International Media Acquisition Corp 10-Q for FY2023 Q1
International Media Acquisition Corp. (IMAQ)
About this 10-Q
International Media Acquisition Corp filed this 10-Q on August 12, 2022, covering the quarter ended June 30, 2022 (FY2023 Q1).
Headline figures
Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $204.67K
- compared with a net loss of $864 a year earlier
- Diluted EPS
- -$0.01
- compared with $0.00 a year earlier
fv
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from to
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or 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 August 11, 2022, there were
INTERNATIONAL MEDIA ACQUISITION CORP.
TABLE OF CONTENTS
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Item 1. | FINANCIAL STATEMENTS | |
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| Condensed Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021 (audited) | 3 |
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 24 | |
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PART 1 – FINANCIAL INFORMATION
INTERNATIONAL MEDIA ACQUISITION CORP.
CONDENSED BALANCE SHEETS
| | June 30, | | December 31, | ||
| | 2022 (unaudited) | | 2021 (audited) | ||
ASSETS |
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Cash | | $ | | $ | ||
Prepaid expenses | | | |
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Total current assets | | | | | | |
Investments held in Trust Account | | | | | | |
Total Assets | | $ | | $ | | |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
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Current liabilities: | | | | | | |
Accounts payable and accrued expenses | | $ | | $ | | |
Accrued expenses - related party | | | | | | |
Promissory note- related party | | | | | — | |
Income tax payable | | | | | — | |
Total current liabilities | |
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Deferred underwriting fee payable | |
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Warrant liability | | | | | | |
Total Liabilities | | | | | | |
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Commitments (see Note 7) | |
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Common stock subject to possible redemption: | | | | | ||
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Stockholders’ Deficit | |
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Preferred stock, $ | |
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Common stock, $ | |
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Additional paid-in capital | |
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Accumulated deficit | |
| ( | |
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Total Stockholder’s Deficit | |
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Total Liabilities and Stockholder’s Deficit | | $ | | $ | | |
The accompanying notes are an integral part of the unaudited condensed financial statements
3
INTERNATIONAL MEDIA ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| | | | | | | | | | | For the Period | |
| | | | from January 15, | ||||||||
| | | | | | | | | | | 2021 (Inception) | |
| | | | | | | | | | | Through | |
| | Three Months Ended | | Three Months Ended | | Six Months Ended | | June 30, | ||||
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| June 30, 2022 |
| June 30, 2021 |
| June 30, 2022 |
| 2021 | ||||
Formation and operating costs | | $ | | | $ | | | $ | | | $ | |
Loss from operations | | | ( | | | ( | | | ( | | | ( |
Change in fair value of warrant liability | | | | | | — | | | | | | — |
Interest and dividend income on investments held in trust account | | | | | | — | | | | | | — |
Loss before provision for income taxes | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Provision for income taxes | | | | | | — | | | | | | — |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
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Weighted average shares outstanding, basic and diluted | |
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Basic and diluted net loss per common share | | ( | | ( | $ | | ( | | ( | |||
The accompanying notes are an integral part of the unaudited condensed financial statements
4
INTERNATIONAL MEDIA ACQUISITION CORP.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY( DEFICIT)
(UNAUDITED)
For the three and six months ended June 30, 2022
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| | Common Stock | | Additional Paid- | | Accumulated | | Stockholder’s | ||||||
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| Shares |
| Amount |
| in Capital |
| Deficit |
| Deficit | ||||
Balance at December 31, 2021 | | | | $ | | | $ | | | $ | ( | | $ | ( |
Net loss | | — | | | — | | | — | | | ( | | | ( |
Balance at March 31, 2022 | | | | $ | | | $ | | | $ | ( | | $ | ( |
Net loss |
| — | |
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Remeasurement of Class A Ordinary Shares Subject to redemption | | — | | | — | | | ( | | | — | | | ( |
Balance at June 30, 2022 |
| | | $ | | | $ | | | $ | ( | | $ | ( |
For the three months ended June 30, 2021 and the period from January 15 (inception) through June 30, 2021
| | | | Additional | | | | | Total | |||||
| | Common Stock | | Paid-in | | Accumulated | | Stockholder’s | ||||||
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| Shares |
| Amount |
| Capital |
| Deficit |
| Equity | ||||
Balance at January 15, 2021 (inception) | | | | $ | | | $ | | | $ | | | $ | |
Issuance of ordinary shares to sponsor | | | | | | | | | | | — | | | |
Net loss |
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Balance at March 31, 2021 |
| | | $ | | | $ | | | $ | ( | | $ | |
Net loss | | | | | — | | | — | | | ( | | | ( |
Balance at June 30, 2021 | | | | $ | | | $ | | | $ | ( | | $ | |
The accompanying notes are an integral part of the unaudited condensed financial statements
5
INTERNATIONAL MEDIA ACQUISITION CORP.
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
| | | | | For the Period from | |
| | Six Months | | January 15, 2021 | ||
| | Ended June 30, | | (Inception) Through | ||
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| 2022 |
| June 30, 2021 | ||
Cash Flows from Operating Activities: |
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Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net income to net cash used in operating activities: | |
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Interest and dividend income on investments held in trust account | | | ( | | | — |
Change in fair value of warrant liability | | | ( | | | |
Changes in operating assets and liabilities: | | | | | | |
Prepaid expenses | | | | | | — |
Income tax payable | | | | | | — |
Accounts payable and accrued expenses | | | | | | |
Net cash used in operating activities | |
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Cash flows from Investing Activities: | | | | | | |
Cash deposited in Trust Account | | | — | | | — |
Net cash used in investing activities | | | — | | | — |
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Cash Flows from Financing Activities: | |
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Proceeds from promissory note - related party | | | | | | |
Repayment of promissory note - related party | | | — | | | ( |
Offering costs paid | |
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Net cash provided by financing activities | |
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Net Change in Cash | |
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Cash - Beginning of period | |
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Cash - End of period | | $ | | | $ | |
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Non-cash investing and financing activities | | | | |
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Offering costs paid in exchange for private units | | $ | — | | $ | |
Offering included in accrued offering costs | | $ | — | | $ | |
Offering costs paid via promissory note - related party | | $ | — | | $ | |
Remeasurement of Class A Ordinary Shares Subject to Redemption | | $ | | | $ | — |
The accompanying notes are an integral part of the unaudited condensed financial statements
6
INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
International Media Acquisition Corp. (the “Company”) is a blank check company incorporated in the Delaware on January 15, 2021. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with
As of June 30, 2022, the Company had not commenced any operations. All activity for the period from January 15, 2021 (inception) through June 30, 2022, related to the Company’s formation and initial public offering (“Initial Public Offering”), which is described below, and identifying a target 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 and dividend income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The registration statement filed in connection with the Company’s Initial Public Offering was declared effective on July 28, 2021. On August 2, 2021, the Company consummated the Initial Public Offering of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of
On August 6, 2021, in connection with the underwriters’ exercise in full of their option to purchase up to
Simultaneously with the closing of the exercise of the over-allotment option, the Company consummated the sale of an additional
Following the closing of the Initial Public Offering and the sale of the Private Units, a total of $
The Company will provide the holders (the “public stockholders”) of the shares of common stock included in the Units sold in the Initial Public Offering (the “Public Shares”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders 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 $
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INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $
Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder 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 Sponsor and the other initial stockholders (as defined in Note 5) have agreed (a) to waive their redemption rights with respect to their Founder Shares, Private Shares and Public Shares held by them in connection with the completion of a Business Combination, (b) to waive their liquidation rights with respect to their Founder Shares and Private Shares if the Company fails to complete a Business Combination within
The Company will have until
The underwriters have agreed to waive their rights to their deferred underwriting commissions (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 assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($
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INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party 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 to below (1) $
August 2022 Extension
Initially, the Company was required to complete its initial business combination transaction by August 2, 2022, which was
On July 26, 2022, the extension payment of $
Liquidity and Going Concern
As of June 30, 2022, the Company held cash outside the Trust Account of $
In connection with the Company’s assessment of going concern considerations in accordance with FASB’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company had until August 2, 2022 to consummate a Business Combination. The Company may elect, following the Trust Amendment, to extend the period of time to consummate a Business Combination up to
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INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Management has determined that if the Company is unable to raise additional funds to alleviate liquidity needs as well as complete a Business Combination by February 2, 2023, then the Company will cease all operations except for the purpose of liquidating. The liquidity condition and date for mandatory liquidation raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after February 2, 2023. Management plans to continue to draw down on its promissory notes, available for up to $
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a prospective target company, the specific impact is not readily determinable as of the date of these financial statements.
