Financial Performance - The Company reported a net loss per share, with basic net loss calculated by dividing net loss by the weighted-average common stock outstanding during the period[52]. - The Company incurred total transaction costs of $7,728,681 related to the Merger, with $229,328 charged directly to equity and the remaining $7,499,353 classified as Merger transaction costs for the nine months ended September 30, 2024[58]. - The Merger resulted in the Company acquiring net liabilities of $(2,654,653), including accounts payable of $(96,175) and accrued expenses of $(1,269,126)[58]. - Stock-based compensation expense for the three months ended September 30, 2024, totaled $3,327,651, with $33,803,120 recognized for the nine months ended September 30, 2024[81]. - The Company has recognized $1,119,315 in compensation cost for Performance-Based RSUs for the three months ended September 30, 2024, with 3,532,446 shares issued and outstanding[78]. - As of September 30, 2024, there was $82,222,657 of unrecognized compensation cost related to Service-Based Restricted Stock and RSUs, to be expensed over an average of 9.0 years[78]. Capital Structure - The Company has 170,773,864 shares of common stock issued and outstanding as of September 30, 2024, with a total of 157,076,120 shares considered issued and outstanding for accounting purposes[82][83]. - The Company has authorized the issuance of up to 20,000,000 shares of preferred stock, with 2,500 shares of Series A Preferred Stock issued for gross proceeds of $2,000,000[85][86]. - The Series A Preferred Stock carries a cumulative dividend of 5% per annum, increasing by 2% each year it remains outstanding[87]. - The Company issued 600 shares of Series A-1 Preferred Stock for a gross purchase price of $6,000,000, with cumulative dividends capped at 15% per annum[94]. - The Series C Preferred Stock carries an annual 7.5% cumulative dividend, beginning on September 30, 2024, and ending on September 30, 2034[101]. - The Series C ranks subordinate to Series A and Series A-1 Preferred Stock and senior to common stock in liquidation priority[102]. - The Series A has an initial conversion price of $4.00 per share, subject to standard antidilution adjustments[93]. - The Company recorded the issuance of Series B shares at a fair value of $3,613,000, classified as permanent equity[95]. Debt and Financing - The Company entered into a Loan Agreement for an unsecured line of credit of up to $36,000,000, with $1,000,000 drawn as of September 30, 2024, leaving $33,000,000 available[66]. - The Company incurred $2,000,000 in fees to the Sponsor for advisory services, with $250,000 payable in cash and the remainder settled with shares of common stock[112]. - As of September 30, 2024, the Company had approximately $2.6 million remaining on its balance sheet related to Assumed Liabilities[96]. Fair Value Measurements - As of September 30, 2024, the fair value of the convertible promissory notes prior to the Merger was $0, with a balance of $94,932,000 at January 1, 2024, and a change in fair value of $(48,468,678)[44]. - The fair value of the Series A Preferred Stock was determined using a Monte Carlo Simulation, with key inputs including volatility between 75% to 85% and a risk-free interest rate between 4.3% and 5.3%[50]. - The Company’s embedded and freestanding purchase options were classified as liability-classified derivative instruments, measured at fair value, with changes recorded in the consolidated statements of operations[35]. - The fair value of private warrants decreased by $14,428 from the Closing Date to September 30, 2024, while the fair value of written call options decreased by $367,936 during the same period[48]. - The Company’s convertible promissory notes had an initial fair value of $39,297,000 at January 1, 2023, with a change in fair value of $49,122,865 by September 30, 2023[44]. Shareholder Equity and Options - The Company issued up to 24,500,000 Earnout Shares contingent on the stock price reaching specified thresholds of $15.00, $17.50, and $20.00 over a three-year period[61]. - The Company has a purchase option for the Lender to buy up to $14,000,000 of shares at 70% of the Trailing VWAP, exercisable once the Trailing VWAP reaches $10.00 per share[67]. - As of September 30, 2024, the Company had 17,249,978 public warrants outstanding, with an exercise price of $11.50 per share[107]. - As of September 30, 2024, the Company had 2,509,295 outstanding restricted stock units[120]. Operational Overview - The Company’s operations are managed in one segment, with no significant concentrations of credit risk identified in cash holdings[37][36]. - The Company adopted ASU 2020-06 effective January 1, 2024, which simplifies accounting for convertible instruments without impacting its consolidated financial statements[53]. - The Company repurchased all issued Series B Preferred Stock during the three months ended June 30, 2024, in exchange for the Sponsor being released from their obligation to repay $3,613,000 in assumed liabilities[60].
Semper Paratus Acquisition (LGST) - 2024 Q3 - Quarterly Report