success rates of business combinations for special purpose acquisition companies. The expected volatility as of the Initial Public Offering date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target.

The public warrants began separately trading on December 30, 2021, and therefore were transferred out of a Level 3 investment into a Level 1 investment.
The following table presents the quantitative information regarding Level 3 fair value measurements:
 
Input
  
June 30, 2022
 
 
December 31, 2021
 
 
 
 
 
 
 
 
 
 
Risk-free interest rate
     3.01     1.26
Expected term (years)
     5.43       5.50  
Expected volatility
     3.00     10.00
Exercise price
   $ 11.50     $ 11.50  
Unit Price (public)
   $ 10.13     $ 10.09  
Class A Ordinary Shares
   $ 10.06     $ 9.87  
The following table presents the changes in the fair value of Level 3 warrant liabilities:
 
 
 
 
 
 
    
Private
Placement
Warrant
Liabilities
 
Fair value as of December 31, 2021
   $ 6,757,500  
Change in valuation inputs and other assumptions
     (4,770,000
    
 
 
 
Fair value as of June 30, 2022
   $ 1,987,500  
    
 
 
 
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date the financial statements were issued.
The Company did not identify any subsequent events that would have required adjustment or disclosure to the financial statements.
 
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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to “we”, “us”, “our” or the “Company” are to Talon 1 Acquisition Corp., except where the context requires otherwise. The following discussion should be read in conjunction with our unaudited condensed financial statements and related notes thereto included elsewhere in this report.
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 Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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 Securities and Exchange Commission (“SEC”) filings.
Overview
We were incorporated as a Cayman Islands exempted company and incorporated with limited liability on April 20, 2021. The Company was incorporated for the purpose of effecting a merger capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
On November 8, 2021, the Company consummated its initial public offering (the “IPO”) of 23,000,000 units (including the underwriters’ full exercise of their over-allotment option) at $10.00 per unit (each, a “Unit”). Each Unit consists of one Class A ordinary share and
 
one-half
 
of one redeemable warrant. Each whole warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share.
The Company will have 15 months from the closing of the IPO (or up to 18 months from the closing of the IPO if the Company extends the period of time to consummate the Business Combination) (the “Completion Window”) to consummate the initial Business Combination by depositing $2,300,000 ($0.10 per share) in the Trust Account.
Pursuant to the terms of the Company’s second amended and restated memorandum and articles of association and the Trust Agreement entered into between the Company and Continental Stock Transfer & Trust Company, in order to extend the time available for the Company to consummate its initial Business Combination by an additional three months, the Company’s Sponsor or its affiliates or designees must provide advance notice at least five days prior to the date which is 15 months from the closing of our initial public offering and must deposit into the Trust Account $2,300,000 ($0.10 per share), on or prior to the date which is 15 months from the closing of our initial public offering. Any such payments would be made in the form of a
 
non-interest
 
bearing loan (an “Extension Loan”). If the Company completes its initial business combination, it will, at the option of the Company’s initial shareholders or their affiliates or designees, repay such loaned amounts out of the proceeds of the Trust Account released to the Company or convert a portion or all of the total loan amount into warrants at a price of $1.00 per warrant (the “Extension Loan Warrants”). If the Company does not complete its initial Business Combination, it will repay such loans only from funds held outside of the Trust Account. The Company’s initial shareholders or their affiliates or designees are not obligated to fund the Trust Account to extend the time for the Company to complete its initial Business Combination. If the Company is unable to consummate its initial Business Combination within the applicable time period, it will, as promptly as reasonably possible but not more than five business days thereafter, redeem the public shares for a pro rata portion of the funds held in the Trust Account and as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and its board of directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
If the Company is unable to complete our initial Business Combination within the Completion Window, the Company will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a
 
per-share
 
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and its board of directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and other requirements of applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete the initial Business Combination within the Completion Window.