Additionally, as a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related economic sanctions, the Company’s ability to consummate a Business Combination, or the operations of a target business with which the Company ultimately consummates a Business Combination, may be materially and adversely affected. In addition, the Company’s ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of this action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations and/or ability to consummate a Business Combination are not yet determinable. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in condensed financial statements prepared in accordance with 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 for the year ended December 31, 2021 as filed with the SEC on March 30, 2022. The interim results for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
10
INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of 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 financial statements and the reported amounts of expenses during the reporting period.
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 financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the 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 not have any cash equivalents as of June 30, 2022.
Investments Held in Trust Account
As of June 30, 2022, the assets held in the Trust Account were comprised of U.S. government securities, within the meaning set forth in Section 2(a) (16) of the Investment Company Act, with maturities of
Warrant Liability
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
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INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. In accordance with the guidance contained in ASC 815, the Public Warrants qualify for equity treatment. The Private Warrants do not qualify as equity and are recorded as a liability at fair value. Changes in the estimated fair value of the Private Warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the Private Warrants (as defined in Note 4) was estimated using a Black-Scholes method (see Note 9).
Common Stock Subject to Possible Redemption
All of the
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid-in capital and accumulated deficit.
As of June 30, 2022, the redeemable common stock reflected in the condensed balance sheet are reconciled in the following table:
Gross proceeds |
| $ | |
Less: | |
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Proceeds allocated to Public Warrants | |
| ( |
Proceeds allocated to Public Rights | | | ( |
Issuance costs allocated to common stock | |
| ( |
Plus: | |
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Remeasurement of carrying value to redemption value | |
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Common stock subject to possible redemption, December 31, 2021 | | $ | |
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Plus: | | | |
Remeasurement of carrying value to redemption value | | | |
Common stock subject to possible redemption, June 30, 2022 | | $ | |
Offering Costs associated with the Initial Public Offering
The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A - Expenses of Offering. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Initial Public Offering. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred offering costs amounting to $
12
INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Share-Based Payment Arrangements
The Company accounts for stock awards in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”), which requires that all equity awards be accounted for at their fair value. Fair value is measured on the grant date and is equal to the underlying value of the stock.
Costs equal to these fair values are recognized ratably over the requisite service period based on the number of awards that are expected to vest, or in the period of grant for awards that vest immediately and have no future service condition. For awards that vest over time, cumulative adjustments in later periods are recorded to the extent actual forfeitures differ from the Company’s initial estimates; previously recognized compensation cost is reversed if the service or performance conditions are not satisfied, and the award is forfeited.
Income Taxes
The Company complies with the accounting and reporting requirements of ASC 740, Income Taxes (“ASC 470”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were
Our effective tax rate was -
13
INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Net Loss Per Share of Common Stock
Net loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. As the Public Shares are considered to be redeemable at fair value, and a redemption at fair value does not amount to a distribution different than other stockholders, redeemable and non-redeemable common stock are presented as one class of stock in calculating net loss per share. The Company has not considered the effect of the warrants sold in the Initial Public Offering and private placement to purchase an aggregate of
The following table reflects the calculation of basic and diluted net loss per common stock (in dollars, except per share amounts):
| | | | For the Period from | ||
| | | | January 15, 2021 | ||
| | Six Months Ended | | (Inception) Through | ||
|
| June 30, 2022 |
| June 30, 2021 | ||
Basic and diluted net loss per share: | | | | | | |
Numerator: | | | | | | |
Net loss | | $ | ( | | $ | ( |
Denominator: | |
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Basic and diluted weighted average shares outstanding | | | | | | |
Basic and diluted net loss per share of common stock | | ( | | ( | ||
| | For the three months ended | ||||
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| June 30, 2022 |
| June 30, 2021 | ||
Basic and diluted net loss per share: | | | | | | |
Numerator: | | | | | | |
Net loss | | $ | ( | | $ | ( |
Denominator: | |
| | |
| |
Basic and diluted weighted average shares outstanding | | | | | | |
Basic and diluted net loss per share of common stock | | $ | ( | | $ | ( |
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $
Fair Value of Financial Instruments
The Company applies ASC 820, Fair Value Measurements (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.
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INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The carrying amounts reflected in the balance sheet for current assets and current liabilities approximate fair value due to their short-term nature.
Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.
Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.
See Note 9 for additional information on assets and liabilities measured at fair value.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
The Company’s management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
The registration statement filed in connection with the Company’s Initial Public Offering was declared effective on July 28, 2021. On August 2, 2021, the Company completed its Initial Public Offering of
On August 6, 2021, in connection with the underwriters’ exercise in full of their option to purchase up to
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of
15
INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The proceeds from the Private Units was added to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Units and all underlying securities will be worthless. There will be no redemption rights or liquidating distributions from the Trust Account with respect to the Private Rights and Private Warrants.
