UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
For the transition period from to
Commission
File No.
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of | (IRS Employer | |
| incorporation or organization) | Identification No.) | |
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| (Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, 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 | ||
| The Stock Market LLC | ||||
| The
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| The Stock Market LLC |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☐ Large accelerated filer | ☐Accelerated filer | |
| ☒
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
As of November 13, 2023 there were Class A ordinary shares, par value $0.0001 per share, and Class B ordinary shares, of the registrant issued and outstanding.
SEMPER PARATUS ACQUISITION CORPORATION
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
| i |
ITEM 1. INTERIM FINANCIAL STATEMENTS (UNAUDITED)
SEMPER PARATUS ACQUISITION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses and other assets | ||||||||
| Total current assets | ||||||||
| Cash and marketable securities held in Trust Account | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES, REDEEMABLE ORDINARY SHARES AND SHAREHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Convertible note payable, net of discount | ||||||||
| Due to affiliate | ||||||||
| Total current liabilities | ||||||||
| Derivative warrant liabilities | ||||||||
| Deferred underwriting fee payable | ||||||||
| Total liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES (Note 6) | ||||||||
| REDEEMABLE ORDINARY SHARES | ||||||||
| Class A ordinary shares subject to possible redemption, $ par value, and shares at redemption value of $ and $ per share as of September 30, 2023 and December 31, 2022, respectively | ||||||||
| SHAREHOLDERS’ DEFICIT | ||||||||
| Preferred stock, $ par value; shares authorized; issued or outstanding | ||||||||
| Class A ordinary shares; $ par value; shares authorized; and shares issued and outstanding (excluding and shares subject to possible redemption) as of September 30, 2023 and December 31, 2022, respectively | ||||||||
| Class B ordinary shares; $ par value; shares authorized; shares and shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ deficit | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES, REDEEMABLE ORDINARY SHARES AND SHAREHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 1 |
SEMPER PARATUS ACQUISITION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| General and administrative | $ | $ | $ | $ | ||||||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Unrealized gain on investments held in Trust Account | ||||||||||||||||
| Change in fair value of warrants | ( | ) | ( | ) | ||||||||||||
| Total other income, net | ||||||||||||||||
| Net (loss) income | $ | ( | ) | $ | $ | $ | ||||||||||
| Weighted average shares outstanding of Class A Ordinary shares | ||||||||||||||||
| Basic and diluted net income (loss) income per share, Class A | $ | ) | $ | $ | $ | |||||||||||
| Weighted average shares outstanding of Class A Ordinary shares (non-redeemable) | ||||||||||||||||
| Basic and diluted net income (loss) income per share, Class A (non-redeemable) | $ | ) | $ | $ | $ | |||||||||||
| Weighted average shares outstanding of Class B Ordinary shares | ||||||||||||||||
| Basic and diluted net income (loss) income per share, Class B | $ | $ | $ | $ | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 2 |
SEMPER PARATUS ACQUISITION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
| Ordinary Shares | ||||||||||||||||||||||||||||
| Class A (Non-redeemable) | Class B | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Conversion of Class B shares | ( | ) | ( | ) | ||||||||||||||||||||||||
| Accretion of carrying value to redemption value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net Income | — | — | ||||||||||||||||||||||||||
| Balance, March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Accretion of carrying value to redemption value | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Proceeds allocated to Class A shares issuable from the convertible note payable | — | — | ||||||||||||||||||||||||||
| Net Loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Accretion of carrying value to redemption value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net Loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022
| Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
| Class A | Class B | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | deficit’ | Deficit | ||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Net Loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, March 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net Income | — | — | ||||||||||||||||||||||||||
| Balance, June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Accretion of carrying value to redemption value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net Income | — | — | ||||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
SEMPER PARATUS ACQUISITION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
| Unrealized gain on investments held in Trust Account | ( | ) | ( | ) | ||||
| Change in fair value of warrants | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ||||||||
| Due to affiliate | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Cash withdrawn from Trust Account in connection with redemption | ||||||||
| Net cash flows provided by investing activities | $ | $ | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from convertible note payable | ||||||||
| Redemption of ordinary shares | ( | ) | ||||||
| Net cash flows used in financing activities | $ | ( | ) | $ | ||||
| NET CHANGE IN CASH | $ | $ | ( | ) | ||||
| CASH, BEGINNING OF PERIOD | ||||||||
| CASH, END OF PERIOD | $ | $ | ||||||
| Supplemental disclosure of noncash activities: | ||||||||
| Sale of Class B shares to Investor | $ | $ | ||||||
| Sale of warrants | $ | $ | ||||||
| Remeasurement for redeemable shares to redemption value | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
SEMPER PARATUS ACQUISITION CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023 (UNAUDITED)
Note 1 — Description of Organization, Business Operations and Liquidity
Semper
Paratus Acquisition Corporation (the “Company”) was incorporated as a Cayman Islands exempted company on April 21, 2021.
The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization
or similar business combination with
The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. The Company’s wholly owned subsidiary, Semper Merger Sub, Inc., a Delaware corporation, was incorporated on June 28, 2023 and has had no activity as of September 30, 2023.
As of September 30, 2023, the Company had not commenced any operations. All activity through September 30, 2023, relates to the Company’s formation and Initial Public Offering (“IPO”), which is described below, and the search for a prospective initial Business Combination. 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 earned on investments from the proceeds derived from the IPO.
The
registration statement for the Company’s IPO was declared effective on November 3, 2021. On November 8, 2021, the Company consummated
the IPO of units (“Units”) with respect to the ordinary shares included in the Units being offered (the “Public
Shares”) at $ per Unit generating gross proceeds of $
Simultaneously
with the closing of the IPO, the Company consummated the sale of private placement units (“Private Placement Units”)
at a price of $ per Private Placement Unit in a private placement to the Company’s sponsor, Semper Paratus Sponsor LLC (the
“Original Sponsor”) and underwriter Cantor Fitzgerald & Co. (“Cantor”), generating gross proceeds of $
Simultaneously
with the closing of the IPO, the Company consummated the closing of the sale of additional Units upon receiving notice of the
underwriter’s election to fully exercise its overallotment option (“Overallotment Units”), generating additional gross
proceeds of $
Offering
costs for the IPO amounted to $
Following
the closing of the IPO, $
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale
of the Private Placement Units, 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
| 5 |
The Company will provide the holders of the outstanding Public Shares (the “Public Shareholders”) 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 shareholder 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. The Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $ per Public Share, plus any pro rata interest then in the Trust Account, net of taxes payable). There will be no redemption rights with respect to the Company’s warrants.
All
of the Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s
liquidation, if there is a shareholder vote or tender offer in connection with the Company’s Business Combination and in connection
with certain amendments to the Company’s amended and restated memorandum and articles of association (as amended by the Charter
Amendment (defined below), the “Memorandum and Articles of Association”). In accordance with Financial Accounting Standards
Board (“FASB”) Accounting Standards 480-10-S99, redemption provisions not solely within the control of a company require
Class A ordinary shares subject to redemption to be classified outside of permanent equity. Given that the Public Shares were issued
with other freestanding instruments (i.e., public warrants), the initial carrying value of ordinary shares classified as temporary equity
was the allocated proceeds determined in accordance with FASB 470-20. The ordinary shares are subject to FASB 480-10-S99. If it is probable
that the equity instrument will become redeemable, the Company has the option to either (i) accrete changes in the redemption value over
the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later)
to the earliest redemption date of the instrument or (ii) recognize changes in the redemption value immediately as they occur and adjust
the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company has elected to recognize
the changes immediately. While redemptions cannot cause the Company’s net tangible assets to fall below $
Redemptions of the Company’s Public Shares may be subject to the satisfaction of conditions, including minimum cash conditions, pursuant to an agreement relating to the Company’s Business Combination. If the Company seeks shareholder approval of the Business Combination, the Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination, or such other vote as required by law or stock exchange rule. If a shareholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its Memorandum and Articles of Association, conduct the redemptions pursuant to the tender offer rules of the 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 applicable law or stock exchange listing requirements, or the Company decides to obtain shareholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks shareholder approval in connection with a Business Combination, the Original Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the IPO in favor of approving a Business Combination. Additionally, each Public Shareholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.
