Chain Bridge I(CBRG) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Interim Financial Statements Chain Bridge I, a pre-business combination SPAC, reported a net income of approximately $8.4 million for the nine months ended September 30, 2022, primarily from derivative fair value gains and trust account income Note 1 — Description of Organization and Business Operations Chain Bridge I, a blank check company, completed its $230 million IPO in November 2021 and seeks a U.S. national security-focused technology business combination by May 2023 - The company is a blank check company targeting a technology firm that will advance U.S. national security and intelligence interests[22] - On November 15, 2021, the company completed its IPO, generating gross proceeds of $230.0 million. Net proceeds of $234.6 million were placed in a Trust Account[24][27] - The company must complete a Business Combination by May 15, 2023 (18 months from IPO), with an option to extend up to 24 months if the Sponsor deposits additional funds into the Trust Account[33][36] Note 5 — Related Party Transactions The company engages in related party transactions with its Sponsor and CB Co-Investment, including founder share issuance, a convertible note, and administrative service fees - The Sponsor and CB Co-Investment initially acquired 8,625,000 Class B Founder Shares for an aggregate of $25,000[75] - Upon the IPO closing, CB Co-Investment loaned the company approximately $1.2 million via a non-interest bearing, unsecured convertible promissory note, which can be converted into warrants at $1.00 per warrant[80] - The company pays its Sponsor for administrative services, initially $20,000 per month, amended in July 2022 to an amount not to exceed $30,000 per month[85][87] Note 6 — Commitments and Contingencies Key commitments include an $8.1 million marketing fee payable upon business combination and a $40 million forward purchase agreement with Franklin Growth Opportunities Fund - A Marketing Fee of approximately $8.1 million (3.5% of gross IPO proceeds) is payable to an underwriter upon the consummation of the initial Business Combination[92] - Franklin Growth Opportunities Fund has committed to purchase 4,000,000 Class A ordinary shares and 2,000,000 redeemable warrants for an aggregate price of $40.0 million in a private placement concurrent with the business combination[93] Note 9 —Fair Value Measurements Financial instruments are measured at fair value, with Trust Account investments as Level 1 assets and various derivative liabilities across Level 1, 2, and 3 Fair Value of Financial Instruments (Sep 30, 2022) | Instrument | Fair Value (USD) | Hierarchy Level | | :--- | :--- | :--- | | Investments held in Trust Account | $235,886,696 | Level 1 | | Convertible note - related party | $1,019,787 | Level 3 | | Derivative liabilities - Public Warrants | $1,610,000 | Level 1 | | Derivative liabilities - Private Placement Warrants | $1,477,000 | Level 2 | | Derivative liabilities - Forward Purchase Agreement | $433,115 | Level 3 | - The fair value of Private Placement Warrants was transferred from Level 3 to Level 2 in January 2022, as their value is considered equivalent to the publicly traded Public Warrants[116] Condensed Balance Sheet Data (Unaudited) | Assets & Liabilities | Sep 30, 2022 (USD) | Dec 31, 2021 (USD) | | :--- | :--- | :--- | | Total Assets | $236,487,099 | $236,185,808 | | Cash | $46,692 | $740,639 | | Investments held in Trust Account | $235,887,011 | $234,618,998 | | Total Liabilities | $4,883,670 | $12,938,262 | | Derivative liabilities | $3,520,115 | $11,500,980 | | Class A ordinary shares subject to possible redemption | $235,787,011 | $234,600,000 | | Total shareholders' deficit | ($4,183,582) | ($11,352,454) | Condensed Statements of Operations (Unaudited) | Metric | Three Months Ended Sep 30, 2022 (USD) | Nine Months Ended Sep 30, 2022 (USD) | | :--- | :--- | :--- | | Loss from operations | ($254,816) | ($926,764) | | Change in fair value of derivative liabilities | $2,102,884 | $7,980,865 | | Income from investments held in Trust Account | $903,549 | $1,268,013 | | Net income | $2,743,638 | $8,355,883 | | Basic and diluted net income per share, Class A | $0.10 | $0.29 | Condensed Statements of Cash Flows (Unaudited) | Cash Flow Activity | Nine Months Ended Sep 30, 2022 (USD) | | :--- | :--- | | Net cash used in operating activities | ($693,947) | | Net cash provided by financing activities | $0 | | Net change in cash | ($693,947) | | Cash at beginning of period | $740,639 | | Cash at end of period | $46,692 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations As a blank check company, Chain Bridge I reported net income of $8.4 million for the nine months ended September 30, 2022, driven by non-operating gains - The company is a blank check company incorporated to effect a business combination, with an intended focus on technology companies advancing U.S. national security[126] Results of Operations Highlights | Period | Net Income / (Loss) (USD) | Key Drivers | | :--- | :--- | :--- | | Q3 2022 | $2.7M | $2.1M gain on derivative liabilities, $0.9M trust income | | Q3 2021 | ($37k) | General & administrative expenses | | Nine Months 2022 | $8.4M | $8.0M gain on derivative liabilities, $1.3M trust income | | Nine Months 2021 | ($69k) | General & administrative expenses | - As of September 30, 2022, the company had approximately $47,000 in cash and $524,000 in working capital, deemed sufficient by management for near-term needs[133][135] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Chain Bridge I is exempt from providing quantitative and qualitative market risk disclosures - As a smaller reporting company defined by Rule 12b-2 of the Exchange Act, the company is not required to provide quantitative and qualitative disclosures about market risk[156] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal controls - Based on an evaluation as of September 30, 2022, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[158] - Management assessed internal control over financial reporting as effective as of September 30, 2022, and no material changes were identified during the fiscal quarter[159] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings - None[160] Item 1A. Risk Factors Proposed SEC rules pose a risk of investment company classification, potentially leading to liquidation of trust assets into cash and reduced interest income - Due to proposed SEC rules (the "SPAC Rule Proposals"), the company faces a risk of being classified as an investment company under the Investment Company Act of 1940[162] - To mitigate this risk, the company may instruct the trustee to liquidate the U.S. government securities in the trust account and hold cash, which would significantly reduce or eliminate interest income[163][165] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities The company reported no unregistered sales of equity securities or use of proceeds from registered securities - None[166] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[167] Item 4. Mine Safety Disclosures The company reported no mine safety disclosures - None[168] Item 5. Other Information The company reported no other information - None[169] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including officer certifications and XBRL data files - The exhibits include officer certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and XBRL interactive data files (Exhibits 101 series)[171]