Simultaneously with the closing of the exercise of the over-allotment option, the Company consummated the sale of an additional
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On February 9, 2021, the Sponsor paid an aggregate of $
The Sponsor and the other holders of the Founder Shares (the “initial stockholders”) have agreed not to transfer, assign or sell any of the Founder Shares (except to certain permitted transferees) until, with respect to
On July 7, 2021, the Sponsor entered into agreements with two independent directors of the Company to transfer
On July 22, 2021, the Sponsor sold
On September 17, 2021, the Sponsor sold
16
INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
On September 17, 2021, the Sponsor sold
Promissory Notes - Related Party
On February 1, 2021, the Company issued an unsecured promissory note to the Sponsor (the “Initial Promissory Note”), pursuant to which the Company could borrow up to an aggregate of $
On January 14, 2022, the Company issued an unsecured promissory note to the Sponsor (the “Post-IPO Promissory Note”), pursuant to which the Company could borrow up to an aggregate of $
On March 29, 2022, the Company amended and restated the Post-IPO Promissory Note, such that the aggregate amount the Company can borrow at its discretion under the note increased from $
On August 10, 2022, the Company issued an unsecured promissory note to the Sponsor (the “August 2022 Promissory Note”), pursuant to which the Company may borrow up to an aggregate of $
Administrative Support Agreement
The Company entered into an agreement, commencing on the effective date of the Initial Public Offering, to pay the Sponsor up to a total of $
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the initial stockholders or an affiliate of the initial stockholders or certain of the Company’s directors and officers may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of
17
INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 $
NOTE 6. COMMITMENTS
Registration Rights Agreement
Pursuant to a registration rights agreement entered into on the effective date of the Initial Public Offering, the holders of the Founder Shares, the Private Units and any units that may be issued upon conversion of Working Capital Loans or extension loans (and any securities underlying the Private Units or units issued upon conversion of the Working Capital Loans or extension loans) are entitled to certain registration rights. The holders of these securities are entitled to make up to
Underwriting Agreement
On July 28, 2021, in connection with the Initial Public Offering, the Company entered into an underwriting agreement with Chardan Capital Markets, LLC, as representative of the underwriters named therein.
Pursuant to the underwriting agreement, the underwriters were paid a cash underwriting discount of $
Right of First Refusal
Subject to certain conditions, the Company has granted Chardan Capital Markets, LLC, for a period of
Chief Financial Officer Agreement
On February 8, 2021, the Company entered into an agreement with Vishwas Joshi to act as Chief Financial Officer of the Company for a period of twenty-four months from the date of listing of the Company on NASDAQ. The Company has agreed to pay Mr. Joshi up to $
Management Consulting Agreement
The Company has engaged Ontogeny Capital L T D (“Ontogeny”) to act as a management consulting and corporate advisor in the preparation of corporate strategies, management support and business plans for the Company. The Company paid Ontogeny $
18
INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
over-allotment option. In addition, upon the consummation of the Company’s initial Business Combination, the Company has agreed to pay Ontogeny $
Consulting Agreements
On September 17, 2021, the Company entered into a consulting agreement, effective as of September 1, 2021, with F. Jacob Cherian, pursuant to which the Company engaged Mr. Cherian to provide financial advisory services to the Company for a period of 12 months. In consideration for his services, the Company agreed to pay Mr. Cherian a monthly consulting fee of $
On October 29, 2021, the Company entered into a letter of engagement and terms of business with Sterling Media Ltd (“Sterling Media”), pursuant to which the Company engaged Sterling Media to provide strategic media coverage for the Company. In consideration for the services Sterling Media provides to the Company, the Company agreed to pay Sterling Media a total fee of $
On October 29, 2021, the Company also entered into a consulting agreement with Priyanka Agarwal, pursuant to which the Company engaged Ms. Agarwal to provide strategy, management and financial advisory services to the Company, as specified in the consulting agreement, commencing on October 29, 2021, and ending on October 28, 2022 (the “Term of Consulting Agreement”). In consideration for the services Ms. Agarwal provides to the Company, the Company agreed to pay Ms. Agarwal a monthly consulting fee of $
On January 12, 2022, the Company entered into a letter of engagement with Chardan Capital Markets, LLC (“Chardan”), pursuant to which the Company engaged Chardan to provide capital markets advisory services commencing from January 12, 2022 and ending on the close of a potential placement related to the Company’s initial business combination. In consideration for the services Chardan will provide to the Company, the Company agreed to pay Chardan a total fee of
On January 12, 2022, the Company also entered into a letter of engagement with Chardan, pursuant to which the Company engaged Chardan to provide merger and acquisition advisory services commencing from January 12, 2022 and ending on close of the Company’s initial business combination. In consideration for the services Chardan provides to the Company, the Company agreed to pay Chardan a total fee equal to: (i) if the Company enters into a business combination involving a party other than a target introduced by Chardan, one-half of one percent (
On March 18, 2022, the Company entered into an engagement letter with Ontogeny Capital relating to corporate advisory & management consultancy services for the purpose of raising capital in form of private investment in public equity (“PIPE”) financing. Ontogeny Capital will receive a contingent fee equal to 5% of the gross proceeds of securities sold in the PIPE up to $
On June 9, 2022, we entered into a letter of engagement with ADAS Capital Partners and Lone Cypress Holdings (“ADAS”) , pursuant to which we engaged ADAS to provide Company with introduction to investors residing in geographies outside of United States of America, assist in negotiations with introduced parties, assist with closing with introduced parties, assets with getting certain
19
INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
capital back from certain individuals and any other services deemed appropriate. In consideration for the services ADAS will provide to us, we agreed to pay ADAS a total fee of $
On June 24, 2022, we entered into a letter of engagement with Morrow Sodali (“Morrow”), pursuant to which we engaged Morrow to act as Solicitation Agent for shareholders of International Media Acquisition Corp. (“IMAQ” or the “Company”) in connection with Company’s Special Meeting (Extension Meeting) to be held in the third or fourth quarter of 2022 or such other time as determined by the Company (the “Business Combination Meeting”) pursuant to the terms of the final Proxy Statement to be filed with the Securities and Exchange Commission (the “SEC”) and when amended and approved by the SEC and distributed to your shareholders (the “SEC Approval Date”). In consideration for the services Baker will provide to us, we agreed to pay Baker a total estimated fee of $
On June 28, 2022, we entered into a letter of engagement with Baker Tilly DHC Business Private Limited (“Baker”), pursuant to which we engaged Baker to provide Purchase Price Allocation (PPA) study in accordance with the extant provision of US GAAP ASC 805. In consideration for the services Baker will provide to us, we agreed to pay Baker a total estimated fee of $
NOTE 7. WARRANTS
As of June 30, 2022, there were
Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) the completion of a Business Combination or (b)
No Public Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to such shares. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the warrants is not effective within
No Public Warrants will be exercisable and the Company will not be obligated to issue shares of common stock unless at the time a holder seeks to exercise such warrant, a prospectus relating to the shares of common stock issuable upon exercise of the warrants is current and the shares of common stock have been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Under the terms of the warrant agreement, the Company has agreed to use its best efforts to meet these conditions and to maintain a current prospectus relating to the shares of common stock issuable upon exercise of the warrants until the expiration of the warrants. However, the Company cannot guarantee that it will be able to do so and, if the Company does not maintain a current prospectus relating to the shares of common stock issuable upon exercise of the warrants, holders will be unable to exercise their warrants and the Company will not be required to settle any such warrant exercise. If the prospectus relating to the shares of common stock issuable upon the exercise of the warrants is not current or if the shares of common stock are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the Company will not be required to net cash settle or cash settle the warrant exercise, the warrants may have no value, the market for the warrants may be limited and the warrants may expire worthless.