On
January 30, 2023, shareholders (the “Initial Shareholders”) holding all of the issued and outstanding Class B ordinary shares
(the “Founder Shares”) of the Company elected to convert their Class B ordinary shares into Class A ordinary shares of the
Company on a
On February 3, 2023, the Company held an extraordinary general meeting of shareholders for the purpose of considering and voting on the Charter Amendment (as defined below) and, if presented, the proposal to adjourn the meeting to a later date.
On May 4, 2023, the Company entered into a purchase agreement (the “Purchase Agreement”) with SSVK Associates, LLC (the “Sponsor”) and the Original Sponsor, pursuant to which the Sponsor will purchase from the Original Sponsor (x) Class A ordinary shares and (y) Private Placement Units, each consisting of one Class A ordinary share and one-half of one redeemable warrant that is exercisable for one Class A ordinary share, free and clear of all liens and encumbrances (other than those contained in the Letter Agreement, dated November 3, 2021, by and among the Company, its officers, directors and the Original Sponsor, and the Underwriting Agreement, dated November 3, 2021, by and between the Company and Cantor, as representative of the several underwriters (the “Underwriting Agreement”)), for an aggregate purchase price of $ (the “Purchase Price”) payable at the time of the initial Business Combination (see Note 5).
| 6 |
Charter Amendment
On
February 3, 2023, the Company held an extraordinary general meeting of the shareholders for the purpose of considering and voting on
a charter amendment. At the meeting, the shareholders of the Company approved an amendment (the “Charter Amendment”) to the
Company’s Amended and Restated Memorandum and Articles of Association to extend the date by which the Company must consummate an
initial business combination from February 8, 2023 to December 15, 2023. Under Cayman Islands law, the Charter Amendment took effect
upon approval by the shareholders. The Company filed the Charter Amendment with the Cayman Islands General Registry within
Nasdaq Notices
On
March 23, 2023, the Company received a written notice (the “March Notice”) from the Listing Qualifications division of the
Nasdaq Stock Market (“Nasdaq”) stating that the Company had not paid certain fees required by Nasdaq Listing Rule 5250(f)
and that the Company would be delisted unless it appealed such determination. As of the date of the March Notice, the Company’s
past due fee balance totaled $
Notwithstanding
the foregoing, the Memorandum and Articles of Association 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
The Company’s Original Sponsor, officers and directors (the “Initial Shareholders”) have agreed not to propose an amendment to the Memorandum and Articles of Association that would affect the substance or timing of the Company’s obligation to redeem % of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the Public Shareholders with the opportunity to redeem their ordinary shares in conjunction with any such amendment.
If
the Company is unable to complete a Business Combination by December 15, 2023, the extended date (“Combination Period”),
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 earned on the funds held in the Trust Account and not previously released to us to
pay the Company’s franchise and income taxes (less up to $
| 7 |
The Initial Shareholders have agreed to waive their liquidation rights with respect to the Founder Shares (which converted into Class A ordinary shares) if the Company fails to complete a Business Combination within the Combination Period. However, if the Initial Shareholders should acquire Public Shares in or after the IPO, 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 its deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within 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 $ per shares held in the Trust Account. 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 vendor 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, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the 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 (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Proposed Business Combination
On June 28, 2023, the Company entered into an Agreement and Plan of Merger by and among the Company, Semper Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), the Sponsor, in its capacity as purchaser representative, Tevogen Bio Inc, a Delaware corporation (“Tevogen Bio”), and Ryan Saadi, in his capacity as seller representative (as may be amended and/or restated from time to time, the “Merger Agreement”), pursuant to which, among other things, the parties will affect the merger of Merger Sub with and into Tevogen Bio, with Tevogen Bio continuing as the surviving entity (the “Merger”), as a result of which all of the issued and outstanding capital stock of Tevogen Bio shall be exchanged for shares of Class A common stock, par value $ per share (the “Class A Common Stock”), of the Company (the “Share Exchange”) subject to the conditions set forth in the Merger Agreement, with Tevogen Bio surviving the Share Exchange as a wholly owned subsidiary of the Company (the Share Exchange and the other transactions contemplated by the Merger Agreement, together, the “Transaction”).
Prior to the Closing Date, and subject to the satisfaction or waiver of the conditions of the Merger Agreement, the Company will migrate out of the Cayman Islands and domesticate (the “Domestication”) as a Delaware corporation in accordance with Section 388 of the DGCL and Part XIII of the Cayman Islands Companies Act (2021 Revision). In connection with the Domestication, (i) each issued and outstanding Class A ordinary share, par value $ per share will convert, on a one-for-one basis, into a duly authorized, validly issued, fully paid and nonassessable share of Class A Common Stock; and, (ii) each issued and outstanding whole warrant to purchase Class A ordinary shares of the Company will automatically represent the right to purchase one share of Class A Common Stock, at an exercise price of $ per share on the terms and conditions set forth in the Company’s warrant agreement. Immediately following the Domestication, (i) the Class A Common Stock will be reclassified as common stock, par value $ per share (the “Common Stock”); (ii) each issued and outstanding Unit that has not been previously separated into the underlying Class A ordinary share and underlying one-half of one warrant upon the request of the holder thereof, will be cancelled and will entitle the holder thereof to one share of Common Stock and one-half of one public warrant, with a whole public warrant representing the right to acquire one share of Common Stock at an exercise price of $ per share. The Company will change its name to “Tevogen Bio Holdings Inc.” after giving effect to the Domestication.
As
consideration for the Merger, the holders of Tevogen Bio’s securities collectively shall be entitled to receive from the Company,
in the aggregate, a number of shares of Common Stock (the “Merger Consideration”) with an aggregate value equal to $
The
Merger Agreement contains customary conditions to Closing, including the following mutual conditions of the parties (unless waived):
(i) approval of the shareholders of the Company and Tevogen Bio of the Transaction and the other matters requiring shareholder approval;
(ii) approvals of any required governmental authorities and completion of any antitrust expiration periods; (iii) receipt of specified
third party consents; (iv) no law or order preventing the Transaction; (v) the registration statement having been declared effective
by the SEC; (vi) no material uncured breach by the other party; (vii) no occurrence of a material adverse effect with respect to the
other party; (viii) the satisfaction of the $
| 8 |
In
addition, unless waived by Tevogen Bio, the obligations of Tevogen Bio to consummate the Transaction are subject to the satisfaction
of the following additional closing conditions, in addition to the delivery by the Company of certain related agreements, customary certificates
and other closing deliverables: (i) the representations and warranties of the Company being true and correct as of the date of the Merger
Agreement and as of the closing (subject to customary exceptions, including materiality qualifiers); (ii) the Company having performed
in all material respects its obligations and complied in all material respects with its covenants and agreements under the Merger Agreement
required to be performed or complied with by it on or prior to the date of the closing; (iii) absence of any material adverse effect
with respect to the Company since the date of the Merger Agreement which is continuing and uncured; (iv) at the closing, the Company
having $
Finally, unless waived by the Company, the obligations of the Company to consummate the Transaction are subject to the satisfaction of the following additional Closing conditions, in addition to the delivery by the Company of certain related agreements, customary certificates and other closing deliverables: (i) the representations and warranties of Tevogen Bio being true and correct as of the date of the Merger Agreement and as of the closing (subject to customary exceptions, including materiality qualifiers); (ii) Tevogen Bio having performed in all material respects their respective obligations and complied in all material respects with their respective covenants and agreements under the Merger Agreement required to be performed or complied with by them on or prior to the date of the closing; and (iii) absence of any material adverse effect with respect to Tevogen Bio and its subsidiaries on a consolidated basis since the date of the Merger Agreement which is continuing and uncured.
On September 14, 2023, the Company filed a registration statement on Form S-4 with the SEC relating to the Transaction with Tevogen.
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.
The escalation in October 2023 of the conflict between Israel and Hamas also could cause disruptions to global economic conditions and effect the stability of the Middle East region. It is unknown how long any of these disruptions will continue and whether such disruptions will become more severe.
The impact of these conflicts on the world economy is not determinable as of the date of these financial statements and the specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these condensed financial statements.
Liquidity and Going Concern
As
of September 30, 2023, the Company had $
Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination. The Company will need to raise additional capital through loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing.
If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.
