Chain Bridge I(CBRG) - 2023 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Interim Financial Statements The company reported a $4.1 million net income for the nine months ended September 30, 2023, primarily from trust investments, but faces going concern doubts after significant share redemptions Condensed Balance Sheet Data (Unaudited) | Indicator | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash | $33,225 | $116,320 | | Investments held in Trust Account | $44,769,068 | $237,796,114 | | Total Assets | $44,878,760 | $238,234,726 | | Liabilities & Deficit | | | | Total current liabilities | $162,637 | $32,489 | | Convertible note - related party | $2,109,352 | $1,431,546 | | Derivative liabilities | $2,095,528 | $2,547,235 | | Total Liabilities | $4,634,937 | $4,278,690 | | Class A ordinary shares subject to possible redemption | $44,669,068 | $237,696,114 | | Total shareholders' deficit | $(4,425,245) | $(3,740,078) | Condensed Statements of Operations (Unaudited) | Indicator | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Loss from operations | $(1,203,668) | $(926,764) | | Change in fair value of derivative liabilities | $451,707 | $7,980,865 | | Income from investments held in Trust Account | $4,826,979 | $1,268,013 | | Net Income | $4,141,812 | $8,355,883 | Condensed Statements of Cash Flows (Unaudited, for Nine Months Ended Sep 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(827,695) | $(693,947) | | Net cash provided by investing activities | $197,854,025 | $0 | | Net cash used in financing activities | $(197,109,425) | $0 | | Net change in cash | $(83,095) | $(693,947) | - In May 2023, holders of 18,848,866 Class A ordinary shares exercised their redemption rights, resulting in a cash payment of approximately $197.9 million from the Trust Account[17] Note 1 — Description of Organization and Business Operations Chain Bridge I, a blank check company, raised $230 million in its 2021 IPO to pursue a business combination by January 15, 2024 - The company is a blank check company aiming to merge with a technology firm that supports U.S. national security and intelligence interests[10] - The company consummated its Initial Public Offering (IPO) of 23,000,000 units at $10.00 per unit on November 15, 2021, generating gross proceeds of $230.0 million[157] - The deadline to consummate an initial Business Combination was extended to January 15, 2024, with an option to further extend to February 15, 2024. If no combination is completed, the company will liquidate[161][17] Note 2 — Basis of Presentation and Summary of Significant Accounting Policies Financial statements prepared under U.S. GAAP indicate substantial doubt about the company's going concern ability due to liquidity and approaching liquidation - The company has determined that its liquidity condition and the mandatory liquidation date raise substantial doubt about its ability to continue as a going concern. No adjustments have been made to the financial statements for this uncertainty[27] - The company is an "emerging growth company" under the JOBS Act and has elected to use the extended transition period for new accounting standards, which may make its financial statements not directly comparable to other public companies[20][21] - Derivative financial instruments, including warrants and forward purchase securities, are recognized as liabilities at fair value and are re-measured each reporting period[38][178] - Class A ordinary shares subject to possible redemption are classified as temporary equity and measured at their redemption value at the end of each reporting period[40][180] Note 5 — Related Party Transactions Related party transactions include a $2.1 million convertible note, $2.24 million in working capital loans from the Sponsor, and monthly administrative fees - The Sponsor and its affiliate, CB Co-Investment, provided loans to the company. As of September 30, 2023, there was $2,244,600 outstanding under working capital loans (convertible notes)[52][171] - The company pays its Sponsor up to $30,000 per month for office space and administrative services. For the nine months ended September 30, 2023, expenses under this agreement totaled $270,000[53] Note 6 — Commitments and Contingencies The company has a $40 million Forward Purchase Agreement and Non-Redemption Agreements for 4,000,000 shares in exchange for founder shares - The company has a Forward Purchase Agreement with Franklin, which provides for the purchase of 4,000,000 Class A ordinary shares and 2,000,000 warrants for an aggregate price of $40.0 million, concurrent with the initial Business Combination[209] - The company entered into Non-Redemption Agreements where investors agreed not to redeem 4,000,000 Public Shares. In return, the Sponsor and CB Co-Investment agreed to transfer an aggregate of 1,000,000 founder shares, plus up to 500,000 additional shares depending on the timing of