CSTAF 10-Q
Constellation Acquisition Corp I (CSTAF)
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
OR
For the transition period from to .
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and formal 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 | ||
| ® Best Market | ||||
| ® Venture Market | ||||
| ® Best Market |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
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 | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As
of November 14, 2024,
CONSTELLATION
ACQUISITION CORP I
Form 10-Q
For the Quarter Ended September 30, 2024
Table of Contents
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CONSTELLATION
ACQUISITION CORP I
CONDENSED BALANCE SHEETS
September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | ||||||||
| Assets: | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Cash held in Trust Account | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities, Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Due to related party | ||||||||
| Promissory notes – related party | ||||||||
| Convertible promissory note - related party | ||||||||
| Total current liabilities | ||||||||
| Deferred underwriting fee | ||||||||
| Warrant liability | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 6) | ||||||||
| Class A ordinary shares subject to possible redemption, | ||||||||
| Shareholders’ Deficit: | ||||||||
| Preference shares, $ | ||||||||
| Class A ordinary shares, $ | ||||||||
| Class B ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities, Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
1
CONSTELLATION
ACQUISITION CORP I
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| General and administrative costs | $ | $ | $ | $ | ||||||||||||
| Loss from Operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income: | ||||||||||||||||
| Interest earned on investments held in Trust Account | ||||||||||||||||
| Change in fair value of warrant liability | ( | ) | ||||||||||||||
| Total other income | ||||||||||||||||
| Net income (loss) | $ | $ | $ | ( | ) | $ | ||||||||||
| Weighted average shares outstanding, redeemable Class A ordinary shares | ||||||||||||||||
| Basic and diluted net income (loss) per share, redeemable Class A ordinary shares | $ | $ | $ | ( | ) | $ | ||||||||||
| Weighted average shares outstanding, non-redeemable Class A ordinary shares and Class B ordinary shares | ||||||||||||||||
| Basic and diluted net income (loss) per share, non-redeemable Class A ordinary shares and Class B ordinary shares | $ | $ | $ | ( | ) | $ | ||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
CONSTELLATION
ACQUISITION CORP I
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Non-Redeemable Class A | Class B Ordinary shares | Additional Paid-In | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance as of January 1, 2024 (audited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Accretion of Class A ordinary shares subject to redemption | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Conversion of Class B ordinary shares to Class A ordinary shares | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Accretion of Class A ordinary shares subject to redemption | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Accretion of Class A ordinary shares subject to redemption | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance as of September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
Class B Ordinary Shares | Additional Paid-in | Accumulated | Total Shareholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance as of January 1, 2023 (audited) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Accretion of Class A ordinary shares subject to redemption | — | ( | ) | ( | ) | |||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balance as of March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Accretion of Class A ordinary shares subject to redemption | — | ( | ) | ( | ) | |||||||||||||||
| Net income | — | |||||||||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Accretion of Class A ordinary shares subject to redemption | — | ( | ) | ( | ) | |||||||||||||||
| Net income | — | |||||||||||||||||||
| Balance as of September 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
CONSTELLATION
ACQUISITION CORP I
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
| Interest earned on investments held in Trust Account | ( | ) | ( | ) | ||||
| Change in fair value of warrant liability | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Due to related party | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Investment of cash in Trust Account | ( | ) | ( | ) | ||||
| Cash withdrawn from Trust Account in connection with redemption | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash Flows from Financing Activities: | ||||||||
| Payments on promissory note to related party | ( | ) | ||||||
| Proceeds from promissory note to related party | ||||||||
| Proceeds from convertible promissory note to related party | ||||||||
| Redemption of Class A ordinary shares | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net change in cash | ( | ) | ||||||
| Cash, beginning of the period | ||||||||
| Cash, end of the period | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
CONSTELLATION
ACQUISITION CORP I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024
Note 1 — Organization and Business Operations
Constellation Acquisition Corp I (the “Company”) is a blank check company incorporated in the Cayman Islands on November 20, 2020. The Company was formed for the purpose of effecting a merger, capital share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”).
As of September 30, 2024, the Company had not commenced any operations. All activity through September 30, 2024 relates to the Company’s formation and the initial public offering (the “IPO” or “Initial Public Offering”) which is described below, and identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the IPO.
The registration
statement for the Company’s IPO was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on
January 26, 2021 (the “Effective Date”). On January 29, 2021, the Company consummated the IPO of
Simultaneously
with the closing of the IPO, the Company consummated the sale of
Transaction
costs of the IPO amounted to $
Following
the closing of the IPO on January 29, 2021, $
5
The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the public shareholders.
The
Company will provide its public shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion
of the initial Business Combination either (i) in connection with a shareholder meeting called to approve the initial Business Combination
or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed initial Business
Combination or conduct a tender offer will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem
their shares for a pro rata portion of the amount then on deposit in the Trust Account (initially approximately $
If the Company is unable to complete a Business Combination within the 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 (10) business days, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay the income taxes, if any, 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 Company’s board of directors (the “Board”), liquidate and dissolve, subject in the case of clauses (ii) and (iii), to the obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
There will be no redemption rights or liquidating distributions with respect to the Private Placement Warrants, which will expire worthless if the Company fails to consummate an initial Business Combination within the Combination Period.
The Sponsor, officers and directors have agreed to waive their redemption rights with respect to their Founder Shares (as defined below) and any Public Shares purchased during or after the IPO in connection with (i) the completion of the initial Business Combination, (ii) a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and articles of association, and (iii) waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if the Company fails to complete its initial Business Combination within the Combination Period.