Management has also determined that the mandatory liquidation and subsequent dissolution described in the financial statements, should the Company be unable to complete a business combination, raises substantial doubt about the Company’s ability to continue as a going concern. The Company has until December 15, 2023 to consummate a Business Combination. It is uncertain that the Company will be able to consummate a Business Combination by the specified period. If a Business Combination is not consummated by December 15, 2023, there will be a mandatory liquidation and subsequent dissolution, or the Company may seek approval from the Company’s shareholders to amend the Company’s Memorandum and Articles of Association to extend the Combination Period. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
| 9 |
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed financial statements of the Company are presented 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. Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, as filed with the SEC on April 17, 2023. The interim results for the period presented are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any future interim periods.
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.
Emerging Growth Company
The Company is an emerging growth company as defined in Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), which 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.
Use of Estimates
The preparation of condensed 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 at the date of the condensed financial statements. Making estimates requires management to exercise significant judgment. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Actual results could differ from those estimates.
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 did
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Investments Held in Trust Account
At September 30, 2023 and December 31, 2022, substantially all of the assets held in the Trust Account were held in U.S. Treasury securities. The Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying statements of operations. The estimated fair values of investments held in Trust Account are determined using available market information.
Offering Costs associated with the Initial Public Offering
Offering
costs, including additional underwriting fees associated with the underwriters’ exercise of the over-allotment option, consist
principally of legal, accounting, underwriting fees and other costs directly related to the IPO. Offering costs, including those attributable
to the underwriters’ exercise of the over-allotment option in full, amounted to $
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
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.
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
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Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that features 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) is classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. The Company’s Public Shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2023 and December 31, 2022, and Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ deficit section of the Company’s balance sheets, respectively.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable Class A ordinary share to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary share are affected by charges against additional paid in capital and accumulated deficit.
At September 30, 2023 and December 31, 2022, the Class A ordinary shares subject to possible redemption reflected in the condensed balance sheets is reconciled in the following table:
| Class A ordinary share subject to possible redemption, January 1, 2022 | ||||
| Plus: | ||||
| Accretion of carrying value to redemption value | ||||
| Class A ordinary share subject to possible redemption, December 31, 2022 | $ | |||
| Less: | ||||
| Redemption | ( | ) | ||
| Plus: | ||||
| Accretion of carrying value to redemption value | ||||
| Class A ordinary share subject to possible redemption, September 30, 2023 | $ |
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The
Company has two classes of shares, which are referred to as Class A ordinary shares and Class B Ordinary shares (the “Founder Shares”).
On January 30, 2023, holders of all of the issued and outstanding Founder Shares elected to convert their Founder Shares into Class A
ordinary shares of the Company on a one-for-one basis. Earnings and losses are shared pro rata between the two classes of shares. Public
Warrants (see Note 3) and Private Placement Warrants (see Note 4) to purchase
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||
| Class A (Redeemable) Ordinary Shares | Class A (Non – Redeemable) Ordinary Shares | Class B Ordinary Shares | Class A Ordinary Shares | Class B Ordinary Shares | Class A (Redeemable) Ordinary Shares | Class A (Non – Redeemable) Ordinary Shares | Class B Ordinary Shares | Class A Ordinary Shares | Class B Ordinary Shares | |||||||||||||||||||||||||||||||
| Basic and diluted net (loss) income per share: | ||||||||||||||||||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||||||||||||||||
| Allocation of net (loss) income | $ | ( | ) | $ | ( | ) | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||||||||||||||||||||
| Basic and diluted net (loss) income per share | $ | ) | $ | ) | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Accounting for Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the instruments are free standing financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own ordinary shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, was conducted at the time of warrant issuance and as of each subsequent period end date while the instruments are outstanding. Management has concluded that the Public Warrants qualify for equity accounting treatment and Private Placement Warrants qualify for liability accounting treatment.
Recent Accounting Pronouncements
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Since June 2016, the FASB issued clarifying updates to the new standard including changing the effective date for smaller reporting companies. The guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2016-13 on January 1, 2023. The adoption of ASU 2016-13 did not have a material impact on its financial statements.
The Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
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Note 3 — Initial Public Offering and Over-Allotment
Pursuant
to the IPO, the Company sold units at a price of $ per Unit. Each Unit consists of ordinary share (such ordinary
shares included in the Units being offered, the “Public Shares”), and -half of one redeemable warrant (each, a “Public
Warrant”). Each whole Public Warrant entitles the holder to purchase
Note 4 — Private Placement Warrants
On
November 8, 2021, simultaneously with the consummation of the IPO and the underwriters’ exercise of their over-allotment option,
the Company consummated the issuance and sale (“Private Placement”) of
On June 7, 2023, the Original Sponsor transferred Private Placement Units to the Sponsor in connection with the Purchase Agreement (see Note 6).
Note 5 — Related Party Transactions
Founder Shares
Our Original Sponsor paid $ to cover certain offering costs of the Company in consideration for Class B ordinary shares (the “Founder Shares”) which were issued on April 22, 2021. In August 2021, the Company effectuated a dividend of approximately shares for each outstanding Class B ordinary share resulting in an aggregate of Class B ordinary shares outstanding. On October 1, 2021, the Company effectuated a dividend of approximately shares for each outstanding Class B ordinary share resulting in an aggregate of Class B Founder shares outstanding (up to of which were subject to forfeiture if the underwriters’ over-allotment option was not exercised in full). The Founder Shares will automatically convert into Class A ordinary shares at the time of the Company’s initial Business Combination and are subject to certain transfer restrictions. The initial shareholders had agreed to forfeit up to Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters. Since the underwriters’ exercised the over-allotment option in full, no Founder Shares are subject to forfeiture.
The Initial Shareholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earliest of (A) after the completion of our initial business combination and (B) subsequent to our initial business combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $ per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any trading days within any -trading day period commencing at least days after our initial business combination, or (y) the date on which we complete a liquidation, merger, share exchange or other similar transaction that results in all of our public shareholders having the right to exchange their ordinary shares for cash, securities or other property.
On
January 30, 2023, the initial shareholders holding all of the Founder Shares elected to convert their Founder Shares into Class A ordinary
shares of the Company on a
On
May 4, 2023, the Company entered into a purchase agreement (the “Purchase Agreement”) with SSVK Associates, LLC (the “Sponsor”)
and the Original Sponsor, pursuant to which the Sponsor will purchase from the Original Sponsor (x) Class A ordinary shares
and (y) Private Placement Units, each consisting of one Class A ordinary share and one-half of one redeemable warrant that
is exercisable for one Class A ordinary share, free and clear of all liens and encumbrances (other than those contained in the Letter
Agreement, dated November 3, 2021, by and among the Company, its officers, directors and the Original Sponsor, and the Underwriting Agreement,
dated November 3, 2021, by and between the Company and Cantor Fitzgerald & Co., as representative of the several underwriters (the
“Underwriting Agreement”)), for an aggregate purchase price of $
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| May 4, 2023 | ||||
| Discount for lack of marketability | % | |||
| Stock price as of measurement date | $ | |||
| Probability of transaction | % | |||
Related Party Loans
On
April 22, 2021, the Original Sponsor agreed to loan the Company an aggregate of up to $
Subscription Agreement Loans
On
May 3, 2023, the Company and the Original Sponsor entered into a Subscription Agreement with Polar Multi-Strategy Master Fund (the “Investor”)
where the Investor agreed to make a cash contribution of $
On
June 20, 2023, the Sponsor and the Company entered into a second subscription agreement (the “Second Subscription Agreement”)
with the Investor where the Investor agreed to lend to the Sponsor, which will in turn be lent to the Company, an aggregate of $
Collectively,
the First SPAC Loan and the Second SPAC Loan are referred to as the SPAC Loans. The Company accounted for the Class A common stock they
could be converted (“equity instrument”) to as equity-classified instruments based on an assessment of the specific terms
and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the equity instrument is freestanding
financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the equity instrument
meets all the requirements for equity classification under ASC 815, including whether the equity instrument is indexed to the Company’s
own common stock, among other conditions for the equity classification. This assessment, which requires the use of professional judgment,
was conducted at the time of equity instrument issuance. The SPAC Loans and the equity instrument meet the scope exception of ASC 815-10-15-74(a).
The Company applied the guidance in ASC 470-20-25-2 “Debt With Conversion and Other Options”, requiring that the loan
proceeds be allocated to the SPAC Loans based on their relative fair values. At May 3, 2023 the Company allocated $
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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 will 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.