the business combination[18][58] Note 8 — Warrants As of September 30, 2023, 11.5 million Public Warrants and 10.55 million Private Placement Warrants were outstanding, exercisable at $11.50 per share, with redemption rights - As of September 30, 2023, there were 11,500,000 Public Warrants and 10,550,000 Private Placement Warrants outstanding[64] - Warrants have an exercise price of $11.50 per share and become exercisable 30 days after the completion of a Business Combination[66][216] - The company may redeem outstanding warrants for cash at $0.01 per warrant if the Class A ordinary share price equals or exceeds $18.00 for 20 of 30 trading days[67][74] - The company may also redeem warrants for shares on a cashless basis if the share price equals or exceeds $10.00 for 20 of 30 trading days[67] Note 9 — Fair Value Measurements The company measures financial instruments using a three-tier fair value hierarchy, classifying assets and liabilities across Level 1, Level 2, and Level 3 based on valuation inputs Fair Value of Financial Instruments as of September 30, 2023 (Unaudited) | Description | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | | Assets | | | | | Investments held in Trust Account | $44,769,068 | — | — | | Liabilities | | | | | Convertible note - related party | — | — | $2,109,352 | | Derivative liabilities - Public Warrants | $920,000 | — | — | | Derivative liabilities - Private Placement Warrants | — | $844,000 | — | | Derivative liabilities - Forward Purchase Agreement | — | — | $331,528 | Note 10 — Subsequent Events Post-reporting, the company extended its business deadline to January 15, 2024, entered a Securities Purchase Agreement for a change of control, and transferred its listing to the Nasdaq Capital Market - On December 8, 2023, the company entered into a Securities Purchase Agreement with Fulton AC I LLC, which will acquire a controlling stake from the Sponsor, leading to a change in management and the board of directors[87][233] - The company extended its business operations deadline to January 15, 2024, after initially indicating it would liquidate by November 15, 2023[231] - Effective December 4, 2023, the company's securities were transferred from the Nasdaq Global Market to the Nasdaq Capital Market[232][18] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations As a pre-business combination SPAC, the company reported a $4.1 million net income for the nine months ended September 30, 2023, primarily from trust investments, but faces liquidity constraints and substantial doubt about its going concern ability - The company is a blank check company that has not yet commenced operations and will not generate operating revenue until a Business Combination is completed[91][237] - The company has determined there is substantial doubt about its ability to continue as a going concern due to its liquidity condition and the mandatory liquidation date of January 15, 2024 (extendable to February 15, 2024)[94][242] Results of Operations Summary | Period | Net Income / (Loss) | Key Drivers | | :--- | :--- | :--- | | 3 Months Ended Sep 30, 2023 | $(472,000) | Loss from change in fair value of derivative liabilities, G&A expenses. | | 9 Months Ended Sep 30, 2023 | $4.1 million | Income from investments in Trust Account, gain from change in fair value of derivatives. | | 3 Months Ended Sep 30, 2022 | $2.7 million | Gain from change in fair value of derivative liabilities, investment income. | | 9 Months Ended Sep 30, 2022 | $8.4 million | Gain from change in fair value of derivative liabilities, investment income. | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not required for smaller reporting companies, and therefore no disclosures are provided - Disclosure is not required for smaller reporting companies[111][260] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting - Based on an evaluation as of September 30, 2023, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[112] - Management concluded that the company's internal control over financial reporting was effective as of September 30, 2023[113] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings - There are no legal proceedings to report[121] Item 1A. Risk Factors No new risk factors are reported in this Form 10-Q, referring to those detailed in the Annual Report on Form 10-K - The report refers to the risk factors described in the Annual Report on Form 10-K filed with the SEC on March 17, 2023[115][263] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None reported[122] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None reported[116] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including officer certifications and XBRL interactive data files - Exhibits filed include Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Act Sections 302 and 906[118] - XBRL Instance Document and related taxonomy files are also included as exhibits[118]