The Company may call the Public Warrants for redemption, in whole and not in part, at a price of $
| ● | at any time while the warrants are exercisable; |
| ● | upon not less than |
| ● | if, and only if, the reported last sale price of the shares of common stock equals or exceeds $ |
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INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
| ● | if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants at the time of redemption and for the entire |
If the Company calls the Public Warrants for redemption as described above, management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the whole warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value by (y) the fair market value. The fair market value shall mean the volume weighted average trading price of our common stock for the
In addition, if (x) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $
The Private Units are identical to the Units sold in the Initial Public Offering, except the Private Units and their component securities will not be transferable, assignable or salable until
The Company accounts for the
The accounting treatment for derivative financial instruments requires that the Company record the Private Warrants as derivative liabilities at fair value upon the closing of the Initial Public Offering and subsequently at the end of each reporting period. With each such re-measurement, the warrant liability will be adjusted to its current fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification.
NOTE 8. STOCKHOLDER’S EQUITY
Preferred stock — The Company is authorized to issue
Common stock — The Company is authorized to issue
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INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Rights — Except in cases where the Company is not the surviving company in a Business Combination, each holder of a Public Right will automatically receive one-twentieth () of one share of common stock upon consummation of a Business Combination, even if the holder of a Public Right converted all shares held by him, her or it in connection with a Business Combination or an amendment to the Company’s Amended and Restated Certificate of Incorporation with respect to its pre-Business Combination activities. In the event that the Company will not be the surviving company upon completion of a Business Combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive the one-twentieth () of a share underlying each right upon consummation of the Business Combination.
The Company will not issue fractional shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware law. As a result, the holders of the rights must hold rights in multiples of
NOTE 9. FAIR VALUE MEASUREMENTS
The following table presents information about the Company’s financial liabilities that are measured at fair value on a recurring basis as of June 30, 2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
|
| Amount at Fair |
| | |
| | |
| | | |
Description |
| Value |
| Level 1 |
| Level 2 |
| Level 3 | ||||
June 30, 2022 |
| |
|
| |
|
| |
|
| |
|
Assets |
| |
|
| |
|
| |
|
| |
|
Investments held in Trust Account: |
| |
|
| |
|
| |
|
| |
|
Money Market investments | | $ | | $ | | $ | — | | $ | — | ||
Liabilities | |
| | |
|
| |
|
| |
|
|
Warrant liability - Private Warrants | | $ | | | $ | — | | $ | — | | $ | |
The Company utilizes a Black-Scholes method to value the Private 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 binomial options 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 common stock based on 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 Private 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 following table provides the significant inputs to the Black-Scholes method for the fair value of the Private Warrants:
|
| As of August 2, |
| | |
| |
| | 2021 (Initial | | As of June 30, |
| ||
|
| Measurement) |
| 2022 |
| ||
Unit price | | $ | | | $ | | |
Common stock price | | $ | | | $ | | |
Dividend yield | |
| — | % |
| — | % |
Term to Business Combination (years) | |
| | |
| | |
Volatility | |
| | % |
| | % |
Risk-free rate | |
| | % |
| | % |
Fair value | | $ | | | $ | | |
The following table provides a summary of the changes in the fair value of the Company’s Level 3 financial instruments that are measured at fair value on a recurring basis:
22
INTERNATIONAL MEDIA ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Fair value as of January 15, 2021 (inception) |
| $ | |
Initial measurement as of August 2, 2021 | |
| |
Additional warrants issued in over-allotment | |
| |
Fair value as of August 2, 2021 | |
| |
|
| ( | |
Fair value as of June 30, 2022 | | $ | |
Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. There were
The Company recognized a gain in the accompanying Statement of Operations of $
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the financial statement.
August 2022 Extension
Initially, the Company was required to complete its initial business combination transaction by August 2, 2022, which was
On July 26, 2022, the extension payment of $
On August 10, 2022, the Company issued the August 2022 Promissory Note, pursuant to which the Company may borrow up to an aggregate of $
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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 International Media Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Content Creation Media LLC The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report 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 final prospectus for its Initial Public Offering (as defined below) filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s filings with the SEC can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated on January 15, 2021, in Delaware and formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this Quarterly Report as our “initial business combination”. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering (the “Initial Public Offering”) and the private placement of the Private Units (as defined below), the proceeds of the sale of our shares in connection with our initial business combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of the Initial Public Offering or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
The issuance of additional shares in connection with an initial business combination:
| ● | may significantly dilute the equity interest of our investors who would not have pre-emption rights in respect of any such issuance; |
| ● | may subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded to our shares of common stock; |
| ● | could cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; |
| ● | may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and |
| ● | may adversely affect prevailing market prices for our common stock, rights and/or warrants. |
24
Similarly, if we issue debt securities or otherwise incur significant debt, it could result in:
| ● | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
| ● | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| ● | our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; |
| ● | our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding; |
| ● | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes; |
| ● | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| ● | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; |
| ● | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and |
| ● | other purposes and other disadvantages compared to our competitors who have less debt. |
We expect to continue to incur significant costs in the pursuit of our initial business combination plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities for the period from January 1, 2022 through June 30, 2022 were organizational activities, after IPO related to identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our initial business combination. We generate non-operating income in the form of interest income on cash and cash equivalents held after the Initial Public Offering. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended June 30, 2022, we had a net loss of $204,671, which resulted from franchise tax and income tax expense of $80,953, formation and operating costs of $521,964 and was offset in part by a change in the fair value of our warrant liability of $87,659 and interest and dividend income on investments held in the trust account of $310,587.
For the three months ended June 30, 2021, we had a net loss of $864, which resulted from formation and operating costs of $864.
For the six months ended June 30, 2022, we had a net loss of $520,650, which resulted from franchise tax and income tax expense of $129,720, formation and operating costs of $931,872 and was offset in part by a change in the fair value of our warrant liability of $207,194 and interest and dividend income on investments held in the trust account of $333,748.
For the period from January 15, 2021 (inception) through June 30, 2021, we had a net loss of $2,389, which resulted from formation and operating costs of $2,389.
25
Liquidity and Capital Resources
As of June 30, 2022, we had $43,773 in our operating bank account available for working capital needs. All remaining cash was held in the trust account and is generally unavailable for our use prior to an initial business combination.
On August 2, 2021, we consummated the Initial Public Offering of 20,000,000 units (the “Units”), at $10.00 per Unit, generating gross proceeds of $200,000,000. Each Unit consists of one share of common stock (“Public Share”), one right (“Public Right”) and one redeemable warrant (“Public Warrant”). Each Public Right entitles the holder to receive one-twentieth of one share of common stock at the closing of our initial business combination. Each Public Warrant entitles the holder to purchase three-fourths of one share of common stock at an exercise price of $11.50 per whole share.