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. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest,
or, at the lender’s discretion, up to $
Administrative Support Services
Commencing
on the date of the final prospectus, the Company agreed to pay the Original Sponsor a total of $
Note 6 — Commitments and Contingencies
Registration Rights
The holders of Founder Shares, Private Placement Units (including the underlying securities), and securities that may be issued upon conversion of Working Capital Loans, if any, will be entitled to registration rights pursuant to a registration rights agreement signed upon consummation of the IPO. These holders will be entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The
Company granted the underwriters a
The
underwriters were paid a cash underwriting discount of $
On
June 28, 2023, the Company and Cantor entered into a fee reduction agreement (the “Fee Reduction Agreement”), pursuant to
which Cantor has agreed to forfeit $
Subscription Agreement
As noted in Note 5, on May 3, 2023, the Company entered into a subscription agreement (“Subscription Agreement”) with the Investor and the Original Sponsor. Pursuant to the May 4, 2023 Purchase Agreement, the Sponsor assumed the obligations of the Original Sponsor under the Subscription Agreement. Subject to, and in accordance with the terms and conditions of the Subscription Agreement, the parties agreed that:
| ● | The
Investor shall make a cash contribution of $ | |
| ● | The Initial Capital Contribution will in turn be loaned by the Sponsor to the Company to cover working capital expenses (the “First SPAC Loan”). | |
| ● | In consideration for the Initial Capital Contribution, the Company will issue Class A ordinary shares, par value $ per share, of the Company to the Investor at the closing of the initial business combination (the “De-SPAC Closing”), which shares shall be subject to no transfer restrictions or any other lock-up provisions, earn outs, or other contingencies and shall be registered as part of any registration statement to be filed in connection with the De-SPAC Closing or, if no such registration statement is filed in connection with the De-SPAC Closing, pursuant to the first registration statement to be filed by the Company or the surviving entity following the De-SPAC Closing. | |
| ● | The
SPAC Loan shall not accrue interest and shall be repaid by the Company upon the De-SPAC Closing. The Sponsor will pay to the Investor
all repayments of the SPAC Loan the Sponsor has received within business days of the De-SPAC Closing. The Investor may elect
at the De-SPAC Closing to receive such payments in (a) cash or (b) Class A ordinary shares at a rate of Class A ordinary share
for each $ of the Initial Capital Contribution. If the Company liquidates without consummating the initial business combination,
any amounts remaining in the Sponsor or Company’s cash accounts, not including the Company’s Trust Account, will be paid
to the Investor within | |
| ● | On
the De-SPAC Closing, the Sponsor will pay the Investor an amount equal to the reasonable attorney fees incurred by the Investor in
connection with the Subscription Agreement not to exceed $ |
| 16 |
On June 20, 2023, the Company entered into a second subscription agreement (the “Second Subscription Agreement”) with the Investor and SSVK Associates, LLC (the “Sponsor”). Subject to, and in accordance with the terms and conditions of the Second Subscription Agreement, the parties agreed that:
| ● | The
Investor shall make a cash contribution of up to $ | |
| ● | The Additional Capital Contribution will in turn be loaned by the Sponsor to the Company in cash on the later of the Sponsor’s request and the first filing of the S-4 for the SPAC’s business combination (the “Second SPAC Loan”). | |
| ● | In consideration for the Additional Capital Commitment, SPAC will issue a further Class A ordinary share for each dollar of the Additional Capital Commitment funded to the Investor at the close of the business combination (“Subscription Shares”). The Subscription Shares shall be subject to no transfer restrictions or any other lock-up provisions, earn outs, or other contingencies. The Subscription Shares (i) shall be registered as part of any registration statement issuing shares before or in connection with the De- SPAC Closing or (ii) if no such registration statement is filed in connection with the de-SPAC Closing, shall promptly be registered pursuant to the first registration statement filed by the SPAC or the surviving entity following the De-SPAC Closing, which shall be filed no later than 30 days after the De-SPAC Closing and declared effective no later than 90 days after the De-SPAC Closing. | |
| ● | The Second SPAC Loan shall not accrue interest and shall be repaid by the Company upon the De-SPAC Closing. The Sponsor will pay to the Investor all repayments of the Second SPAC Loan the Sponsor has received within business days of the De-SPAC Closing. The Investor may elect at the De-SPAC Closing to receive such payments in (a) cash or (b) Class A ordinary shares at a rate of Class A ordinary share for each $ of the Additional Capital Contribution. If the Company liquidates without consummating the initial business combination, any amounts remaining in the Sponsor or Company’s cash accounts, not including the Company’s Trust Account, will be paid to the Investor within five days of the liquidation. | |
| ● | On
the De-SPAC Closing, the Sponsor will pay the Investor an amount equal to the reasonable attorney fees incurred by the Investor in
connection with the Second Subscription Agreement not to exceed $ |
Purchase Agreement
On
May 4, 2023, the Company entered into a purchase agreement (the “Purchase Agreement”) with SSVK Associates, LLC (the “Sponsor”)
and the Original Sponsor, pursuant to which the Sponsor will purchase from the Original Sponsor (x) Class A ordinary shares
and (y) Private Placement Units, each consisting of one Class A ordinary share and one-half of one redeemable warrant that
is exercisable for one Class A ordinary share, free and clear of all liens and encumbrances (other than those contained in the Letter
Agreement, dated November 3, 2021, by and among the Company, its officers, directors and the Original Sponsor, and the Underwriting Agreement,
dated November 3, 2021, by and between the Company and Cantor, as representative of the several underwriters (the “Underwriting
Agreement”), for an aggregate purchase price of $
In addition to the payment of the Purchase Price, the Sponsor also assumed the following obligations: (i) responsibility for all of Company’s public company reporting obligations; (ii) the obligations of the Original Sponsor under the May 3, 2023 Subscription Agreement, (iii) responsibility for the Company’s D&O insurance premium to extend the Company’s existing D&O insurance policy and maintain D&O coverage through the closing of the initial business combination and obtain appropriate tail coverage; (iv) responsibility for the Company’s outstanding legal fees owed by the Company; and (v) all other obligations of the Original Sponsor related to the Company.
Pursuant to the Purchase Agreement, the Sponsor had the right to replace the Company’s current directors and officers with directors and officers as the Sponsor may select in its sole discretion. The obligations of the Original Sponsor to consummate the transactions contemplated by the Purchase Agreement were subject to the satisfaction or written waiver by the Original Sponsor of the following conditions: (a) the approval of the board of directors the SPAC; (b) the approval of the members of the Original Sponsor; (c) the consent or waiver of the underwriters under the Underwriting Agreement; (d) the filing of its quarterly report on Form 10-Q by the SPAC for the quarter ended March 31, 2023. On June 7, 2023, the parties to the Purchase Agreement closed the transactions contemplated thereby. In connection with the closing, the Sponsor replaced the Company’s directors and officers.
The Purchase Agreement contains customary representations and warranties of the parties, including, among others, with respect to corporate organization, corporate authority, and compliance with applicable laws. The representations and warranties of each party set forth in the Purchase Agreement were made solely for the benefit of the other parties to the Purchase Agreement, and investors are not third-party beneficiaries of the Purchase Agreement. In addition, such representations and warranties (a) are subject to materiality and other qualifications contained in the Purchase Agreement, which may differ from what may be viewed as material by investors, (b) were made only as of the date of the Purchase Agreement or such other date as is specified in the Purchase Agreement and (c) may have been included in the Purchase Agreement for the purpose of allocating risk between the parties rather than establishing matters as facts.
Note 7 — Shareholders’ Deficit
Class A Ordinary Shares
The Company is authorized to issue Class A ordinary shares with a par value of $ per share. As of September 30, 2023 and December 31, 2022, there were and Class A ordinary shares issued and outstanding (excluding and Class A ordinary shares subject to possible redemption), respectively.
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Class B Ordinary Shares
The Company is authorized to issue Class B ordinary shares with a par value of $ per share. Holders of Class B ordinary shares are entitled to vote for each share of Class B ordinary shares. As of September 30, 2023, and December 31, 2022, there were and Class B ordinary shares outstanding, respectively, none of which are subject to forfeiture since the underwriters’ over-allotment option was exercised in full.