 
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities since April 20, 2021 (inception) have been organizational activities and those necessary to prepare for our initial public offering. We do not expect to generate any operating revenues until after completion of our initial business combination. We generate
 
non-operating
 
income in the form of interest income on investments held in our Trust Account. Our expenses have increased substantially after the closing of our initial public offering. 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 expenses.
For the three months ended June 30, 2022, we had net income of $3,007,492, which consisted of general and administrative costs of $791,077, offset by a favorable change in fair value of warrant liabilities of $3,712,500 and interest earned on cash and marketable securities held in Trust Account of $86,069.
For the period from April 20, 2021 (inception) through June 30, 2021, we had a net loss of $31,457, which consisted of all general and administrative costs.
For the six months ended June 30, 2022, we had net income of $7,097,597, which consisted of general and administrative costs of $1,678,005, offset by a favorable change in fair value of warrant liabilities of $8,680,000 and interest earned on cash and marketable securities held in Trust Account of $95,602
.
Liquidity and Capital Resources
As of June 30, 2022, we had $553,671 in cash and working capital of $1,057,477.
On November 8, 2021, we consummated our initial public offering of 20,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $200,000,000. Simultaneously with the closing of our initial public offering, the underwriters fully exercised the over-allotment option, generating gross proceeds of $30,000,000.
Simultaneously with the closing of our initial public offering, the Company consummated the sale of 13,250,000 warrants at a price of $1.00 per Private Placement Warrant in a private placement to our Sponsor generating gross proceeds of $13,250,000.
A total of $235,750,000 of the proceeds from our initial public offering, a portion of the sale of the private placement warrants, the sale of the over-allotment units and the sale of the over-allotment warrants were placed in a U.S.-based trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee.
For the six months ended June 30, 2022, net cash used in operating activities was $446,677.
For the period from April 20, 2021 (inception) through June 30, 2021, net cash used in operating activities was $25,403.
As of June 30, 2022, we had cash and marketable securities held in the Trust Account of $235,828,184 (including approximately $124,774 of interest income) consisting of securities held in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under
 
Rule2a-7
 
under the Investment Company Act which invest only in direct U.S. government treasury.
As of June 30, 2022, we had cash of $553,671 held outside the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.
The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. As of June 30, 2022, the Company had $235,828,184 cash and investments held in its Trust Account for use in a potential business combination. The Company has until February 8, 2023 to complete a business combination. If a business combination is not consummated by this date, there will be a mandatory liquidation, should a business combination not occur, and potential subsequent dissolution.
As of June 30, 2022, the Company had $553,671 in cash and working capital of $1,050,304. The Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. However, if our estimates of the costs of identifying a target business, undertaking
 
in-depth
 
due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants of the
 
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post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities as a result of this uncertainty.
Critical Accounting Policies
The preparation of 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:
Net Income Per Ordinary Share
Net income per ordinary share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the period. On June 30, 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 per share is the same as basic income per share for the period presented.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815, Derivatives and Hedging. For derivative financial instruments that are accounted for as assets or liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then
re-valued
at each reporting date, with changes in the fair value reported in the statements of operations. Derivative instruments are classified in the balance sheet as current or
non-current
based on whether or not
net-cash
settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board (“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. ASU
2020-06
is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 on January 1, 2022 and it did not impact the Company’s financial position, results of operations, or cash flows.
 
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Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
Off-Balance
Sheet Arrangements
As of the date of this Quarterly Report on Form
10-Q,
we did not have any
off-balance
sheet arrangements.
Commitments and Contractual Obligations
We do not have any long term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or other long term liabilities, other than an agreement to pay our Sponsor a monthly fee of $10,000 for office space and administrative support. We began incurring these fees on November 3, 2021 and will continue to incur these fees monthly until the earlier of the completion of the initial business combination or our liquidation.
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” under the JOBS Act and are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We elected to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for
non-emerging
growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
As an “emerging growth company,” we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting, (ii) provide all of the compensation disclosure that may be required of
non-emerging
growth public companies, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose comparisons of the chief executive officer’s compensation to median employee compensation. These exemptions will apply for a period of five (5) years following the completion of our IPO or until we otherwise no longer qualify as an “emerging growth company.”
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule
 
12b-2
 
under 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
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules
 
13a-15(e)
 
and
 
15d-15(e)
 
under the Exchange Act) as of the end of the fiscal year ended December 31, 2021. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this Quarterly Report our disclosure controls and procedures were effective. Based on this evaluation, our principal executive officer and principal financial officer have concluded that during the period covered by this report, our disclosure controls and procedures were not effective as of June 30, 2022, because of a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, the Company’s management has concluded that our controls around the carrying value of our Class A Ordinary Shares subject to redemption were not effectively designed or maintained to prevent an error in the calculation such carrying value, as the Company failed to adjust the carrying value to account for the interest and dividends accrued in the Trust Account during the quarterly period ended June 30, 2022 during the closing process. The failure to accrue interest and dividends resulted in us having to record a post-closing journal entry to correct the error prior to filing this Quarterly Report. Since this control deficiency could lead to a material misstatement, management concluded that there was a material weakness in internal control over financial reporting.
Management has implemented remediation steps to improve our internal control over financial reporting. Specifically, we expanded and improved our closing process with respect to the review of the carrying value of the of Class A Ordinary Shares subject to redemption.
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 and accounting officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. 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 (as defined in Rules
 