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 714,400 units (the “Private Units”), at a price of $10.00 per Private Unit ($7,144,000 in the aggregate). Each Private Unit consists of one share of common stock (“Private Share”), one right (“Private Right”) and one warrant (“Private Warrant”). Each Private Right entitles the holder to receive one-twentieth of one share of common stock at the closing of our initial business combination. Each Private Warrant entitles the holder to purchase three-fourths of one share of common stock at an exercise price of $11.50 per whole share.
The proceeds from the Private Units was added to the proceeds from the Initial Public Offering to be held in the trust account. If we do not complete our initial business combination within 15 months (or up to 18 months if our time to complete a business combination is extended), the proceeds of the sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Units and all underlying securities will be worthless. There will be no redemption rights or liquidating distributions from the trust account with respect to the rights and warrants included in the Private Units.
On August 6, 2021, in connection with the underwriters’ exercise in full of their option to purchase up to 3,000,000 additional Units to cover over-allotments, if any, we consummated the sale of an additional 3,000,000 Units, at $10.00 per Unit, generating gross proceeds of $30,000,000.
Simultaneously with the closing of the exercise of the over-allotment option, we consummated the sale of an additional 82,500 Private Units, at a price of $10.00 per Private Unit, in a private placement to our Sponsor, generating gross proceeds of $825,000.
We intend to use substantially all of the net proceeds of the Initial Public Offering and the private placement, including the funds held in the trust account, in connection with our initial business combination and to pay our expenses relating thereto, including deferred underwriting commissions payable to the underwriters in an amount equal to 3.5% ($8,050,000) of the total gross proceeds raised in the Initial Public Offering upon consummation of our initial business combination. To the extent that our capital stock is used in whole or in part as consideration to effect our initial business combination, the remaining proceeds held in the trust account as well as any other net proceeds not expended will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our initial business combination if the funds available to us outside of the trust account were insufficient to cover such expenses.
In connection with the Company’s assessment of going concern considerations in accordance with FASB’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company had until August 2, 2022 to consummate a Business Combination. The Company may elect, following the Trust Amendment, to extend the period of time to consummate a Business Combination up to two times, each by an additional three months (or up to 18 months total) subject to the Sponsor depositing into the Trust Account $350,000 for each three month extension ($700,000 if both extensions are elected). On July 26, 2022, an extension payment of $350,000 was deposited by the Sponsor into the Company’s Trust Account to extend the August 2, 2022, deadline to November 2, 2022. If a Business Combination is not consummated by this date and an extension not requested by the Sponsor, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the mandatory liquidation, should a Business Combination not occur and an extension is not requested by the Sponsor, raises substantial doubt about the Company's ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after August 2, 2022.
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Management has determined that if the Company is unable to raise additional funds to alleviate liquidity needs as well as complete a Business Combination by February 2, 2023, then the Company will cease all operations except for the purpose of liquidating. The liquidity condition and date for mandatory liquidation raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after February 2, 2023. Management plans to continue to draw down on its promissory note, available for up to $1,200,000 out of $1,645,000 and repayable only if there is a Business Combination. The Company intends to complete a Business Combination before the mandatory liquidation date.
We believe that the $43,773 in our operating bank account as of June 30, 2022; $500,000 of additional funds provided by sponsors on July 14, 2022 under the Post IPO Promissory Note and commitment from sponsor to provide further loan as and when required, will be insufficient to allow us to operate for at least the next 12 months, assuming that a business combination is not consummated during that time. Over this time period, we will be using these funds for identifying and evaluating prospective business combination candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to consummate our initial business combination with and structuring, negotiating and consummating the business combination.
We expect our primary liquidity requirements during that period to include approximately $207,248 for accounting, audit and other third-party expenses attendant to the structuring and negotiation of a business combination; $316,679 for due diligence, consulting, travel and miscellaneous expenses incurred during search for initial business combination target; $700,000 SEC extension fee; $200,000 for franchise tax payment and approximately $65,000 for working capital that will be used for miscellaneous expenses and reserves.
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
We do not believe we will need to raise additional funds following the Initial Public Offering in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our Public Shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of June 30, 2022.
Contractual Obligations
Promissory Notes - Related Party
On February 1, 2021, we issued an unsecured promissory note to the Sponsor (the “Initial Promissory Note”), pursuant to which we could borrow up to an aggregate of $300,000 to cover expenses related to the Initial Public Offering. On April 6, 2021 and June 17, 2021, we issued additional unsecured promissory notes to the Sponsor (the “Additional Promissory Notes” and, together with the “Initial
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Promissory Note”, the “IPO Promissory Notes”), pursuant to which we may borrow up to an additional aggregate principal amount of $200,000. The IPO Promissory Notes were non-interest bearing and payable on the earlier of (i) December 31, 2021 or (ii) the consummation of the Initial Public Offering. The outstanding balance under the Promissory Notes was repaid on August 6, 2021.
On January 14, 2022, we issued an unsecured promissory note to the Sponsor (the “Post-IPO Promissory Note”), pursuant to which we could borrow up to an aggregate of $500,000 in two installments of (i) up to $300,000 during the month of March 2022, and (ii) up to $200,000 during the month of June 2022 at our discretion. The Post-IPO Promissory Note is non-interest bearing and payable promptly after the date on which we consummate an initial business combination.
On March 29, 2022, we amended and restated the Post-IPO Promissory Note, such that the aggregate amount we can borrow at our discretion under the note increased from $500,000 in two installments as described above, to up to $750,000 in three installments of (i) up to $195,000 no later than February 28, 2022, (ii) up to 355,000 no later than April 30, 2022, and (iii) up to $200,000 no later than June 30, 2022. No other terms were amended pursuant to this amendment and restatement. As of June 30, 2022 and December 31, 2021, the amount outstanding on the promissory note was $445,000 and $0 respectively.
On August 10, 2022, the Company issued an unsecured promissory note to the Sponsor (the “August 2022 Promissory Note”), pursuant to which the Company may borrow up to an aggregate of $895,000 in three installments of (i) up to $195,000 no later than July 31, 2022, (ii) up to $500,000 no later than October 31, 2022, and (iii) up to $200,000 no later than January 31, 2023 at the Company’s discretion. The August 2022 Promissory Note is non-interest bearing and payable promptly after the date on which the Company consummates an initial Business Combination. As of June 30, 2022 and December 31, 2021, the amount outstanding on the August 2022 Promissory Note was $0 and $0 respectively. In July 2022 Company borrowed $195,000 under the August 2022 Promissory Note.
Underwriting Agreement
On July 28, 2021, in connection with the Initial Public Offering, we entered into an underwriting agreement with Chardan Capital Markets, LLC, as representative of the underwriters named therein.
Pursuant to the underwriting agreement, the underwriters were paid a cash underwriting discount of $0.20 per Unit sold in the Initial Public Offering, or $4,600,000 in the aggregate, upon the closing of the Initial Public Offering and full exercise of the over-allotment option. In addition, $0.35 per Unit sold in the Initial Public Offering, or $8,050,000 in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the trust account solely in the event that we complete an initial business combination, subject to the terms of the underwriting agreement.