The
Company’s Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services
rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of
intent, confidentiality or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below
the lesser of (i) $
On January 26, 2023, the Old Sponsor underwent a reorganization pursuant to which the limited partners of the Old Sponsor transferred all of their limited partnership interests to Constellation Sponsor LP, a Delaware limited partnership (the “Sponsor”). On January 26, 2023, the Old Sponsor liquidated pursuant to applicable law by the retirement of the general partner of the Old Sponsor (the second to last partner of the Sponsor) and all Securities held by the Old Sponsor were distributed by operation of law to its sole remaining limited partner, the Sponsor, following which, on January 30, 2023, control of the Sponsor was transferred to affiliates of Antarctica Capital Partners, LLC, including Antarctica Endurance Manager, LLC the current general partner of the Sponsor.
6
On
January 27, 2023, the Company held an extraordinary general meeting of shareholders of the Company (the “Extension Meeting”)
to amend the Company’s amended and restated memorandum and articles of association (the “2023 Articles Amendment”)
to extend the date by which the Company has to consummate a Business Combination from January 29, 2023 (the “2023 Original Termination
Date”) to April 29, 2023 (the “2023 Articles Extension Date”) and to allow the Company, without another shareholder
vote, to elect to extend the Termination Date to consummate a Business Combination on a monthly basis for up to nine times by an additional
one month each time after the 2023 Articles Extension Date, by resolution of the Company’s Board if requested by the Sponsor, and
upon five days’ advance notice prior to the applicable Termination Date, or a total of up to twelve (12) months after the 2023
Original Termination Date, unless the closing of the Company’s initial Business Combination shall have occurred prior to such date
(the “2023 Extension Amendment Proposal”). Upon each of the nine one-month extensions, the Sponsor or one or more of its
affiliates, members or third-party designees may contribute to the Company $
In
connection with the vote to approve the 2023 Extension Amendment Proposal, the holders of
On
April 28, 2023, May 26, 2023, July 3, 2023, July 28, 2023, August 29, 2023, September 29, 2023, October 26, 2023, November 28, 2023 and
December 28, 2023, the Company drew $
On
December 20, 2023, the Company announced its intention to voluntarily delist its Class A ordinary shares, redeemable warrants, each one
whole warrant exercisable for one share of Class A ordinary shares at an exercise price of $
The Board approved the voluntary delisting on December 20, 2023, and the Company provided notice of the voluntary delisting to NYSE on December 20, 2023. The Company filed a Form 25 with the SEC to effect the delisting of its Securities on January 2, 2024. The delisting became effective on January 12, 2024 when the Form 25 took effect. The last day of trading of its Securities on NYSE was January 12, 2024, and the Securities were suspended pre-market on January 16, 2024. On January 16, 2024, the Company’s Securities began trading on the OTCQX where the Class A ordinary shares and Units began trading on the OTCQX® Best Market under their new trading symbols “CSTAF” and “CSTUF,” respectively, and the warrants started trading on the OTCQB® Venture Market under its new trading symbol “CSTWF.” In connection with the extraordinary general meeting of the shareholders on January 29, 2024 (the “Shareholder Meeting”) the Company adhered to the initial or continued trading requirements of OTCQX.
On
January 23, 2024 and January 25, 2024, the Company held extraordinary general meetings and only voted on the Adjournment Proposal (as
defined below) to adjourn the Shareholder Meeting to January 25, 2024 and January 29, 2024, respectively. On January 29, 2024, the Company
held its Shareholder Meeting (A) to amend, by way of special resolution, the Company’s amended and restated memorandum and articles
of association (the “2024 Articles Amendment”) to extend the date (the “Termination Date”) by which the Company
has to consummate a Business Combination from January 29, 2024 (the “2024 Original Termination Date”) to February 29, 2024
(the “Articles Extension Date”) and to allow the Company, without another shareholder vote, to elect to extend the Termination
Date to consummate a Business Combination on a monthly basis for up to eleven (11) times by an additional one month each time after the
Articles Extension Date, by resolution of the Board, if requested by the Sponsor, and upon five days’ advance notice prior to the
applicable Termination Date, until January 29, 2025, or a total of up to twelve (12) months after the 2024 Original Termination Date,
unless the closing of a Business Combination shall have occurred prior thereto (the “2024 Extension Amendment Proposal”);
(B) to amend, by way of special resolution, the amended and restated memorandum and articles of association to eliminate the limitation
that the Company may not redeem Class A ordinary shares, to the extent that such redemption would result in the Company having net tangible
assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as amended), of less than $
7
The shareholders of the Company approved the 2024 Extension Amendment Proposal and the Redemption Limitation Amendment Proposal at the Shareholder Meeting and on January 30, 2024, the Company filed the 2024 Articles Amendment with the Registrar of Companies of the Cayman Islands, effective January 29, 2024.
In
connection with the vote to approve the 2024 Extension Amendment Proposal and the Redemption Limitation Amendment Proposal, the holders
of
On
January 30, 2024, the Sponsor converted an aggregate of
In
connection with the Shareholder Meeting, the Sponsor agreed that the Sponsor (or one or more of its affiliates, members or third-party
designees) (the “Lender”) shall make a deposit into the Trust Account established in connection with the Company’s
Initial Public Offering of $
On February 29, 2024 (“First 2024 Extension”),
March 28, 2024 (“Second 2024 Extension”), April 29, 2024 (“Third 2024 Extension”), May 29, 2024 (“Fourth
2024 Extension”), June 28, 2024 (“Fifth 2024 Extension”), July 23, 2024 (“Sixth 2024 Extension”), August
23, 2024 (“Seventh 2024 Extension”), September 26, 2024 (“Eighth 2024 Extension”) and October 29, 2024 (“Ninth
2024 Extension”), the Company drew $
8
Risks and Uncertainties
Management acknowledges that the Company depends on a variety of U.S. and multi-national financial institutions for banking services. Market conditions can impact the viability of these institutions, which in effect will affect the Company’s ability to maintain and provide assurances that the Company can access its cash and cash equivalents in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect the Company’s liquidity, business and financial condition.