Prior to our initial Business Combination, only holders of our Class B ordinary shares will have the right to vote on the appointment of directors. Holders of our Class A ordinary shares will not be entitled to vote on the election of directors during such time. In addition, prior to the completion of an initial Business Combination, holders of a majority of our Class B ordinary shares may remove a member of the board of directors for any reason. These provisions of our Memorandum and Articles of Association may only be amended by a special resolution passed by not less than 90% of our ordinary share shareholders who attend and vote at our general meeting. With respect to any other matter submitted to a vote of our shareholders, including any vote in connection with our initial Business Combination, except as required by law, holders of our Class B ordinary shares and holders of our Class A ordinary shares will vote together as a single class, with each share entitling the holder to one vote.
The
Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination on a
one-for-one basis, subject to adjustment. In the case that additional Class A ordinary shares, or equity-linked securities, are issued
or deemed issued in excess of the amounts offered in the IPO and related to the closing of the initial Business Combination, the ratio
at which Class B ordinary shares shall convert into Class A ordinary shares will be adjusted (unless the holders of a majority of the
outstanding Class B ordinary shares agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the
number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the aggregate, on an as-converted
basis,
Preference Shares
The Company is authorized to issue preference shares 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 September 30, 2023, and December 31, 2022, there were preferred shares issued or outstanding.
Public Warrants
The
Public Warrants will become exercisable on the later of (i)
Once the warrants become exercisable, the Company may redeem the Public Warrants:
| ● | in whole and not in part; | |
| ● | at
a price of $ | |
| ● | upon
not less than | |
| ● | if,
and only if, the reported last sale price of the Class A ordinary shares equals or exceeds $ per share (as adjusted for share
subdivisions, share dividends, reorganizations and recapitalizations), for any |
| 18 |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
The Private Warrants are identical to the Public Warrants underlying the Units being sold in the IPO, except that the Private Warrants and the Class A ordinary shares issuable upon the exercise of the Private Warrants will not be transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
The exercise price and number of Class A ordinary shares issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extra Class A ordinary share dividend or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of Class A ordinary shares at a price below their respective exercise prices. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of 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.
In
addition, if the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection
with the closing of a Business Combination at an issue price or effective issue price of less than $ per Class A ordinary share (with
such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of
any such issuance to the initial shareholders or their affiliates, without taking into account any Founder Shares held by them prior
to such issuance), (y) the aggregate gross proceeds from such issuances represent more than
Note 8 — Warrant Liabilities
The
Company accounts for the
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Note 9 — Fair Value Measurements
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.
At September 30, 2023 and December 31, 2022, the assets held in the Trust Account were held in treasury funds. All of the Company’s investments held in the Trust Account are classified as trading securities.
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
| September 30, 2023: | Quoted Prices in | Significant Other | Significant Other | |||||||||||||
| Active Markets | Observable Inputs | Unobservable Inputs | ||||||||||||||
| Level | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Assets: | ||||||||||||||||
| U.S. Treasury Securities | 1 | $ | $ | $ | ||||||||||||
| Warrant Liability- Private Placement Warrants | 3 | |||||||||||||||
| December 31, 2022: | Quoted Prices in | Significant Other | Significant Other | |||||||||||||
| Active Markets | Observable Inputs | Unobservable Inputs | ||||||||||||||
| Level | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Assets: | ||||||||||||||||
| U.S. Treasury Securities | 1 | $ | $ | $ | ||||||||||||
| Warrant Liability- Private Placement Warrants | 3 | |||||||||||||||
The Company utilizes a Monte Carlo simulation model to value the warrants at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the warrant liability is determined using Level 3 inputs. Inherent in a Monte Carlo pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its ordinary shares based on industry historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
The aforementioned warrant liabilities are not subject to qualified hedge accounting.
The following table provides quantitative information regarding Level 3 fair value measurements at September 30, 2023 and December 31, 2022:
At September 30,
| At December 31,
| |||||||
| Share Price | $ | $ | ||||||
| Exercise Price | $ | $ | ||||||
| Term (years) | ||||||||
| Industry Volatility | % | % | ||||||
| Risk Free Rate | % | % | ||||||
| Dividend Yield | % | % | ||||||
Note 10 — Subsequent Events
The Company has evaluated subsequent events and transactions that occurred after the balance sheet date up to the date these financial statements were available to be issued. Based on this review, other than as described in these financial statements and as stated below, the Company did not identify any subsequent events that would have required adjustment or disclosure in these financial statements.
The Company filed Amendment No. 1 to Form S-4 in connection with the Transaction with Tevogen with the SEC on October 23, 2023.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (this “Quarterly Report”) to “we,” “us” or the “Company” refer to Semper Paratus Acquisition Corporation. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to SSVK Associates, LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
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 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 17, 2023. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
Semper Paratus Acquisition Corporation was incorporated as a Cayman Islands exempted company on April 21, 2021. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, reorganization or other similar business transaction with one or more businesses that the Company has not yet identified (a “Business Combination”).We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
The Registration Statement on Form S-1, as amended (the “Registration Statement”), for the Company’s IPO was declared effective on November 3, 2021. On November 8, 2021, the Company consummated the IPO of 30,000,000 units (“Units”) with respect to the ordinary shares included in the Units being offered (the “Public Shares”) at $10.00 per Unit generating gross proceeds of $300,000,000, which is discussed in Note 3. The company has selected December 31 as its fiscal year end.
Simultaneously with the closing of the IPO, the Company consummated the sale of 1,360,000 private placement units (“Private Placement Units”) at a price of $10.00 per Private Placement Unit in a private placement to the Company’s sponsor, Semper Paratus Sponsor LLC (the “Original Sponsor”) and underwriter Cantor Fitzgerald & Co. (“Cantor”) generating gross proceeds of $13,600,000.
Simultaneously with the closing of the IPO, the Company consummated the closing of the sale of 4,500,000 additional Units upon receiving notice of the underwriter’s election to fully exercise its overallotment option (“Overallotment Units”), generating additional gross proceeds of $45,000,000 and incurring additional offering costs of $2,700,000 in underwriting fees, all of which are deferred until completion of the Company’s Business Combination. Simultaneously with the exercise of the overallotment, the Company consummated the private placement of an additional 90,000 Private Placement Units to the Original Sponsor, generating gross proceeds of $900,000.
Following the closing of the IPO, $351,900,000 ($10.20 per Unit) from the net proceeds of the sale of the Units in the IPO and the Private Placement Units was placed in a trust account (“Trust Account”) and will be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account.
On May 4, 2023, the Company entered into a purchase agreement (the “Purchase Agreement”) with SSVK Associates, LLC (the “Sponsor”) and the Original Sponsor, pursuant to which the Sponsor will purchase from the Original Sponsor (x) 7,988,889 Class A ordinary shares and (y) 1,000,000 Private Placement Units, each consisting of one Class A ordinary share and one-half of one redeemable warrant that is exercisable for one Class A ordinary share, free and clear of all liens and encumbrances (other than those contained in the Letter Agreement, dated November 3, 2021, by and among the Company, its officers, directors and the Original Sponsor, and the Underwriting Agreement, dated November 3, 2021, by and between the Company and Cantor, as representative of the several underwriters (the “Underwriting Agreement”)), for an aggregate purchase price of $1.00 (the “Purchase Price”) payable at the time of the initial Business Combination. The transactions contemplated by the Purchase Agreement closed June 7, 2023, and the Original Sponsor transferred the Private Placement Units and the Class A ordinary shares to the Sponsor.
Our management has broad discretion with respect to the specific application of the net proceeds of its IPO 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. Our initial Business Combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account) at the time we sign a definitive agreement in connection with the initial Business Combination. However, we will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target business or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company.
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If we are unable to complete a Business Combination within the Combination Period, we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes that were paid by us or are payable by us, 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 Shareholders’ rights as shareholders (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 remaining shareholders and the board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to the our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
Charter Amendment and Share Redemptions
On February 3, 2023, the Company held an extraordinary general meeting of the shareholders for the purpose of considering and voting on a charter amendment. At the meeting, the shareholders of the Company approved an amendment (the “Charter Amendment”) to the Company’s Amended and Restated Memorandum and Articles of Association to extend the date by which the Company must consummate an initial business combination from February 8, 2023 to December 15, 2023. Under Cayman Islands law, the Charter Amendment took effect upon approval by the shareholders. The Company filed the Charter Amendment with the Cayman Islands General Registry within 15 days of the meeting. In connection with the meeting, shareholders holding approximately 32,116,947 Public Shares exercised their right to redeem their shares for a pro rata portion of the funds in the Company’s Trust Account. As a result, approximately $332 million (approximately $10.34 per Public Share) was removed from the Trust Account to pay such holders and approximately $25 million remained in the Trust Account. Following redemptions, the Company has 2,383,053 Public Shares outstanding.