Right of First Refusal
Subject to certain conditions, we granted Chardan, the representative of the underwriters in the Initial Public Offering, for a period of 18 months after the date of the consummation of our business combination, a right of first refusal to act as book-running manager, with at least 30% of the economics, for any and all future public and private equity and debt offerings. In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have a duration of more than three years from the effective date of the registration statement for the Initial Public Offering.
Chief Financial Officer Agreement
On February 8, 2021, we entered into an agreement with Vishwas Joshi to act as our Chief Financial Officer for a period of twenty-four months from the date of listing of the Company on NASDAQ. We have agreed to pay Mr. Joshi up to $400,000, subject to successfully completing our initial business combination. If we do not complete a business combination, we have agreed to pay Mr. Joshi $40,000. As of June 30, 2022, we have accrued $40,000 as expense.
Consulting Agreements
We have engaged Ontogeny Capital L T D (“Ontogeny”) to act as a management consulting and corporate advisor in the preparation of corporate strategies, management support and business plans for us. We paid Ontogeny $40,000 at the time of signing the engagement agreement and $35,000 upon the filing of the registration statement relating to the Initial Public Offering. We paid Ontogeny an aggregate of $1,650,000 upon the closing of the Initial Public Offering and exercise of the underwriters’ over-allotment
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option. In addition, upon the consummation of our initial business combination, we have agreed to pay Ontogeny $2,875,000 for certain management consulting and corporate advisory services.
On September 17, 2021, we entered into a consulting agreement, effective as of September 1, 2021, with F. Jacob Cherian, pursuant to which we engaged Mr. Cherian to provide financial advisory services to us for a period of 12 months. In consideration for his services, we agreed to pay Mr. Cherian a monthly consulting fee of $12,000 per month. Agreement was terminated in April 2022 and since no further payment accrued or paid under this agreement.
On October 29, 2021, we entered into a letter of engagement and terms of business (the “Letter of Engagement”) with Sterling Media Ltd (“Sterling Media”), pursuant to which we engaged Sterling Media to provide strategic media coverage for us commencing on October 29, 2021 and ending on June 30, 2022 (the “Term of Engagement Letter”). In consideration for the services Sterling Media provides to us, we agreed to pay Sterling Media a total fee of £20,000 during the Term of Engagement Letter in accordance with the terms of the Letter of Engagement. An additional mutually agreed financial fee may be awarded to Sterling Media for deals secured by Sterling Media that may result in clearly significant brand enhancement and/or potential future income for us.
On October 29, 2021, we also entered into a consulting agreement with Priyanka Agarwal, pursuant to which we engaged Ms. Agarwal to provide strategy, management and financial advisory services to us, as specified in the consulting agreement, commencing on October 29, 2021 and ending on October 28, 2022 (the “Term of Consulting Agreement”). In consideration for the services Ms. Agarwal provides to us, we agreed to pay Ms. Agarwal a monthly consulting fee of $11,250 per month for the duration of the Term of Consulting Agreement in accordance with the payment schedule provided in the consulting agreement. In addition, we shall reimburse Ms. Agarwal for her reasonable and documented travel expenses incurred at our request.
On January 12, 2022, we entered into a letter of engagement with Chardan Capital Markets, LLC (“Chardan”), pursuant to which we engaged Chardan to provide capital markets advisory services commencing from January 12, 2022 and ending on the close of a potential placement related to our initial business combination. In consideration for the services Chardan will provide to us, we agreed to pay Chardan a total fee of 5% of the aggregate sales price of securities sold in the financing transaction plus reimbursement of out-of-pocket expenses capped at $25,000.
On January 12, 2022, we also entered into a letter of engagement with Chardan, pursuant to which we engaged Chardan to provide merger and acquisition advisory services commencing from January 12, 2022 and ending on close of our initial business combination. In consideration for the services Chardan provides to us, we agreed to pay Chardan a total fee equal to: (i) if we enter into a business combination involving a party other than a target introduced by Chardan, one-half of one percent (0.5%) of the aggregate value of the business combination; and (ii) if we consummate a business combination with a target introduced by Chardan, three percent (3%) of the first $100 million aggregate value of the target, two percent (2.0%) of the aggregate value of the target greater than $100 million but less than $200 million, and one percent (1.0%) of the aggregate value of the target greater than $200 million but less than $300 million, paid at the close of the business combination plus reimbursement of out-of-pocket expenses capped at $25,000.
On March 18, 2022, we entered into an engagement letter with Ontogeny Capital relating to corporate advisory & management consultancy services for the purpose of raising capital in form of a private investment in public equity (“PIPE”) financing. Ontogeny Capital will receive a contingent fee equal to 5% of the gross proceeds of securities sold in the PIPE up to $75 million in gross proceeds and 5.5% of the gross proceeds of securities sold in the PIPE from $75 million up to $150 million in gross proceeds. The engagement letter also provides for an additional incremental discretionary fee of 0.5% of gross proceeds if the gross proceeds of securities sold in a PIPE are above $150 million.
On June 9, 2022, we entered into a letter of engagement with ADAS Capital Partners and Lone Cypress Holdings (“ADAS”) , pursuant to which we engaged ADAS to provide Company with introduction to investors residing in geographies outside of United States of America, assist in negotiations with introduced parties, assist with closing with introduced parties, assets with getting certain capital back from certain individuals and any other services deemed appropriate. In consideration for the services ADAS will provide to us, we agreed to pay ADAS a total fee of $25,000.
On June 24, 2022, we entered into a letter of engagement with Morrow Sodali (“Morrow”), pursuant to which we engaged Morrow to act as Solicitation Agent for shareholders of International Media Acquisition Corp. (“IMAQ” or the “Company”) in connection with Company’s Special Meeting (Extension Meeting) to be held in the third or fourth quarter of 2022 or such other time as determined by the Company (the “Business Combination Meeting”) pursuant to the terms of the final Proxy Statement to be filed with the Securities and Exchange Commission (the “SEC”) and when amended and approved by the SEC and distributed to your shareholders
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(the “SEC Approval Date”). In consideration for the services Baker will provide to us, we agreed to pay Baker a total estimated fee of $25,000.
On June 28, 2022, we entered into a letter of engagement with Baker Tilly DHC Business Private Limited (“Baker”), pursuant to which we engaged Baker to provide Purchase Price Allocation (PPA) study in accordance with the extant provision of US GAAP ASC 805. In consideration for the services Baker will provide to us, we agreed to pay Baker a total estimated fee of $24,000.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Net Loss Per Share of Common Stock
Net loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. As the Public Shares are considered to be redeemable at fair value, and a redemption at fair value does not amount to a distribution different than other stockholders, redeemable and non-redeemable common stock are presented as one class of stock in calculating net loss per share. We have not considered the effect of the warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 17,847,675 shares in the calculation of diluted income per share, since the exercise of the warrants are contingent upon the occurrence of future events.