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy is not determinable as of the date of these unaudited condensed financial statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these unaudited condensed financial statements.
In October 2023, the Israel-Hamas war commenced. As a result of the war, instability in the Middle East and various other regions of the world may occur and effect the world economy. Various nations, including the United States, as a reaction to the Israel-Hamas war have begun taking actions that may further affect the world economy. Such effects on the world economy are not determinable as of the date of these unaudited condensed financial statements. The specific impact on the Company’s financial condition, results of operations and cash flows is also not determinable as of the date of these unaudited condensed financial statements.
Liquidity and Going Concern Consideration
As
of September 30, 2024, the Company had $
The Company is within 12 months of its mandatory liquidation as of the time of filing this Quarterly Report on Form 10-Q. In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the liquidity condition and mandatory liquidation raise substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of the Business Combination or the Termination Date.
These unaudited condensed 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.
As such, management plans to consummate a Business Combination prior to the mandatory liquidation date. If the Company’s estimates 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, the Company may have insufficient funds available to operate its business prior to an initial Business Combination. Moreover, the Company may need to obtain additional financing either to complete an initial Business Combination or because it becomes obligated to redeem a significant number of its Public Shares upon completion of an initial Business Combination, in which case the Company may issue additional securities or incur debt in connection with such initial Business Combination.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. The interim results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future period.
The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form 10-K filed by the Company with the SEC on March 29, 2024 (the “Annual Report”).
9
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. 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 unaudited condensed financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of unaudited condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of expenses during the reporting period. Accordingly, actual results could differ from those estimates.
Making estimates requires management to exercise significant judgment. 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 unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these unaudited condensed financial statements is the determination of the fair value of the warrant liability and convertible promissory notes. Such estimates may be subject to change as more current information becomes available and, accordingly, the actual results could differ significantly from those estimates.
Cash
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 not have any cash equivalents as of September 30, 2024 and December 31, 2023.
Cash Held in Trust Account
At
September 30, 2024 and December 31, 2023, the assets held in the Trust Account were held in a bank deposit account. During the period
ended September 30, 2024, the Company withdrew $
10
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts and a Trust Account in a financial
institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage of $
Warrant Liabilities
The Company evaluated the Public Warrants and Private Placement Warrants (collectively, “Warrants,” which are discussed in Notes 3, 4, and 8) in accordance with Accounting Standards Codification (“ASC”) 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity” (“ASC 815-40”), and concluded that a provision in the warrant agreement, dated January 26, 2021, related to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants are recorded as derivative liabilities on the condensed balance sheets and measured at fair value at inception (on the date of the IPO) and at each reporting date in accordance with ASC 820, “Fair Value Measurement” (“ASC 820”), with changes in fair value recognized in the condensed statements of operations in the period of change.
Convertible Promissory Note
The Company analyzed the convertible promissory notes to assess if the fair value option was appropriate, due to the substantial premium which results in an offsetting entry to additional paid-in capital and under the related party guidance which precludes the fair value option, it was determined the fair value option was not appropriate. As such, the Company accounted for the convertible promissory notes, analyzing the conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as freestanding derivative financial instruments.
Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense.
It was determined that the conversion option was de minimis, as such the Company has recorded the Convertible Promissory Notes at par value.
Offering Costs Associated with the Initial Public Offering
The
Company complies with the requirements of the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees
and other costs incurred through the IPO that were directly related to the IPO. Offering costs are allocated to the separable financial
instruments issued in the IPO based on a relative fair value basis, compared to total proceeds received. Offering costs associated with
warrant liabilities are expensed as incurred, presented as non-operating expenses in the condensed statements of operations. Transaction
costs amounted to $
Class A Ordinary Shares Subject to Possible Redemption
All
of the
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of the Class A ordinary shares subject to possible redemption to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of the Class A ordinary shares subject to possible redemption are affected by charges against additional paid-in capital and accumulated deficit.
11
| Class A ordinary shares subject to possible redemption as of December 31, 2022 | $ | |||
| Less: | ||||
| Redemptions | ( | ) | ||
| Plus: | ||||
| Accretion of carrying value to redemption value | ||||
| Class A ordinary shares subject to possible redemption as of December 31, 2023 | $ | |||
| Plus: | ||||
| Accretion of carrying value to redemption value | ||||
| Less: | ||||
| Redemptions | ( | ) | ||
| Class A ordinary shares subject to possible redemption as of March 31, 2024 | $ | |||
| Plus: | ||||
| Accretion of carrying value to redemption value | ||||
| Class A ordinary shares subject to possible redemption as of June 30, 2024 | $ | |||
| Plus: | ||||
| Accretion of carrying value to redemption value | ||||
| Class A ordinary shares subject to possible redemption as of September 30, 2024 | $ |
Income Taxes
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September 30, 2024 and December 31, 2023. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of September 30, 2024 and December 31, 2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company has been subject to income tax examinations by major taxing authorities since inception.
The Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the periods presented. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve (12) months.