Proposed Business Combination
On June 28, 2023, the Company entered into an Agreement and Plan of Merger by and among the Company, Semper Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), the Sponsor, in its capacity as purchaser representative, Tevogen Bio Inc, a Delaware corporation (“Tevogen Bio”), and Ryan Saadi, in his capacity as seller representative (as may be amended and/or restated from time to time, the “Merger Agreement”), pursuant to which, among other things, the parties will affect the merger of Merger Sub with and into Tevogen Bio, with Tevogen Bio continuing as the surviving entity (the “Merger”), as a result of which all of the issued and outstanding capital stock of Tevogen Bio shall be exchanged for shares of Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), of the Company (the “Share Exchange”) subject to the conditions set forth in the Merger Agreement, with Tevogen Bio surviving the Share Exchange as a wholly owned subsidiary of the Company (the Share Exchange and the other transactions contemplated by the Merger Agreement, together, the “Transaction”).
Prior to the Closing Date, and subject to the satisfaction or waiver of the conditions of the Merger Agreement, the Company will migrate out of the Cayman Islands and domesticate (the “Domestication”) as a Delaware corporation in accordance with Section 388 of the DGCL and Part XIII of the Cayman Islands Companies Act (2021 Revision). In connection with the Domestication, (i) each issued and outstanding Class A ordinary share, par value $0.0001 per share will convert, on a one-for-one basis, into a duly authorized, validly issued, fully paid and nonassessable share of Class A Class A Common Stock; and, (ii) each issued and outstanding whole warrant to purchase Class A ordinary shares of the Company will automatically represent the right to purchase one share of Class A Common Stock, at an exercise price of $11.50 per share on the terms and conditions set forth in the Company’s warrant agreement. Immediately following the Domestication, (i) the Class A Common Stock will be reclassified as common stock, par value $0.0001 per share (the “Common Stock”); (ii) each issued and outstanding Unit that has not been previously separated into the underlying Class A ordinary share and underlying one-half of one warrant upon the request of the holder thereof, will be cancelled and will entitle the holder thereof to one share of Common Stock and one-half of one public warrant, with a whole public warrant representing the right to acquire one share of Common Stock at an exercise price of $11.50 per share.
As consideration for the Merger, the holders of Tevogen Bio’s securities collectively shall be entitled to receive from the Company, in the aggregate, a number of shares of Common Stock (the “Merger Consideration”) with an aggregate value equal to $1,200,000,000. In addition, holders of Tevogen Bio’s securities shall also be entitled to receive from the Company, in the aggregate, an additional 20,000,000 shares of the Common Stock (each an “Earnout Share Payment”) in the event that the VWAP of the Company’s Common Stock, collectively, exceeds (a) $15.00 per share for 20 out of any 30 consecutive trading days beginning on the Closing Date of the Merger Agreement until the 36-month anniversary of the Closing Date, in which case the holders of Tevogen Bio securities shall be entitled to receive an additional 6,666,667 shares of Common Stock, (b) $17.50 per share for 20 out of any 30 consecutive trading days beginning on the Closing Date of the Merger Agreement until the 36-month anniversary of the Closing Date, in which case the holders of Tevogen Bio securities shall be entitled to receive an additional 6,666,667 shares of Common Stock and (c) $20.00 per share for 20 out of any 30 consecutive trading days beginning on the Closing Date of the Merger Agreement until the 36-month anniversary of the Closing Date, in which case the holders of Tevogen Bio securities shall be entitled to receive an additional 6,666,666 shares of Common Stock. In addition, for each Earnout Share Payment, the Company will also issue to Sponsor an additional 1,500,000 shares of Company Common Stock.
The Merger Agreement contains customary conditions to Closing, including the following mutual conditions of the parties (unless waived): (i) approval of the shareholders of the Company and Tevogen Bio of the Transaction and the other matters requiring shareholder approval; (ii) approvals of any required governmental authorities and completion of any antitrust expiration periods; (iii) receipt of specified third party consents; (iv) no law or order preventing the Transaction; (v) the registration statement having been declared effective by the SEC; (vi) no material uncured breach by the other party; (vii) no occurrence of a material adverse effect with respect to the other party; (viii) the satisfaction of the $5,000,001 minimum net tangible asset test by the Company; (ix) approval from NYSE for the listing of the shares of the Company’s Common Stock to be issued in connection with the Transaction; and (x) reconstitution of the post-closing board or directors of the Company.
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In addition, unless waived by Tevogen Bio, the obligations of Tevogen Bio to consummate the Transaction are subject to the satisfaction of the following additional closing conditions, in addition to the delivery by the Company of certain related agreements, customary certificates and other closing deliverables: (i) the representations and warranties of the Company being true and correct as of the date of the Merger Agreement and as of the closing (subject to customary exceptions, including materiality qualifiers); (ii) the Company having performed in all material respects its obligations and complied in all material respects with its covenants and agreements under the Merger Agreement required to be performed or complied with by it on or prior to the date of the closing; (iii) absence of any material adverse effect with respect to the Company since the date of the Merger Agreement which is continuing and uncured; (iv) at the closing, the Company having $25,000,000 in cash and cash equivalents, including funds remaining in the Trust Account (after giving effect to the completion and payment of any redemptions, purchaser expenses, deferred purchaser expenses, loans owned by the Company to the Sponsor for any purchaser expenses, other administrative costs, other liabilities of the Company as of the closing, and any transaction expenses); (v) the Company shall have made all reasonably necessary arrangements with the trustee to the Trust Account to have the Trust Account funds disbursed to the Company, and there shall be no actions, suits, proceedings, arbitrations or mediations pending or threatened by any person (not including Tevogen Bio and its affiliates) with respect to or against the Trust Account that would reasonably be expected to have a material adverse effect on the Company; and (vi) at least one day prior to closing, the Company shall have delivered to Tevogen Bio a written consent of the board of directors of the Company (or a duly appointed committee thereof authorized to administer the equity incentive plan), authorizing and approving the grant of awards of restricted stock units under the equity incentive plan shares of Common Stock to certain individuals that were executives, employees or individual service providers of Tevogen Bio as of immediately prior to the closing of the Transaction.
Finally, unless waived by the Company, the obligations of the Company to consummate the Transaction are subject to the satisfaction of the following additional Closing conditions, in addition to the delivery by the Company of certain related agreements, customary certificates and other closing deliverables: (i) the representations and warranties of Tevogen Bio being true and correct as of the date of the Merger Agreement and as of the closing (subject to customary exceptions, including materiality qualifiers); (ii) Tevogen Bio having performed in all material respects their respective obligations and complied in all material respects with their respective covenants and agreements under the Merger Agreement required to be performed or complied with by them on or prior to the date of the closing; and (iii) absence of any material adverse effect with respect to Tevogen Bio and its subsidiaries on a consolidated basis since the date of the Merger Agreement which is continuing and uncured.
Nasdaq Notices
On March 23, 2023, the Company received a written notice (the “March Notice”) from the Listing Qualifications division of the Nasdaq Stock Market (“Nasdaq”) stating that the Company had not paid certain fees required by Nasdaq Listing Rule 5250(f) and that the Company would be delisted unless it appeals such determination. As of the date of the March Notice, the Company’s past due fee balance totaled $151,000. On May 5, 2023 the Company received notification from Nasdaq that the fee delinquency was cured, and the Company is now in compliance with Nasdaq’s continued listing standards.
On April 4, 2023, the Company received a written notice (the “April Notice”) from Nasdaq indicating that the Company was not in compliance with Listing Rule 5450(b)(2)(A), requiring the Company to maintain a Market Value of Listed Securities (“MVLS”) of $50,000,000 for the continued listing of its securities on The Nasdaq Global Market. The April Notice was only a notification of deficiency, not of imminent delisting, and had no then-current effect on the listing or trading of the Company’s securities on Nasdaq when issued. The April Notice stated that the Company had 180 calendar days, or until October 2, 2023, to regain compliance with Listing Rule 5450(b)(2)(A). On September 28, 2023, the Company received notice from Nasdaq that it had regained compliance with Listing Rule 5450(b)(2)(A) regarding the MVLS requirement.