13a-15(f)
 
and
 
15d-15(f)
 
under the Exchange Act) that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
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Table of Contents
PART II. OTHER INFORMATION
 
Item 1.
Legal Proceedings
None.
 
Item 1A.
Risk Factors
As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our
 
Form 10-Q
 
for the period ended March 31, 2022 filed with the SEC on May 16, 2022 and the risk factors disclosed in our
 
Form 10-K
 
for the year ended December 31, 2021 filed with the SEC on April 1, 2022, except for the following amended and restated risk factor.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application also may change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to complete our initial business combination, and results of operations.
On March 30, 2022, the SEC issued proposed rules that would, among other items, impose additional disclosure requirements in business combination transactions involving SPACs and private operating companies; amend the financial statement requirements applicable to business combination transactions involving such companies; update and expand guidance regarding the general use of projections in SEC filings, as well as when projections are disclosed in connection with proposed business combination transactions; increase the potential liability of certain participants in proposed business combination transactions; and impact the extent to which SPACs could become subject to regulation under the Investment Company Act of 1940. These rules, if adopted, whether in the form proposed or in revised form, may materially adversely affect our business, including our ability to negotiate and complete our initial business combination and may increase the costs and time related thereto.
We have identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As described elsewhere in this Quarterly Report, we identified a material weakness in our internal control over financial reporting related to our controls around the carrying value of our Class A ordinary shares subject to redemption. As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as of June 30, 2022.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. Measures to remediate material weaknesses may be time-consuming and costly and there is no assurance that such initiatives will ultimately have the intended effects. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results. If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and adversely affect our business and operating results. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
Simultaneously with the closing of our initial public offering, the Company completed the private sale of an aggregate of 13,250,000 warrants at a purchase price of $1.00 per private placement warrant, to our sponsor, AVi8 Acquisition LLC, generating gross proceeds to the Company of $13,250,000. The terms of the private placement warrants are substantially similar to the warrants sold as part of the units in our initial public offering, except as otherwise disclosed in the registration statement. The issuance of the Private Placement Warrants was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
Use of Proceeds
On November 3, 2021, our registration statement on Form
 
S-l
 
(File
 
No. 333-260305)
 
was declared effective by the SEC for our initial public offering, pursuant to which we sold an aggregate of 23,000,000 units (including the issuance of 3,000,000 units as a result of the underwriters’ exercise of their over-allotment option) at an offering price to the public of $10.00 per unit for an aggregate offering price of $230,000,000, with each unit consisting of one Class A ordinary share and
 
one-half
 
of one warrant. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share at a price of $11.50 per share. Credit Suisse Securities (USA) LLC and Exos Securities LLC acted as the representatives for the underwriters. Our initial public offering did not terminate before all of the securities registered in our registration statement were sold. Our initial public offering was consummated on November 8, 2021. The net proceeds from our initial public offering and the sale of the private placement warrants, including the underwriters’ deferred underwriting discounts fee of $8,050,000, are held in the Trust Account as of June 30, 2022. No payments were made by us to directors, officers or persons owning ten percent or more of our ordinary shares or to their associates, or to our affiliates. There has been no material change in the planned uses of proceeds from our initial public offering as described in our final prospectus dated November 3, 2021, which was filed with the SEC.
 
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Table of Contents
Item 3.
Defaults Upon Senior Securities
None.
 
Item 4.
Mine Safety Disclosures
Not applicable.
 
Item 5.
Other Information
None.
 
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Table of Contents
Item 6.
Exhibits
 
Exhibit

Number
  
Description
31.1*    Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*    Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*    Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*    Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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    The cover page for the Company’s Quarterly Report on Form
10-Q
has been formatted in Inline XBRL and contained in Exhibit 101
 
*
These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
 
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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 hereunto duly authorized.
Dated: August 22, 2022
 
By:  
/s/ Edward J. Wegel
Name:   Edward J. Wegel
Title:   Chief Executive Officer (principal executive officer)
 
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