Net Income (Loss) per Ordinary Share
The
Company complies with accounting and disclosure requirements of the Financial Accounting Standards Board ASC Topic 260, “Earnings
Per Share.” Net loss per share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding
during the period, excluding ordinary shares subject to forfeiture. The Company has not considered the effect of the warrants sold in
the IPO and the private placement to purchase an aggregate of
Basic and diluted net income (loss) per ordinary share for Class A ordinary shares and Class B ordinary shares is calculated by dividing net income attributable to the Company by the weighted average number of Class A ordinary shares and Class B ordinary shares outstanding, allocated proportionally to each class of ordinary shares. This presentation assumes a Business Combination as the most likely outcome. Accretion associated with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
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Reconciliation of Net Income (Loss) per Ordinary Share
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Redeemable Class A ordinary shares | ||||||||||||||||
| Allocation of net income (loss) to redeemable Class A ordinary shares subject to possible redemption | $ | $ | $ | ( | ) | $ | ||||||||||
| Weighted average redeemable Class A ordinary shares subject to possible redemption | ||||||||||||||||
| Basic and diluted net income (loss) per share | $ | $ | $ | ( | ) | $ | ||||||||||
| Non-redeemable Class A ordinary shares and B ordinary shares | ||||||||||||||||
| Allocation of net income (loss) to non-redeemable Class A ordinary shares and Class B ordinary shares | $ | $ | $ | ( | ) | $ | ||||||||||
| Weighted average non-redeemable Class A ordinary shares and Class B ordinary shares | ||||||||||||||||
| Basic and diluted net income (loss) per share | $ | $ | $ | ( | ) | $ | ||||||||||
Fair Value of Financial Instruments
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| Level 1 — | Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. | |
| Level 2 — | Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. | |
| Level 3 — | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
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The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820 (other than warrant liability), approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
See Note 8 for additional information on assets and liabilities measured at fair value on a recurring basis.
Recent Accounting Pronouncements
The Company’s management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the accompanying unaudited condensed financial statements.
Note 3 — Initial Public Offering
Public Units
On
January 29, 2021, the Company sold
Public Warrants
Each
whole warrant will entitle the holder to purchase one Class A ordinary share at a price of $
The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A ordinary shares underlying the warrants is then effective and a prospectus relating thereto is current, or a valid exemption from registration is available. No warrant will be exercisable, and the Company will not be obligated to issue a Class A ordinary share upon exercise of a warrant, unless the Class A ordinary share issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the Class A ordinary share underlying such unit.
In
addition, if (x) the Company issues additional Class A ordinary shares or equity linked securities for capital raising purposes in connection
with the closing of the initial Business Combination at an issue price or effective issue price of less than $
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The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to Class A ordinary shares underlying the warrants is then effective and a prospectus is current. No warrant will be exercisable and the Company will not be obligated to issue Class A ordinary shares upon exercise of a warrant unless Class A ordinary shares issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the Class A ordinary shares underlying such unit.
Redemptions
of warrants for cash when the price per Class A ordinary share equals or exceeds $
Once the warrants become exercisable, the Company may call the warrants for redemption (except as described herein with respect to the Private Placement Warrants):
| ● | in whole and not in part; | |
| ● | at a price of $ | |
| ● | upon a minimum of | |
| ● | if, and only if, the closing price of the Class A ordinary shares equals or exceeds $ |
Redemptions
of warrants for cash when the price per Class A ordinary share equals or exceeds $
Once the warrants become exercisable, the Company may call the warrants for redemption (except as described herein with respect to the Private Placement Warrants):
| ● | in whole and not in part; | |
| ● | at $ | |
| ● | if, and only if, the Reference Value equals or exceeds $ | |
| ● | if the Reference Value is less than $ |
The
“fair market value” of the Class A ordinary shares shall mean the volume-weighted average price of the Class A ordinary shares
for the
Note 4 — Private Placement
Simultaneously
with the closing of the IPO, the Sponsor purchased an aggregate of
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Each of the Private Placement Warrants are identical to the warrants sold as part of the Units in the IPO except that, so long as they are held by the Sponsor or its permitted transferees: (1) they will not be redeemable by the Company; (2) they (including the Class A ordinary shares issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of the initial Business Combination; (3) they may be exercised by the holders on a cashless basis; and (4) they (including the Class A ordinary shares issuable upon exercise of these warrants) are entitled to registration rights.
If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless.
Note 5 — Related Party Transactions
Founder Shares
On
November 23, 2020, an executive officer of the Company purchased
The
Sponsor, officers and directors have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of
(i)
Promissory Note — Related Party
In
November 2020, the Company issued an unsecured promissory note to an executive officer of the Company. This loan was non-interest bearing,
unsecured and due at the earlier of December 31, 2021 or the closing of the IPO. On December 31, 2020, the amount borrowed under the
note was $
On
February 23, 2021, the Company issued an unsecured promissory note (the “2021 Note”) in the amount of up to $
The
2021 Note bears no interest and is payable in full upon the earlier to occur of (i) the Termination Date or (ii) the consummation of
the Company’s Business Combination. A failure to pay the principal within five business days of the date specified above or the
commencement of a voluntary or involuntary bankruptcy action shall be deemed an event of default, in which case the 2021 Note may be
accelerated. The affiliates of the Sponsor had the option to convert any unpaid balance of the 2021 Note into Private Placement Warrants
(the “Conversion Warrants”), each warrant exercisable for one ordinary share of the Company at an exercise price of $
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During
the year ended December 31, 2022, the Company issued a number of unsecured promissory notes (the “2022 Notes”) totaling $
On
January 30, 2024, the Company issued an unsecured promissory note in the principal amount of $
As
of September 30, 2024 and December 31, 2023, $
