Mobix Labs(MOBX) - 2022 Q4 - Annual Report

PART I Business Chavant Capital Acquisition Corp. is a blank check company that completed an $80 million IPO in July 2021 and has entered a definitive business combination agreement with Mobix Labs, Inc., with a deadline of July 22, 2023 - The company is a blank check company incorporated on March 19, 2021, for the purpose of effecting a business combination and is considered a "shell company"[19] Initial Public Offering (IPO) and Private Placement Details | Item | Details | | :--- | :--- | | IPO Date | July 22, 2021 | | Units Offered | 8,000,000 Units at $10.00 per Unit | | Gross Proceeds (IPO) | $80,000,000 | | Unit Composition | One ordinary share and three-fourths of one redeemable public warrant | | Private Placement | 3,400,000 Private Warrants at $1.00 per warrant | | Gross Proceeds (Private Placement) | $3,400,000 | | Amount in Trust Account | $80,000,000 | - The company has twice extended its deadline to consummate a business combination, with the current deadline being July 22, 2023, leading to significant shareholder redemptions of 7,046,967 shares in July 2022 and 96,991 shares in January 2023[25][26] - On November 15, 2022, the company entered into a definitive business combination agreement with Mobix Labs, Inc., supported by a fully committed $30 million PIPE investment at $10.00 per share[35] Risk Factors The company faces significant risks as a blank check entity, including operational history, business combination completion, investment company status, and material weaknesses in internal controls, alongside specific risks related to the Mobix Labs transaction and its Cayman Islands incorporation - The company is a blank check company with no operating history, and its ability to complete an initial business combination by July 22, 2023, is uncertain, risking liquidation and redemption of public shares[54][59] - There is a risk of being deemed an investment company under the Investment Company Act, potentially leading to burdensome compliance or forced liquidation, which the company may mitigate by holding cash, reducing interest income[63][66] - The proposed target, Mobix Labs, is an early-stage company with a limited operating history since its 2020 inception, making future prospects and risks difficult to evaluate[94] - Material weaknesses in internal control over financial reporting were identified as of December 31, 2022, due to insufficient personnel with adequate accounting knowledge, impacting controls over EPS calculation, PIPE accounting, and third-party valuation reviews[169][171][173] - The company's incorporation in the Cayman Islands may present difficulties for investors in protecting their interests and enforcing U.S. judgments[127][128] Unresolved Staff Comments The company reports that it has no unresolved staff comments from the SEC - There are no unresolved staff comments[194] Properties The company's executive offices are located at 445 Park Avenue, 9th Floor, New York, NY 10022, which is considered adequate for current operations - The company's principal executive offices are located at 445 Park Avenue, 9th Floor, New York, NY 10022[195] Legal Proceedings As of December 31, 2022, there were no material litigation, arbitration, or governmental proceedings pending against the company or its management - To the knowledge of management, there was no material litigation, arbitration, or governmental proceeding pending against the company as of December 31, 2022[196] Mine Safety Disclosures This item is not applicable to the company - Not applicable[197] PART II Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities The company's securities are listed on Nasdaq, it has not paid dividends, and significant shareholder redemptions totaling over $71.5 million occurred due to two extensions of its business combination deadline - The company's securities are listed on Nasdaq: Units (CLAYU), ordinary shares (CLAY), and Public Warrants (CLAYW)[200] - The company has not paid any cash dividends and does not plan to prior to completing its initial business combination[202] Shareholder Redemptions from Trust Account | Date | Event | Shares Redeemed | Amount Deducted from Trust ($) | | :--- | :--- | :--- | :--- | | July 14, 2022 | First Extension | 7,046,967 | $70,573,278 | | Jan 6, 2023 | Second Extension | 96,991 | $1,004,600 | Management's Discussion and Analysis of Financial Condition and Results of Operations The company, a blank check entity with no operations, reported a net loss of $776,000 for 2022, faces substantial doubt about its going concern ability due to a working capital deficiency of $844,469, and received a Nasdaq non-compliance notice for its market value Financial Performance Summary | Period | Net Income / (Loss) ($) | Key Drivers | | :--- | :--- | :--- | | Year Ended Dec 31, 2022 | ($776,000) | Operating costs ($1.26M), Loss on PIPE Derivative ($1.11M), offset by Gain on Warrant Liability ($1.33M) and Interest Income ($217k). | | Inception to Dec 31, 2021 | $361,000 | Gain on Warrant Liability ($1.12M), offset by operating costs ($763k). | Liquidity and Trust Account Balance | Date | Cash outside Trust ($) | Working Capital (Deficiency) ($) | Trust Account Balance ($) | | :--- | :--- | :--- | :--- | | Dec 31, 2022 | $175,788 | ($844,469) | $9,835,409 | | Dec 31, 2021 | $240,706 | N/A | $80,002,777 | - The company's financial condition raises substantial doubt about its ability to continue as a going concern, with management planning to address this through the proposed business combination and funding operations via working capital loans from its Sponsor, totaling $662,000 drawn as of December 31, 2022[238][246] - On March 23, 2023, the company received a non-compliance notice