Part I - Business and Risk Factors Business Overview Chain Bridge I, a Cayman Islands SPAC, is under new sponsorship, seeking a business combination by November 15, 2024 - The company is a Special Purpose Acquisition Company (SPAC) formed to effect a merger, share exchange, or similar business combination318 - On December 29, 2023, Fulton AC I LLC acquired a controlling interest from the original sponsors, Chain Bridge Group (CBG) and CB Co-Investment, resulting in a new management team and board34657817 - The deadline to consummate an initial business combination was extended to November 15, 2024. If a deal is not completed by then, the company will liquidate and redeem public shares1501205 Financial Snapshot | Financial Snapshot | Amount | | :--- | :--- | | IPO Gross Proceeds (Nov 2021) | $230 million | | Trust Account Balance (Mar 26, 2024) | ~$11.18 million | | Redemption Price Per Share (Approx.) | ~$11.00 | Business Combination Strategy and Criteria The company seeks to merge with a growth-oriented, market-leading business, prioritizing scalability and competitive advantages - The company's search for a target spans high-growth sectors including technology, software, biotechnology, and digital assets, as well as traditional sectors like industrials, business services, and healthcare services59 - Key criteria for a target business include: * Leadership in its sector with a proven track record * A scalable business model with strong unit economics * Readiness to become a listed company * Strong competitive dynamics and barriers to entry748666 Initial Business Combination Process The company must complete a business combination valued at 80% of trust assets by November 15, 2024, or liquidate - Nasdaq rules require the initial business combination to have an aggregate fair market value of at least 80% of the net assets held in the trust account77 - Public shareholders have the right to redeem their shares for a pro rata portion of the trust account upon completion of the business combination. The redemption mechanism will be either a shareholder vote or a tender offer, at the company's discretion6769 - To exercise redemption rights, shareholders must tender their shares electronically or physically to the transfer agent up to two business days prior to the scheduled vote62 - If no business combination is consummated by November 15, 2024, the company will cease operations and redeem all public shares150 Corporate Status Chain Bridge I is a Cayman Islands exempted company, qualifying as an "emerging growth company" with reduced disclosure obligations - The company is an "emerging growth company" and a "smaller reporting company," which allows for reduced reporting requirements, such as exemptions from auditor attestation on internal controls and certain executive compensation disclosures100102170 - As a Cayman Islands exempted company, it has received a 20-year tax exemption undertaking from the Cayman Islands government on profits, income, and gains89153 Risk Factors The company faces substantial risks, including potential failure to complete a business combination by November 15, 2024, and conflicts of interest Risks Related to Business and Financial Position As a SPAC with no operating history, the company faces challenges in completing a combination by November 15, 2024, and relies on sponsor loans - As a company with no operating history, there is no basis for investors to evaluate its ability to achieve its business objective190134 - The requirement to consummate a business combination by November 15, 2024, may give potential partners leverage in negotiations and limit due diligence time199314 - The company depends on loans from its sponsor, Fulton AC, to fund its search and operations, as funds outside the trust account are insufficient to operate until the deadline25331 - There is a risk of Nasdaq delisting the company's securities if listing standards, such as completing a business combination within 36 months of the IPO, are not met237243 Risks Related to the Business Combination Public shareholder redemptions, sponsor control, and intense competition pose significant risks to completing a business combination - The ability of public shareholders to redeem a large number of shares may make the company's financial condition unattractive to potential partners or prevent the completion of a business combination19516 - The sponsor (Fulton AC) and insiders have agreed to vote their shares in favor of an initial business combination, which constitutes 83.84% of the outstanding ordinary shares, ensuring the requisite shareholder approval will be met182183 - A public shareholder, along with affiliates, is restricted from redeeming more than 15% of the shares sold in the IPO without the company's consent249317 - Intense competition from other blank check companies and private investors for acquisition targets may make it more difficult and costly to complete a business combination214252 Risks Related to Management and Conflicts of Interest Management and sponsor conflicts of interest, driven by financial incentives, may influence business combination decisions - Executive officers and directors are not required to commit their full time to the company's affairs, which may create conflicts in allocating their time365383 - The sponsor, Fulton AC, will lose its entire investment if a business combination is not completed, creating a conflict of interest in selecting a suitable partner and completing a transaction401827 - The company may engage in a business combination with a partner that is affiliated with the sponsor or management. In such a case, an independent fairness opinion would be obtained36882 - Management's personal and financial interests may influence their motivation in selecting a partner and determining the timing and terms of a business combination385 Other Part I Items The company reports no unresolved SEC comments, no material litigation, and no formal cybersecurity program as a non-operating SPAC - There are no unresolved staff comments489 - The company does not have a formal cybersecurity risk management program as it