Administrative Support Agreement
As
of January 26, 2021 the Company had agreed, commencing on the date that the Securities of the Company were first listed on NYSE, to pay
the Sponsor up to $
Working Capital Loans
In
order to finance transaction costs in connection with a Business Combination, the Sponsor or any of its affiliates or certain of the
Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (the “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 the working capital held outside
the Trust Account to repay the Working Capital Loans but no proceeds from the Trust Account would be used to repay the Working Capital
Loans. Up to $
On
January 18, 2023, the Company issued an unsecured promissory note (the “2023 Note”) in the amount of $
As disclosed
in the definitive proxy statement filed by the Company with the SEC on December 30, 2022 relating to the Extension Meeting, the Sponsor
agreed that if the 2023 Extension Amendment Proposal is approved, it or one or more of its affiliates, members or third-party designees
will contribute to the Company as a loan, within ten (10) business days of the date of the Extension Meeting, $
Accordingly,
on January 30, 2023, the Company issued the Extension Note to the Sponsor. The Sponsor funded the initial principal amount of $
17
The
notes were accounted for using the bifurcation method, and it was determined that the conversion feature was de minimis and was recorded
at par value. As of September 30, 2024 and December 31, 2023, there were $
Note 6 — Commitments and Contingencies
Registration Rights
The holders of the Founder Shares, Private Placement Warrants, Class A ordinary shares underlying the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) will be entitled to registration rights pursuant to a registration and shareholder rights agreement to be signed prior to or on the Effective Date of the IPO. The holders of these Securities are entitled to make up to three demands, excluding short form demands, that the Company registers such Securities. In addition, the holders have certain “piggyback” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such Securities pursuant to Rule 415 under the Securities Act. In addition, if the Sponsor affiliates acquire shares in the IPO, they would become affiliates (as defined in the Securities Act) of the Company following the IPO, and the Company would file a registration statement following the IPO to register the resale of the Public Shares purchased by the Sponsor affiliates (or their nominees) in the IPO. The Sponsor affiliates will not be subject to any lock-up period with respect to any Public Shares they may purchase. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering the Company’s Securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The
underwriters had a 45-day option from the date of the IPO to purchase up to an aggregate of
Additionally,
the underwriters will be entitled to a deferred underwriting discount of
Investment Agreement
On
January 26, 2023, the Company, entered into an Investment Agreement (the “Investment Agreement”) with the Old Sponsor, and
Endurance Constellation, LLC, a Delaware limited liability company (the “Investor”), pursuant to which the Investor agreed
to contribute to the Old Sponsor an aggregate amount in cash equal up to $
In connection with the closing of the transactions contemplated by the Investment Agreement, on January 26, 2023, the Old Sponsor underwent a reorganization pursuant to which the limited partners of the Old Sponsor transferred all of their limited partnership interests to the Sponsor. On January 26, 2023, the Old Sponsor was liquidated pursuant to applicable law by the retirement of the general partner of the Old Sponsor (the second to last partner of the Old Sponsor) and all Securities held by the Old Sponsor were distributed by operation of law to its sole remaining limited partner, the Sponsor, following which, on January 30, 2023, control of the Sponsor was transferred to affiliates of Antarctica Capital Partners, LLC, including Antarctica Endurance Manager, LLC the general partner of the Sponsor.
The Investment 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 Investment Agreement were made solely for the benefit of the other parties to the Investment Agreement, and shareholders of the Company are not third-party beneficiaries of the Investment Agreement. In addition, such representations and warranties (a) are subject to materiality and other qualifications contained in the Investment Agreement, which may differ from what may be viewed as material by shareholders of the Company, (b) were made only as of the date of the Investment Agreement or such other date as is specified in the Investment Agreement and (c) may have been included in the Investment Agreement for the purpose of allocating risk between the parties rather than establishing matters as facts. Accordingly, the Investment Agreement is included with this filing only to provide shareholders of the Company with information regarding the terms of the Investment Agreement, and not to provide shareholders of the Company with any other factual information regarding any of the parties or their respective businesses.
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Letter Agreement
On January 30, 2023, the Company, the Old Sponsor, certain officers and directors of the Company, and other parties thereto (the “Insiders,” and together with the Old Sponsor, the “Letter Agreement Parties”) entered into an amendment to the Letter Agreement to allow the Old Sponsor to transfer its holdings in the Company, directly or indirectly, to affiliate(s) of Antarctica Capital Partners, LLC prior to the expiration of the applicable lock-up. In connection with the resignation of certain Insiders, the Letter Agreement Parties agreed that all Insiders that have resigned from their positions as officers and/or directors of the Company and that no longer hold Class B ordinary shares shall no longer be parties to the Letter Agreement.
Note 7 — Shareholders’ Deficit
Preference
shares — The Company is authorized to issue a total of
Class
A ordinary shares — The Company is authorized to issue a total of
Class
B ordinary shares — The Company is authorized to issue a total of
The
Sponsor, officers and directors have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of
(i) one year after the date of the consummation of the initial Business Combination or (ii) subsequent to the initial Business Combination,
(x) if the closing price of the Class A ordinary shares equals or exceeds $
The
Founder Shares will automatically convert into Class A ordinary shares on the first business day following the consummation of the initial
Business Combination at a ratio such that the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal,
in the aggregate, on an as-converted basis,
Holders of the Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders, with each share of ordinary shares entitling the holder to one vote.
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Note 8 — Fair Value Measurements
| Description | Level | September 30, 2024 | Level | December 31, 2023 | |||||||||
| Liabilities | |||||||||||||
| Public Warrant Liability | 2 | $ | 2 | $ | |||||||||
| Private Placement Warrant Liability | 2 | $ | 2 | $ | |||||||||
The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liability on the condensed balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liability in the condensed statements of operations.