Liquidity and Capital Resources
For the nine months ended September 30, 2023, net cash used in operating activities was $682,640, net income of $761,598 was impacted by the unrealized gain on investments held in the Trust Account of $2,417,061, offset by a change in the fair value of warrants of $29,000 and changes in operating asset and liabilities of $943,823.
For the nine months ended September 30, 2022, net cash used in operating activities was $201,534, net income of $1,793,874 was impacted by a decrease in prepaid expenses and other assets of $316,354, unrealized gain on investments held in the Trust Account of $2,207,920, a decrease in the fair value of warrants of $326,250, an increase in due to affiliate of $90,000, and increase in accounts payable and accrued expenses of $132,408.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes payable), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
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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 will 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. 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. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into private placement-equivalent units at a price of $10.00 per unit. As of September 30, 2023 and December 31, 2022, the Company had no borrowings under the Working Capital Loans.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a 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 Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. The Company cannot provide any assurance that additional financing will be available to it on commercially acceptable terms, if at all.
Results of Operations
As of September 30, 2023, the Company had not commenced any operations. All activity through September 30, 2023, relates to the Company’s formation, the IPO and the search for a prospective initial Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the IPO placed in the Trust Account.
For the three months ended September 30, 2023, we had a net loss of $278,746, which consisted of $605,971 of general and administrative expenses and a change in the fair value of warrants of $7,250, offset by $334,475 unrealized gain on investment held in the Trust Account.
For the three months ended September 30, 2022, we had net income of $1,612,864, which consisted of general and administrative expenses, offset by unrealized gain on investment held in the Trust Account and change in the fair value of warrants.
For the nine months ended September 30, 2023, we had net income of $761,598, which consisted of $29,000 change in the fair value of warrants and $1,626,463 of general and administrative expenses, offset by $2,417,061 unrealized gain on investment held in the Trust Account.
For the nine months ended September 30, 2022, we had net income of $1,793,874, which consisted of general and administrative expenses, offset by unrealized gain on investment held in the Trust Account and change in the fair value of warrants.
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Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2023. We do not participate in transactions that create relationships with entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
Registration Rights
The holders of Founder Shares, Private Placement Units (including the underlying securities), and securities that may be issued upon conversion of Working Capital Loans, if any, will be entitled to registration rights pursuant to a registration rights agreement signed upon consummation of the IPO. These holders will be entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriter is entitled to deferred underwriting commissions of $14,700,000 in the aggregate (the “Original Deferred Fee”), consisting of $13,800,000 deferred underwriting commissions, and $900,000 cash underwriting discount agreed to be deferred until Business Combination. The deferred fee will become payable to the underwriter 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.
On June 28, 2023, the Company and Cantor entered into a fee reduction agreement (the “Fee Reduction Agreement”), pursuant to which Cantor has agreed to forfeit $9,700,000 of the deferred underwriting fees payable, resulting in a remainder of $5,000,000 of deferred underwriting fees payable (the “Reduced Deferred Fee”) by the Company to Cantor upon the closing of the contemplated Transaction with Tevogen Bio Inc. The Reduced Deferred Fee shall be payable to Cantor in the form of 500,000 shares of the common equity securities of the entity that survives the Transaction. The Fee Reduction Agreement only applies to the consummation of the Transaction with Tevogen Bio Inc and no other potential Business Combinations that may be contemplated or consummated by the Company. In the event that the Company does not complete the Transaction with Tevogen Bio, Inc, the Original Deferred fee shall become due and payable by the Company to Cantor as originally set forth in the Underwriting Agreement, upon the consummation of a Business Combination.
JOBS Act
On April 5, 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 will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing 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 such, our financial statements may not be comparable to companies that comply with public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB 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 certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of executive compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our IPO or until we are no longer an “emerging growth company,” whichever is earlier.
Critical Accounting Estimates
The preparation of unaudited condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Warrant Liabilities
We account for the Private Placement Warrants included in Private Placement Units and the redeemable warrants (the “Public Warrants”) that were included in units issued by the Company in its IPO (collectively, the “Warrants”) in accordance with Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity (“ASC 815”), under which the Private Placement Warrants do not meet the criteria for equity classification and must be recorded as liabilities. As the Private Placement Warrants meet the definition of a derivative as contemplated in ASC 815, the Private Placement Warrants are measured at fair value at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the statements of operations in the period of change.
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Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable ordinary shares (including 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 our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. Our ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of our balance sheets. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid in capital and accumulated deficit.
Recently Issued Accounting Pronouncements
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Since June 2016, the FASB issued clarifying updates to the new standard including changing the effective date for smaller reporting companies. The guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2016-13 on January 1, 2023. The adoption of ASU 2016-13 did not have a material impact on its financial statements.
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of September 30, 2023, we were not subject to any market or interest rate risk. Following the consummation of our IPO, the net proceeds of our IPO, including amounts in the trust account, were invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
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ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2023. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.
Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
To the knowledge of our management, there is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our property.
ITEM 1A. RISK FACTORS
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our final prospectus for our IPO filed with the SEC on November 5, 2021, and our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on April 17, 2023. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. Except as set forth below, of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our final prospectus for our IPO filed with the SEC on November 5, 2021, and our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on April 17, 2023.
There are no assurances that we will consummate our recently announced business combination with Tevogen Bio, Inc.
On June 29, 2023, we announced that we entered into a Business Combination Agreement, dated June 28, 2023 by and among the Company, Semper Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), SSVK Associates, LLC, Semper Paratus’ sponsor (the “Sponsor”), in its capacity as purchaser representative, Tevogen Bio Inc, a Delaware corporation (“Tevogen Bio”), and Ryan Saadi, in his capacity as seller representative (as may be amended and/or restated from time to time, the “Merger Agreement”), pursuant to which, among other things, the parties will affect the merger of Merger Sub with and into Tevogen Bio, with Tevogen Bio continuing as the surviving entity (the “Merger”), as a result of which all of the issued and outstanding capital stock of Tevogen Bio shall be exchanged for shares of Class A common stock, par value $0.0001 per share, of the Company (the “Share Exchange”) subject to the conditions set forth in the Merger Agreement, with Tevogen Bio surviving the Share Exchange as a wholly owned subsidiary of the Company (the Share Exchange and the other transactions contemplated by the Merger Agreement, together, the “Transaction”).
Prior to the Closing Date, and subject to the satisfaction or waiver of the conditions of the Merger Agreement, the Company will migrate out of the Cayman Islands and domesticate (the “Domestication”) as a Delaware corporation in accordance with Section 388 of the DGCL and Part XIII of the Cayman Islands Companies Act (2021 Revision). In connection with the Domestication, (i) each issued and outstanding Class A ordinary share, par value will convert, on a one-for-one basis, into a duly authorized, validly issued, fully paid and nonassessable share of Class A Common Stock; and, (ii) each issued and outstanding whole warrant to purchase Class A ordinary shares of the Company will automatically represent the right to purchase one share of Class A Common Stock, at an exercise price of $11.50 per share on the terms and conditions set forth in the Company’s warrant agreement. Immediately following the Domestication, (i) the Class A Common Stock will be reclassified as common stock, par value $0.0001 per share (the “Common Stock”); (ii) each issued and outstanding Unit that has not been previously separated into the underlying Class A ordinary share and underlying one-half of one warrant upon the request of the holder thereof, will be cancelled and will entitle the holder thereof to one share of Common Stock and one-half of one public warrant, with a whole public warrant representing the right to acquire one share of Common Stock at an exercise price of $11.50 per share. The Company will change its name to “Tevogen Bio Holdings Inc.” after giving effect to the Domestication.
As consideration for the Merger, the holders of Tevogen Bio’s securities collectively shall be entitled to receive from the Company, in the aggregate, a number of shares of Common Stock (the “Merger Consideration”) with an aggregate value equal to $1,200,000,000. In addition, holders of Tevogen Bio’s securities shall also be entitled to receive from the Company, in the aggregate, an additional 20,000,000 shares of the Common Stock (each an “Earnout Share Payment”) in the event that the VWAP of the Company’s Common Stock, collectively, exceeds (a) $15.00 per share for 20 out of any 30 consecutive trading days beginning on the Closing Date of the Merger Agreement until the 36-month anniversary of the Closing Date, in which case the holders of Tevogen Bio securities shall be entitled to receive an additional 6,666,667 shares of Common Stock, (b) $17.50 per share for 20 out of any 30 consecutive trading days beginning on the Closing Date of the Merger Agreement until the 36-month anniversary of the Closing Date, in which case the holders of Tevogen Bio securities shall be entitled to receive an additional 6,666,667 shares of Common Stock and (c) $20.00 per share for 20 out of any 30 consecutive trading days beginning on the Closing Date of the Merger Agreement until the 36-month anniversary of the Closing Date, in which case the holders of Tevogen Bio securities shall be entitled to receive an additional 6,666,666 shares of Common Stock. In addition, for each Earnout Share Payment, the Company will also issue to Sponsor an additional 1,500,000 shares of Company Common Stock.