Warrant Liability
We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
Common Stock Subject to Possible Redemption
All of the 23,000,000 Public Shares sold as part of the Units in the Initial Public Offering contain a redemption feature which allows for the redemption of such Public Shares in connection with our liquidation, if there is a stockholder vote or tender offer in connection with the initial business combination and in connection with certain amendments to our Amended and Restated Certificate of Incorporation. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within our control require common stock subject to redemption to be classified outside of permanent equity. Therefore, all redeemable Public Shares have been classified outside of permanent equity.
We recognize changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid-in capital and accumulated deficit.
Share Based Payment Arrangements
On July 7, 2021, the Sponsor entered into agreements with two independent directors to transfer 95,000 Founder Shares to each director, subject to and upon closing of our initial business combination. As such, under ASC 718, these shares are transferred subject to a performance condition and compensation expense will be recognized at the date of a business combination when earned.
On July 22, 2021, the Sponsor sold 30,000 of its Founder Shares to each of its five independent directors (the “Directors”) (or 150,000 Founder Shares in total) for cash consideration of approximately $0.004 per share. These awards are subject to ASC 718. In
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accordance with ASC 718, the Company recognized compensation expense in an amount equal to the number of Founders Shares sold times the grant date fair value per share less the amount initially received for the purchase of the Founders Shares. The value of the Founder Shares sold to the Directors was determined to be $787,500 as of July 22, 2021. As such, the Company recognized compensation expense of $786,848 within stock-based compensation expense in the Company’s Statements of Operations for the period from January 15, 2021 (inception) through December 31, 2021.
On September 17, 2021, the Sponsor sold 25,000 of its Founder Shares to an additional independent director (the “Additional Director”) for consideration of approximately $0.004 per share. These awards are subject to ASC 718. In accordance with ASC 718, the Company recognized compensation expense in an amount equal to the number of Founders Shares sold times the grant date fair value per share less the amount initially received for the purchase of the Founders Shares. The value of the Founder Shares sold to the Additional Director was determined to be $141,250 as of September 17, 2021. As such, the Company recognized compensation expense of $141,150 within stock-based compensation expense in the Company’s Statements of Operations for the period from January 15, 2021 (inception) through December 31, 2021.
On September 17, 2021, the Sponsor sold 75,000 of its Founder Shares to an independent consultant (the “Consultant”) for consideration of approximately $0.004 per share. These awards are subject to ASC 718. In accordance with ASC 718, the Company recognized compensation expense in an amount equal to the number of Founders Shares sold times the grant date fair value per share less the amount initially received for the purchase of the Founders Shares. The value of the Founder Shares sold to the Consultant was determined to be $423,750 as of September 17, 2021. As such, the Company recognized compensation expense of $423,450 within stock-based compensation expense in the Company’s Statements of Operations for the period from January 15, 2021 (inception) through December 31, 2021.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to make disclosures under this Item.
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 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 June 30, 2022. 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 not effective as of June 30, 2022, due to the previously reported material weakness in our internal control over financial reporting related to the Company's accounting for complex financial instruments, stock-based compensation and control surrounding the review of accounts payable and accrued expenses to ensure expense recognition in the proper period. As a result, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting except as described below.
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As previously disclosed, management has identified a material weakness in internal controls related to the accounting for our complex financial instruments (including redeemable equity instruments as described above) and stock-based compensation. We also have a material weakness in our internal control surrounding the review of accounts payable and accrued expenses to ensure expense recognition in the proper period. In light of the material weakness identified, although we have processes to identify and appropriately apply applicable accounting requirements, we plan to continue to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in the final prospectus for our Initial Public Offering filed with the SEC on July 29, 2021. 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. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our final prospectus for our Initial Public Offering filed with the SEC on July 29, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sale of Unregistered Securities
None.
Use of Proceeds
For a description of the use of the proceeds generated in the IPO, see Part I, Item 2 of this Quarterly Report on Form 10-Q.
Purchases of Equity Securities by the Issuer and Related Purchasers
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
On August 10, 2022, we issued an unsecured promissory note in the aggregate principal amount of $895,000 to Content Creation Media LLC, the Sponsor. Pursuant to the note, the Sponsor agreed to loan to us an aggregate amount of up to $895,000 in three installments of (i) up to $195,000 no later than July 31, 2022, (ii) up to $500,000 no later than October 31, 2022, and (iii) up to $200,000 no later than January 31, 2023 at our discretion. The note does not bear interest and matures upon closing of our initial business combination. In the event that we do not consummate a business combination, the note will be repaid only from amounts remaining
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outside of our trust account, if any. We intend to use the proceeds of the note for working capital purposes and to fund the Trust Account in connection with extensions of the time we have to complete our initial business combination.
The foregoing description of the promissory note is qualified in its entirety by reference to the full text of the note, a copy of which is filed with this Quarterly Report on Form 10-Q as Exhibit 10.1 and is incorporated herein by reference.
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ITEM 6. EXHIBITS
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report:
Exhibit No. |
| Description |
10.1* | | |
31.1* | | |
31.2* | | |
32.1** | | |
32.2** | | |
101.INS | | Inline XBRL Instance Document |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | | Inline XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| * | Filed herewith. |
** | Furnished herewith. This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filings of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| International Media Acquisition Corp. | |
| | |
Date: August 11, 2022 | By: | /s/ Shibasish Sarkar |
|
| Shibasish Sarkar |
|
| Chief Executive Officer |
| | (Principal Executive Officer) |
| International Media Acquisition Corp. | |
| | |
Date: August 11, 2022 | By: | /s/ Vishwas Joshi |
|
| Vishwas Joshi |
|
| Chief Financial Officer |
| | (Principal Financial and Accounting Officer) |
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Exhibit 10.1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF REGISTRATION OF THE RESALE THEREOF UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
PROMISSORY NOTE
Principal Amount: $895,000 | Dated as of August 10, 2022 |
Content Creation Media LLC (the “Payee”) promises to loan to International Media Acquisition Corp., a Delaware corporation (the “Maker”), an aggregate amount of up to Eight Hundred Ninety-Five Thousand Dollars ($895,000) in three installments of (i) up to One Hundred Ninety-Five Thousand Dollars ($195,000) no later than July 31, 2022, (ii) up to Five Hundred Thousand Dollars ($500,000) no later than October 31, 2022, and (iii) up to Two Hundred Thousand Dollars ($200,000) no later than January 31, 2023, upon the request by the Maker at the Maker’s discretion. Upon making such loan, Maker promises to pay to the order of Payee the principal sum of Eight Hundred Ninety-Five Thousand Dollars ($895,000) in lawful money of the United States of America, on the terms and conditions described below. All payments on this Promissory Note (this “Note”) shall be made by check or wire transfer of immediately available funds or as otherwise determined by the Maker to such account as the Payee may from time to time designate by written notice in accordance with the provisions of this Note.