The
Company established the initial fair value for the Public Warrants on January 29, 2021, the date of the Company’s IPO, using a
Monte Carlo simulation model, and for the Private Placement Warrants on January 29, 2021, using a Black-Scholes model. As of September
30, 2024 and December 31, 2023, the fair value of the Private Placement Warrants was valued utilizing the quoted market price of the
Public Warrants, and the fair value of the Public Warrants by reference to the quoted market price of the Public Warrants. The Public
Warrants and Private Placement Warrants were classified as Level 3 at the initial measurement date. There were no transfers among fair
value hierarchy during the three and nine months ended September 30, 2024. The Public Warrants are classified as Level 2 due to the lack
of trading activity as of the reporting date. The estimated fair value of the Public Warrants transferred from a Level 1 measurement
to a Level 2 fair value measurement during the nine months ended September 30, 2023 was $
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the condensed balance sheet date up to the date that the condensed financial statements were issued. Based on this review, other than as described below, the Company determined no events have occurred that would require adjustments to the disclosures in the condensed financial statements.
On October 29, 2024, the Company drew additional Extension Funds, as approved by unanimous extension committee resolution, dated October 29, 2024, pursuant to the Extension Note, which Extension Funds the Company deposited into the Trust Account for its public shareholders. This deposit enabled the Company to approve the Ninth 2024 Extension. The Ninth 2024 Extension was the ninth of eleven one-month extensions permitted under the Company’s amended and restated memorandum and articles of association and provides the Company with additional time to complete its initial Business Combination. The note does not bear interest and matures upon closing of the Company’s initial Business Combination. In the event that the Company does not consummate a Business Combination, the note will be repaid only from amounts remaining outside of the Trust Account, if any.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,” “Constellation Acquisition Corp I,” “our,” “us” or “we” refer to Constellation Acquisition Corp I. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (the “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 includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
Overview
We are a blank check company incorporated in Cayman Islands on November 20, 2020. We were formed for the purpose of effecting a Business Combination.
Our sponsor is Constellation Sponsor LP, a Delaware limited partnership. The registration statement for the Initial Public Offering was declared effective on January 26, 2021. On January 29, 2021, we consummated the Initial Public Offering of 31,000,000 Units, at $10.00 per Unit, generating gross proceeds of $310.0 million, and incurring offering costs of $17,586,741 million, inclusive of $10,850,000 million in deferred underwriting commissions. On January 26, 2023, our Old Sponsor underwent a reorganization pursuant to which the limited partners of our Old Sponsor transferred all of their limited partnership interests to the Sponsor. On January 26, 2023, our Old Sponsor was liquidated pursuant to applicable law by the retirement of the general partner of our Old Sponsor (the second to last partner of our Sponsor) and all Securities held by our Old Sponsor were distributed by operation of law to its sole remaining limited partner, the Sponsor, following which, on January 30, 2023, control of the Old Sponsor was transferred to affiliates of Antarctica Capital Partners, LLC, including Antarctica Endurance Manager, LLC the general partner of the Sponsor.
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement of 5,466,667 Private Placement Warrants, at a price of $1.50 per Private Placement Warrant to our Old Sponsor, which are now held by our Sponsor, generating gross proceeds to us of $8.2 million.
Since the closing of the Initial Public Offering and the Private Placement, $310.00 million ($10.00 per unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in the Trust Account and was invested in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended 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 that invest only in direct U.S. government treasury obligations. On January 27, 2023, we liquidated the U.S. government treasury obligations or money market funds held in the Trust Account.
Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
21
We will only have until the Termination Date to complete an initial Business Combination. If we do not complete a Business Combination by the Termination Date, we will (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the Public Shares for a per share pro rata portion of the Trust Account, including interest not previously released to us to fund our working capital requirements (less taxes payable) and (iii) as promptly as possible following such redemption, dissolve and liquidate the balance of our net assets to our remaining shareholders, as part of our plan of dissolution and liquidation. Our Sponsor and initial shareholders entered into the Letter Agreement with us, pursuant to which they have waived their rights to participate in any redemption with respect to their Founder Shares; however, if the initial shareholders or any of our officers, directors or affiliates acquire ordinary shares in or after the Initial Public Offering, they will be entitled to a pro rata share of the Trust Account upon our redemption or liquidation in the event we do not complete a Business Combination within the required time period. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including the Trust Account assets) will be less than the Initial Public Offering price per unit in the Initial Public Offering.
On January 27, 2023, we held an extraordinary general meeting of shareholders to amend the Company’s amended and restated memorandum and articles of association to extend the date by which the Company has to consummate a Business Combination from January 29, 2023 to April 29, 2023 and to allow the Company, without another shareholder vote, to elect to extend the 2023 Termination Date to consummate a Business Combination on a monthly basis for up to nine times by an additional one month each time after the 2023 Articles Extension Date, by resolution of the Board if requested by the Sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until January 29, 2024, or a total of up to twelve months after the 2023 Termination Date, unless the closing of the Company’s Business Combination shall have occurred prior to such date. The shareholders of the Company approved the 2023 Extension Amendment Proposal at the Extension Meeting and on January 31, 2023, the Company filed the 2023 Articles Amendment with the Registrar of Companies of the Cayman Islands.
In connection with the vote at the Extension Meeting, the holders of 26,506,157 Class A ordinary shares of the Company properly exercised their right to redeem their shares for an aggregate price of approximately $10.167 per share, for an aggregate redemption amount of approximately $269,485,746. After the satisfaction of such redemptions, the balance in our Trust Account was approximately $46,138,503. On February 13, 2023, a total of $46,600,678.12 (the remaining trust balance), was placed in a U.S.-based trust account at Citibank, N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee.