from Nasdaq for its Market Value of Listed Securities falling below the $35 million minimum requirement, with a deadline of September 19, 2023, to regain compliance[225] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of December 31, 2022, due to material weaknesses in internal control over financial reporting, primarily stemming from insufficient accounting personnel and ineffective controls over complex financial calculations - Management concluded that disclosure controls and procedures were not effective as of December 31, 2022, due to material weaknesses in internal control over financial reporting[260] - The primary material weakness identified is a lack of sufficient personnel with the necessary internal control and accounting knowledge for the company's financial reporting requirements[264] - This led to further material weaknesses in specific areas, including: (1) calculation of EPS and cash flow classification, (2) accounting for the complex PIPE transaction, and (3) review of third-party valuations[269] PART III Directors, Executive Officers and Corporate Governance The company's board comprises five members, with a majority independent, and has established audit and compensation committees, with an audit committee financial expert, all operating under an adopted Code of Ethics Executive Officers and Directors | Name | Position | | :--- | :--- | | Jiong Ma | Chief Executive Officer, President and Director | | André-Jacques Auberton-Hervé | Chairman of the Board of Directors | | Michael Lee | Chief Financial Officer | | Karen Kerr | Director | | Bernhard Stapp | Director | | Patrick J. Ennis | Director | - The board of directors consists of five members, with a majority (Dr. Kerr, Dr. Ennis, and Dr. Stapp) determined to be independent under Nasdaq listing standards[278][281] - The company has an audit committee and a compensation committee, with the audit committee chaired by Dr. Kerr, who is deemed an "audit committee financial expert"[282][284] - A Code of Ethics has been adopted and is available on the company's website[292] Executive Compensation Executive officers and directors receive no cash compensation, but an entity managed by the CFO is paid for financial services, and the Sponsor and affiliates are reimbursed for out-of-pocket expenses - No executive officers or directors have received cash compensation for services rendered[293] - An entity managed by the CFO, New Highland, LLC, is paid for consulting and financial statement preparation services on a fixed-fee basis for quarterly and annual reports[293] - The Sponsor and affiliates are reimbursed for out-of-pocket expenses incurred on the company's behalf, which are reviewed quarterly by the audit committee[293] Security Ownership of Certain Beneficial Owners and Management As of March 30, 2023, the Sponsor, Chavant Capital Partners LLC, is the largest beneficial owner with 55.3% of outstanding shares, while all officers and directors as a group own 59.7% Beneficial Ownership as of March 30, 2023 | Beneficial Owner | Number of Shares | Percentage of Outstanding (%) | | :--- | :--- | :--- | | Chavant Capital Partners LLC (Sponsor) | 1,580,813 | 55.3% | | Jiong Ma (CEO) | 1,580,813 | 55.3% | | Polar Asset Management Partners Inc. | 320,000 | 11.2% | | All officers and directors as a group | 1,706,031 | 59.7% | Certain Relationships and Related Transactions, and Director Independence Related party transactions include the Sponsor's purchase of Founder Shares and Private Warrants, monthly administrative fees of $10,000 paid to the Sponsor, and $662,000 in outstanding working capital loans from the Sponsor convertible into warrants - The Sponsor, Chavant Capital Partners LLC, purchased 2,000,000 Founder Shares for $25,000 and also purchased Private Warrants in a private placement[301][303] - The company pays the Sponsor a monthly fee of $10,000 for office space and administrative services[307] - The Sponsor has provided working capital loans to the company, with $662,000 outstanding as of December 31, 2022, which are convertible into warrants[309][411] - Holders of Founder Shares and Private Warrants are entitled to registration rights, allowing them to demand the company register their securities for resale after the business combination[305] Principal Accounting Fees and Services The company paid BDO USA, LLP $119,000 in audit fees for FY 2022 and $101,000 for the period from inception to December 31, 2021, with no other fees for audit-related, tax, or other services Fees Paid to BDO USA, LLP | Fee Type | FY 2022 ($) | Inception to Dec 31, 2021 ($) | | :--- | :--- | :--- | | Audit Fees | $119,000 | $101,000 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | PART IV Exhibits, Financial Statement Schedules This section presents the audited financial statements for 2022 and 2021, including the auditor's report with a going concern uncertainty, detailing the company's financial position, operations, and cash flows - The independent auditor's report includes a paragraph expressing substantial doubt about the Company's ability to continue as a going concern due to insufficient cash and working capital[324] Balance Sheet Summary (as of Dec 31, 2022) | Account | Amount ($) | | :--- | :--- | | Assets | | | Cash | $175,788 | | Investment held in trust account | $9,835,409 | | Total Assets | $10,011,197 | | Liabilities & Equity | | | Total Liabilities | $2,420,794 | | Ordinary shares subject to redemption | $9,735,409 | | Total Shareholders' Deficit | ($2,145,006) | | Total Liabilities & Equity | $10,011,197 | - The financial statements reflect a net loss of $776,129 for the year ended December 31, 2022, compared to a net income of $361,059 for the period from inception to December 31, 2021[335]