The Merger Agreement contains customary conditions to Closing, including the following mutual conditions of the parties (unless waived): (i) approval of the shareholders of the Company and Tevogen Bio of the Transaction and the other matters requiring shareholder approval; (ii) approvals of any required governmental authorities and completion of any antitrust expiration periods; (iii) receipt of specified third party consents; (iv) no law or order preventing the Transaction; (v) the registration statement having been declared effective by the SEC; (vi) no material uncured breach by the other party; (vii) no occurrence of a material adverse effect with respect to the other party; (viii) the satisfaction of the $5,000,001 minimum net tangible asset test by the Company; (ix) approval from NYSE for the listing of the shares of the Company’s Common Stock to be issued in connection with the Transaction; and (x) reconstitution of the post-closing board or directors of the Company. In addition, unless waived by Tevogen Bio or the Company, the obligations of both Tevogen Bio and the Company to consummate the Transaction are subject to the satisfaction of additional closing conditions, as fully set forth in the Merger Agreement. There are no assurances that all the conditions to the Merger Agreement will be satisfied or satisfied within the time frames required by the Merger Agreement. If the conditions to the Merger Agreement are not met (and, to the extent waivable, are not waived), then subject to the terms of the Merger Agreement, either the Company or Tevogen Bio may terminate the Merger Agreement. The Company has until December 15, 2023 (unless such date is extended by the Company in accordance with its existing governing documents) to complete an initial Business Combination, otherwise 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 earned on the funds held in the Trust Account and not previously released to us to pay the Company’s franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and the Company’s board of directors, dissolve and liquidate, 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.
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Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations.
We are subject to laws and regulations enacted by national, regional, and local governments. In particular, we are 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 may also 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 negotiate and complete our Business Combination, and results of operations.
On March 30, 2022, the SEC issued proposed rules (the “2022 Proposed Rules”) relating to, among other items, enhancing disclosures in business combination transactions involving SPACs and private operating companies; amending the financial statement requirements applicable to transactions involving shell companies; effectively limiting the use of projections in SEC filings in connection with proposed business combination transactions; increasing the potential liability of certain participants in proposed business combination transactions; and the extent to which SPACs could become subject to regulation under the Investment Company Act. The 2022 Proposed Rules, if adopted, whether in the form proposed or in revised form, and certain positions and legal conclusions expressed by the SEC in connection with the 2022 Proposed Rules, may materially adversely affect our ability to negotiate and complete our Business Combination and may increase the costs and time related thereto.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our Business Combination.
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including, without limitation, restrictions on the nature of our investments, restrictions on the issuance of securities, and restrictions on the enforceability of agreements entered into by us, each of which may make it difficult for us to complete our Business Combination. In addition, we may have imposed upon us burdensome requirements, including, without limitation, registration as an investment company with the SEC (which may be impractical and would require significant changes in, among other things, our capital structure); adoption of a specific form of corporate structure; and reporting, record keeping, voting, proxy and disclosure requirements and compliance with other rules and regulations that we are currently not subject to.
In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business is to identify and complete a Business Combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
The 2022 Proposed Rule under the Investment Company Act would provide a safe harbor for SPACs from the definition of “investment company” under Section 3(a)(1)(A) of the Investment Company Act, provided that they satisfy certain conditions that limit a SPAC’s duration, asset composition, business purpose and activities. The duration component of the proposed safe harbor rule would require a SPAC to file a Current Report on Form 8-K with the SEC announcing that it has entered into an agreement with the target company (or companies) to engage in an initial business combination no later than 18 months after the effective date of the SPAC’s registration statement for its initial public offering. The SPAC would then be required to complete its initial business combination no later than 24 months after the effective date of its registration statement for its initial public offering. Although the 2022 Proposed Rules, including the proposed safe harbor rule, have not yet been adopted, there is uncertainty in the SEC’s view of the applicability of the Investment Company Act to a SPAC that does not complete its initial business combination within the proposed time frame set forth in the proposed safe harbor rule or otherwise falls outside of the other provisions of the safe harbor.
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We do not believe that our principal activities currently subject us to the Investment Company Act. To this end, the proceeds held in the trust account have been invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long-term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we do not believe we are an “investment company” within the meaning of the Investment Company Act. The IPO was not intended for persons seeking a return on investments in government securities or investment securities. The trust account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of our primary business objective, which is a business combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion window; and (iii) absent a business combination, our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. Because we have invested only in permitted instruments, we believe we are not an investment company.
On June 28, 2023, we entered into a Merger Agreement by and among us, Tevogen Bio, Inc, and Semper Merger Sub, Inc. We may not be able to complete the Business Combination within the 24-month safe harbor period in the 2022 Proposed Rules. If our Business Combination with Tevogen Bio is not completed, we may continue to try to complete a business combination with a different target. However, we may not be able to enter into such an agreement and complete a related Business Combination within the safe harbor period of the 2022 Proposed Rules. In that case, we would not be able to rely on the safe harbor (should it be adopted) and instead would need to rely on the factors described above, and the SEC could deem us to be subject to regulation as an investment company for purposes of the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to consummate our initial business combination. If we are unable to complete our initial business combination within the completion window, our public stockholders may receive only approximately $10.20 per share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.20 per share on the redemption of their shares if we are unable to complete our initial business combination within the completion window.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
On April 22, 2021, the Original Sponsor paid an aggregate purchase price of $25,000, or approximately $0.0029 per share, to subscribe for an aggregate of 8,625,000 Class B ordinary shares, par value $0.0001. On August 9, 2021, the Company effected a 1.3628-for-1.0000 stock split of its ordinary shares, such that the Original Sponsor owned an aggregate of 11,754,150 Founder Shares, for approximately $0.0021 per share. On October 1, 2021, the Company effected a 1.0195-for-1.0000 stock split of our ordinary shares, such that the Original Sponsor owned an aggregate of 11,983,333 Founder Shares, for approximately $0.0021 per share. The Original Sponsor is an accredited investor for purposes of Rule 501 of Regulation D. Each of the equity holders in the Original Sponsor is an accredited investor under Rule 501 of Regulation D.
On November 8, 2021, the Company completed its IPO of 34,500,000 Units, including the issuance of 4,500,000 Units as a result of the underwriters’ full exercise of their over-allotment option, at a price of $10.00 per unit generating gross proceeds of $345,000,000 before underwriting discounts and expenses. Each Unit consisted of one Class A ordinary share and one-half of one Public Warrant. Each whole Public Warrant entitles the holder thereof to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment, pursuant to the Company’s registration statements on Form S-1 (File No. 333-260113). Cantor was the sole book-running manager of the Company’s IPO.
Simultaneously with the closing of the IPO, the Company completed the private sale of an aggregate of 1,450,000 Private Placement Units (1,300,000 units to the Original Sponsor and 150,000 units to Cantor) at a purchase price of $10.00 per unit, generating gross proceeds to the Company of $14,500,000. The issuance of the Private Placement Units to each of the Original Sponsor and Cantor was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
A total of $351,900,000 comprised of the proceeds from the IPO after offering expenses and a portion of the proceeds of the sale of the Private Placement Units to the Original Sponsor and Cantor, was placed in a U.S.-based trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee.
For a description of the use of the proceeds generated in the IPO, see Part I, Item 2 of this Quarterly Report.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
(a) None.
(b) None.
(c) Not applicable.
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ITEM 6. EXHIBITS
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed herewith. |
| ** | Furnished. |
| † | Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SEMPER PARATUS ACQUISITION CORPORATION | ||
| Date: November 13, 2023 | By: | /s/ Surendra Ajjarapu |
| Name: | Surendra Ajjarapu | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: November 13, 2023 | By: | /s/ Francis Knuettel II |
| Name: | Francis Knuettel II | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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