In connection with the closing of the transactions contemplated by the Investment Agreement, on January 26, 2023, the Old Sponsor underwent a reorganization pursuant to which the limited partners of the Old Sponsor transferred all of their limited partnership interests to the Sponsor. On January 26, 2023, the Old Sponsor was liquidated pursuant to applicable law by the retirement of the general partner of the Old Sponsor (the second to last partner of the Sponsor) and all Securities held by the Old Sponsor were distributed by operation of law to its sole remaining limited partner, the Sponsor, following which, on January 30, 2023, control of the Old Sponsor was transferred to affiliates of Antarctica Capital Partners, LLC.
On December 20, 2023, the Board approved the voluntary delisting of its Class A ordinary shares, Public Warrants and Units from the NYSE, and on January 16, 2024, the Company began trading its Class A ordinary shares and Units on OTCQX® Best Market under the symbols “CSTAF” and “CSTUF,” respectively, and its Public Warrants on the OTCQB® Venture Market under the symbol “CSTWF.”
On January 29, 2024, the Company held the Shareholder Meeting (A) to amend, by way of special resolution, the Company’s amended and restated memorandum and articles of association to extend the Termination Date by which the Company has to consummate a Business Combination from January 29, 2024 to February 29, 2024 and to allow the Company, without another shareholder vote, to elect to extend the Termination Date to consummate a Business Combination on a monthly basis for up to eleven times by an additional one month each time after the 2024 Articles Extension Date, by resolution of the directors, if requested by the Sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until January 29, 2025, or a total of up to twelve months after the 2024 Original Termination Date, unless the closing of a Business Combination shall have occurred prior thereto; and (B) to amend, by way of special resolution, the Company’s amended and restated memorandum and articles of association to eliminate from the amended and restated memorandum and articles of association the limitation that the Company may not redeem Class A ordinary shares to the extent that such redemption would result in the Company having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as amended), of less than $5,000,001 in order to allow the Company to redeem Public Shares irrespective of whether such redemption would exceed the Redemption Limitation. The shareholders of the Company approved the 2024 Extension Amendment Proposal and the Redemption Limitation Amendment Proposal at the Shareholder Meeting and on January 30, 2024, the Company filed the 2024 Articles Amendment with the Registrar of Companies of the Cayman Islands.
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In connection with that vote to approve the 2024 Extension Amendment Proposal and the Redemption Limitation Amendment Proposal, the holders of 2,126,159 Class A ordinary shares properly exercised their right to redeem their shares for cash at a redemption price of approximately $11.13 per share, for an aggregate redemption amount of approximately $23,671,533. After the satisfaction of such redemptions and receipt of the initial deposit of $55,000 to the Trust account, the balance in our Trust Account was approximately $26,415,545.
On January 30, 2024, the Sponsor converted an aggregate of 7,600,000 Class B ordinary shares into Public Shares on a one-for-one basis. The Sponsor waived any right to receive funds from the Trust Account with respect to the Public Shares received upon such conversion and acknowledged that such shares will be subject to all of the restrictions applicable to the original Class B ordinary shares under the terms of the Letter Agreement.
During 2024, the Board of the Company approved the First 2024 Extension on February 29, 2024, and the extension committee of the Board approved the Second 2024 Extension, Third 2024 Extension, Fourth 2024 Extension, Fifth 2024 Extension, Sixth 2024 Extension, Seventh 2024 Extension, Eighth 2024 Extension, and Ninth 2024 Extension on March 28, 2024, April 29, 2024, May 29, 2024, June 28, 2024, July 23, 2024, August 23, 2024, September 26, 2024, and October 29, 2024 respectively, resulting in a new Termination Date of November 29, 2024, and the Company drew an aggregate of $495,000 of Extension Funds pursuant to the 2024 Note. The 2024 Note does not bear interest and matures upon closing of the Company’s initial Business Combination. In the event that the Company does not consummate a Business Combination, the 2024 Note will be repaid only from amounts remaining outside of the Trust Account, if any.
Liquidity and Going Concern Consideration
As of September 30, 2024, the Company had $5,666 in its operating bank account, and a working capital deficit of $5,095,087, net of the convertible promissory note – related party. Convertible promissory note - related party amounting to $3,181,000 is not expected to be settled out of the current assets.
Our liquidity needs to date have been satisfied through loans from the Sponsor to cover for certain operating expenses. 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 our officers and directors may, but are not obligated to, provide the Company working capital loans.