1. | Principal. The principal balance of this Note shall be payable promptly after the date on which the Maker consummates an initial business combination (a “Business Combination”) with a target business (as described in the Maker’s initial public offering prospectus dated July 28, 2021 (the “Prospectus”)). The principal balance may be prepaid at any time. |
2. | Interest. No interest shall accrue on the unpaid principal balance of this Note. |
3. | Non-Convertible; Non-Recourse. This Note shall not be convertible into any securities of Maker, and Payee shall have no recourse with respect to the Payee’s ability to convert this Note into any securities of Maker. |
4. | Application of Payments. All payments shall be applied first to payment in full of any costs incurred in the collection of any sum due under this Note, including (without limitation) reasonable attorney’s fees, then to the payment in full of any late charges and finally to the reduction of the unpaid principal balance of this Note. |
5. | Events of Default. The following shall constitute an event of default (“Event of Default”): |
(a) | Failure to Make Required Payments. Failure by Maker to pay the principal of this Note within five (5) business days following the date when due. |
(b) | Voluntary Liquidation, Etc. The commencement by Maker of a proceeding relating to its bankruptcy, insolvency, reorganization, rehabilitation or other similar action, or the consent by it to the appointment of, or taking possession by, a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for Maker or for any substantial part of its property, or the making by it of any assignment for the benefit of creditors, or the failure of Maker generally to pay its debts as such debts become due, or the taking of corporate action by Maker in furtherance of any of the foregoing. |
(c) | Involuntary Bankruptcy, Etc. The entry of a decree or order for relief by a court having jurisdiction in the premises in respect of Maker in an involuntary case under any applicable bankruptcy, insolvency or similar law, for the appointing of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) for Maker or for any substantial part of its property, or ordering the winding-up or liquidation of the affairs of Maker, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days. |
6. | Remedies. |
(a) | Upon the occurrence of an Event of Default specified in Section 5(a) hereof, the Payee may, by written notice to Maker, declare this Note to be due immediately and payable, whereupon the unpaid principal amount of this Note, and all other amounts payable hereunder, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the documents evidencing the same to the contrary notwithstanding. |
(b) | Upon the occurrence of an Event of Default specified in Sections 5(b) and 5(c), the unpaid principal balance of this Note, and all other sums payable with regard to this Note, shall automatically and immediately become due and payable, in all cases without any action on the part of the Payee. |
7. | Waivers. Maker and all endorsers and guarantors of, and sureties for, this Note waive presentment for payment, demand, notice of dishonor, protest, and notice of protest with regard to the Note, all errors, defects and imperfections in any proceedings instituted by the Payee under the terms of this Note, and all benefits that might accrue to Maker by virtue of any present or future laws exempting any property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy or sale under execution, or providing for any stay of execution, exemption from civil process, or extension of time for payment; and Maker agrees that any real estate that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued hereon, may be sold upon any such writ in whole or in part in any order desired by the Payee. |
8. | Unconditional Liability. Maker hereby waives all notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note, and agrees that its liability shall be unconditional, without regard to the liability of any other party, |
and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by the Payee, and consents to any and all extensions of time, renewals, waivers, or modifications that may be granted by the Payee with respect to the payment or other provisions of this Note, and agrees that additional makers, endorsers, guarantors, or sureties may become parties hereto without notice to Maker or affecting Maker’s liability hereunder.
9. | Notices. Any notice called for hereunder shall be deemed properly given if (i) sent by certified mail, return receipt requested, (ii) personally delivered, (iii) dispatched by any form of private or governmental express mail or delivery service providing receipted delivery or (iv) sent by facsimile or (v) to the following addresses or to such other address as either party may designate by notice in accordance with this Section: |
If to Maker:
International Media Acquisition Corp.
1604 US Highway 130
N Brunswick, NJ 08902
If to Payee:
Content Creation Media LLC
1604 US Highway 130
N Brunswick, NJ 08902
Notice shall be deemed given on the earlier of (i) actual receipt by the receiving party, (ii) the date shown on a facsimile transmission confirmation, (iii) the date reflected on a signed delivery receipt, or (iv) two (2) Business Days following tender of delivery or dispatch by express mail or delivery service.
10. | Construction. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF. |
11. | Jurisdiction. The courts of the State of New York have exclusive jurisdiction to settle any dispute arising out of or in connection with this agreement (including a dispute relating to any non-contractual obligations arising out of or in connection with this agreement) and the parties submit to the exclusive jurisdiction of the courts of New York. |
12. | Severability. Any provision contained in this Note which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. |
13. | Trust Waiver. The Payee has been provided a copy of the Prospectus. Notwithstanding anything herein to the contrary, the Payee hereby waives any and all right, title, interest or |
claim of any kind (“Claim”) in or to any amounts contained in the trust account in which the proceeds of the initial public offering (the “IPO”) conducted by the Maker and the proceeds of the sale of securities in a private placement that occurred prior to the effectiveness of the IPO, as described in greater detail in the Prospectus, were placed, and hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim from the trust account or any distribution therefrom for any reason whatsoever. If Maker does not consummate a Business Combination, this Note shall be repaid only from amounts remaining outside of the trust account, if any.
14. | Amendment; Waiver. Any amendment hereto or waiver of any provision hereof may be made with, and only with, the written consent of the Maker and the Payee. |
15. | Assignment. No assignment or transfer of this Note or any rights or obligations hereunder may be made by any party hereto (by operation of law or otherwise) without the prior written consent of the other party hereto and any attempted assignment without the required consent shall be void. |
16. | Further Assurance. The Maker shall, at its own cost and expense, execute and do (or procure to be executed and done by any other necessary party) all such deeds, documents, acts and things as the Payee may from time to time require as may be necessary to give full effect to this Note. |
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IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Note to be duly executed on the day and year first above written.
| INTERNATIONAL MEDIA ACQUISITION CORP. | |
| | |
| | |
| By: | /s/ Vishwas Joshi |
| Name: | Vishwas Joshi |
| Title: | Chief Financial Officer |
Accepted and Agreed:
CONTENT CREATION MEDIA LLC.
By: | /s/ Shibasish Sarkar | |
| Name: Shibasish Sarkar | |
| Title: Manager | |
[Signature Page to Promissory Note]
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Shibasish Sarkar, certify that:
Date: August 11, 2022 | | |
| By: | /s/ Shibasish Sarkar |
| | Shibasish Sarkar |
| | Chairman of the Board of Directors |
| | (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Vishwas Joshi, certify that:
Date: August 11, 2022 | | |
| By: | /s/ Vishwas Joshi |
| | Vishwas Joshi |
| | Chief Financial Officer |
| | (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of International Media Acquisition Corp. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2022, as filed with the Securities and Exchange Commission (the “Report”), I, Shibasish Sarkar, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by §906 of the Sarbanes-Oxley Act of 2002, that:
Date: August 11, 2022 | | |
| By: | /s/ Shibasish Sarkar |
| | Shibasish Sarkar |
| | Chairman of the Board of Directors |
| | (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of International Media Acquisition Corp. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2022, as filed with the Securities and Exchange Commission (the “Report”), I, Vishwas Joshi, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by §906 of the Sarbanes-Oxley Act of 2002, that:
Date: August 11, 2022 | | |
| By: | /s/ Vishwas Joshi |
| | Vishwas Joshi |
| | Chief Financial Officer |
| | (Principal Financial and Accounting Officer) |