As of September 30, 2024, there was approximately $4,533,208 of borrowings outstanding and $210,000 of related admin fees owed to the Sponsor under the following promissory notes:
| ● | During the year ended December 31, 2022, the Company issued a number of unsecured promissory notes totaling $258,780 to certain executive officers and affiliates of the Company. The proceeds of the 2022 Notes was used for general working capital purposes. The 2022 Notes bear no interest and is payable in full upon the earlier to occur of (i) the Termination Date or (ii) the consummation of the Company’s Business Combination. Failure to pay the principals within five business days of the date specified above or the commencement of a voluntary or involuntary bankruptcy action shall be deemed an event of default, in which case the 2022 Notes may be accelerated. As of September 30, 2024 and December 31, 2023, $227,208 is outstanding under the 2022 Notes. |
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| ● | On January 18, 2023, the Company issued an unsecured promissory note in the amount of $230,000 to the Sponsor. The proceeds of the 2023 Note was used for general working capital purposes. The 2023 Note bears no interest and is payable in full upon the earlier to occur of (i) the consummation of the Company’s Business Combination or (ii) the date that the winding up of the Company is effective. A failure to pay the principal within five business days of the date specified above or the commencement of a voluntary or involuntary bankruptcy action shall be deemed an event of default, in which case the 2023 Note may be accelerated. At the election of the Sponsor, all or a portion of the unpaid principal amount of the 2023 Note may be converted into warrants of the Company, at a price of $1.50 per warrant, each warrant exercisable for one Class A ordinary share of the Company. The warrants shall be identical to the Private Placement Warrants issued to the Sponsor at the time of the Company’s IPO. As of September 30, 2024 and December 31, 2023, $230,000 is outstanding under this 2023 Note. |
| ● | On January 30, 2023, the Company issued an unsecured promissory note, in the amount of $3,000,000 to the Sponsor. The Sponsor funded the initial principal amount of $450,000 on January 30, 2023. The Extension Note does not bear interest and matures upon closing of the Company’s Business Combination. In the event that the Company does not consummate a Business Combination, the Extension Note will be repaid only from amounts remaining outside of the Trust Account, if any. The proceeds of the Extension Note was deposited in the Trust Account. At the election of the payee, $1,270,000 of the total principal amount of the Extension Note may be converted, in whole or in part, at the option of the lender into warrants of the Company at a price of $1.50 per warrant, which warrants will be identical to the Private Placement Warrants issued to the Sponsor at the time of the IPO of the Company. As of September 30, 2024 and December 31, 2023, $2,951,000 and $2,901,000 is outstanding under this Extension Note. |
| ● | On January 30, 2024, the Company issued the 2024 Note in the amount of $1,660,000 to the Sponsor. The 2024 Note does not bear interest and matures upon closing of the Business Combination. In the event that the Company does not consummate a Business Combination, the 2024 Note will be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven. As of September 30, 2024, $1,125,000 is outstanding under the 2024 Note. |
We cannot provide any assurance that new financing along the lines detailed above will be available to us on commercially acceptable terms, if at all. Further, we have until the Termination Date to consummate a Business Combination, but we cannot provide assurance that we will be able to consummate a Business Combination by that date. If a Business Combination is not consummated by the required date, there will be a mandatory liquidation and subsequent dissolution. In connection with the Company’s assessment of going concern considerations in accordance with ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the liquidity condition and mandatory liquidation raise substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of the Business Combination or January 29, 2025, the date the Company is required to liquidate. 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.
We intend to complete our Business Combination before the mandatory liquidation date; however, there can be no assurance that we will be able to consummate any Business Combination by the Termination Date. If the Company’s estimates 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, the Company may have insufficient funds available to operate its business prior to a Business Combination. Moreover, the Company may need to obtain additional financing either to complete a Business Combination or because it becomes obligated to redeem a significant number of its Public Shares upon completion of a Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Business Combination.
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Results of Operations
Our entire activity from inception through September 30, 2024 related to our formation, the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering, the search for a prospective Business Combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our Business Combination. We generate non-operating income in the form of interest income and dividends on cash and investments held in the Trust Account. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended September 30, 2024, we had a net income of approximately $38,000, which included interest earned on investments held in the Trust Account of $310,000, offset by a loss from operations of $245,000 and a loss from the change in fair value of warrant liabilities of $28,000.
For the nine months ended September 30, 2024, we had a net loss of approximately $251,000, which included a loss from operations of $1.3 million, offset by interest earned on investments held in the Trust Account of $1.0 million and a gain from the change in fair value of warrant liabilities of $2,000.
For the three months ended September 30, 2023, we had a net income of approximately $0.3 million, which included interest earned on investments held in the Trust Account of $0.5 million and a gain from the change in fair value of warrant liabilities of $0.5 million, offset by a loss from operations of $0.7 million.
For the nine months ended September 30, 2023, we had a net income of approximately $0.1 million, which included an interest earned on investments held in the Trust Account of $2.5 million and a gain from the change in fair value of warrant liabilities of $0.03 million, offset by loss from operations of $2.4 million.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
Registration Rights
The initial shareholders and holders of the Private Placement Warrants will be entitled to registration rights pursuant to a registration rights agreement. The initial shareholders and holders of the Private Placement Warrants will be entitled to make up to three demands, excluding short form registration demands, that register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filed by us. We will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
We paid an underwriting discount of 2% of the per Unit offering price, or approximately $6,200,000 in the aggregate at the closing of the Initial Public Offering and agreed to pay Deferred Underwriting Fees of 3.5% of the gross offering proceeds, or approximately $10,850,000 in Deferred Underwriting Fees. The Deferred Underwriting Fees will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its Business Combination.
Critical Accounting Estimates
This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these unaudited condensed financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our unaudited condensed financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. One of the more significant accounting estimates included in these unaudited condensed financial statements is the determination of the fair value of the warrant liability. Such estimates may be subject to change as more current information becomes available and, accordingly, actual results may differ from these estimates under different assumptions or conditions.
Off-Balance Sheet Arrangements
As of September 30, 2024, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
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Inflation
We do not believe that inflation had a material impact on our business, revenues or operating results during the period presented.
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are 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 a result, the financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of 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 controls over financial reporting pursuant to Section 404, (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 Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
On January 27, 2023, we liquidated the U.S. government treasury obligations or money market funds held in the Trust Account. The funds in the Trust Account will be maintained in cash in an interest-bearing demand deposit account at a bank until the earlier of our initial Business Combination or our liquidation. Interest on such deposit account is currently approximately 2.5% - 3.0% per anum, but such deposit account carries a variable rate, and we cannot assure you that such rate will not decrease or increase significantly.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2024, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this Quarterly Report, our disclosure controls and procedures were effective. Accordingly, management believes that the financial statements included in this Quarterly Report present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarter ended September 30, 2024 covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
Investing in our ordinary shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Quarterly Report as well as those risk factors previously disclosed in our Annual Report filed with the SEC. Any of these factors could result in a material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
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Item 6. Exhibits.
| * | Filed herewith. |
| ** | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
| (1) | Incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the SEC on February 2, 2024. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: November 14, 2024 | By: | /s/ Jarett Goldman |
| Name: | Jarett Goldman | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
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