is a SPAC with no business operations481 - There is no material litigation, arbitration, or governmental proceeding currently pending against the company172497 Part II - Financial Information Market for Registrant's Common Equity and Related Matters The company's units and Class A shares trade on Nasdaq, warrants were delisted, and no cash dividends are planned - The company's units (CBRGU) and Class A shares (CBRG) trade on the Nasdaq Capital Market. The warrants were delisted from the Nasdaq Global Market on September 8, 2023490 - No cash dividends have been paid to date, and none are intended to be paid prior to the completion of an initial business combination500 - As of March 26, 2024, there were 3 holders of record of Class A ordinary shares and 6 holders of record of Class B ordinary shares499 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) The company reported $7.6 million net income in 2023, has a working capital deficit, and faces going concern doubt Metric | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Income | ~$7.6 million | ~$10.7 million | | Source: Change in fair value of derivative liabilities | ~$2.1 million | ~$9.0 million | | Source: Investment income on Trust Account | ~$5.4 million | ~$3.2 million | Liquidity (as of Dec 31, 2023) | Liquidity (as of Dec 31, 2023) | Amount | | :--- | :--- | | Cash | $3,898 | | Working Capital Deficit | $(61,449) | - Management has determined that there is substantial doubt about the company's ability to continue as a going concern due to the mandatory liquidation date of November 15, 2024528849 - The company qualifies as an "emerging growth company" and has elected to use the extended transition period for complying with new or revised accounting standards543532 Controls and Procedures Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2023547 - Based on the COSO framework, management concluded that internal control over financial reporting was effective as of December 31, 2023536695 - No changes to internal control over financial reporting occurred during the fiscal quarter ended December 31, 2023, that materially affected, or are reasonably likely to materially affect, internal controls550 Part III - Corporate Governance and Ownership Directors, Executive Officers and Corporate Governance A new management team and board were appointed in December 2023, with independent directors and acknowledged conflicts of interest - A new management team was appointed in December 2023. Key figures include Andrew Cohen (CEO), Roger Lazarus (CFO), and Daniel Wainstein (Chairman)566554567 - The Board has determined that a majority of its directors (Messrs. Wainstein, Silberman, Baron, and Wiener) are independent under Nasdaq rules577 - The Board has three standing committees: an Audit Committee, a Nominating Committee, and a Compensation Committee, each with an approved charter586580 - The company acknowledges potential conflicts of interest, as officers and directors have other business obligations and may sponsor other SPACs. The sponsor's investment is at risk if a business combination is not completed602603 Executive Compensation Executive officers and directors have received no cash compensation, while the sponsor is reimbursed for administrative services - No executive officers or directors have received cash compensation for services rendered to the company611 - The company reimburses its sponsor, Fulton AC, up to $30,000 per month for office space, secretarial, and administrative services611671 - After a business combination, directors or team members who remain may be paid consulting or management fees, but no agreements are currently in place623 Security Ownership Fulton AC I LLC acquired a controlling stake on December 29, 2023, becoming the largest beneficial owner with substantial voting influence - A change of control occurred on December 29, 2023, when Fulton AC acquired 3,035,000 Class B Shares and warrants from the original sponsors657658 Beneficial Owner (as of Mar 26, 2024) | Beneficial Owner (as of Mar 26, 2024) | Class B Ownership | Total Voting Power | | :--- | :--- | :--- | | Fulton AC I LLC | 95.86% | 44.92% | | Chain Bridge Group | 0% | 29.72% (Class A) | | All officers and directors as a group | 97.32% | 45.60% | Certain Relationships and Related Transactions Key related party transactions include Fulton AC's acquisition of control, a new working capital loan, and monthly administrative fees - On December 29, 2023, Fulton AC acquired control and assumed the sponsor's indemnification obligations under an Amended Letter Agreement664807 - Fulton AC has agreed to loan the company up to $1.5 million via an unsecured, non-interest bearing convertible promissory note for working capital140648922 - The company pays Fulton AC up to $30,000 per month for office space and administrative support services671925 - The Forward Purchase Agreement with Franklin, which provided for a $40 million investment upon business combination, was terminated on December 29, 2023665819930 Principal Accountant Fees and Services Frank, Rimerman + Co. LLP served as auditor, with audit fees of $149,873 in 2023, and all services are pre-approved Fees Paid to Frank, Rimerman + Co. LLP | Fees Paid to Frank, Rimerman + Co. LLP | 2023 | 2022 | | :--- | :--- | :--- | | Audit Fees | $149,873 | $165,840 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | - The audit committee pre-approves all auditing services and permitted non-audit services to be performed by the auditors327 Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm The auditor issued an unqualified opinion with an "Emphasis of Matter" paragraph highlighting going concern doubt due to the liquidation deadline - The auditor issued an unqualified opinion on the financial statements, stating they present fairly, in all material respects, the financial position of the company799 - The report contains an "Emphasis of Matter" paragraph regarding the company's requirement to complete a business combination by November 15, 2024, to avoid liquidation803 Financial Statements The financial statements show $45.36 million in trust, a $(79,774) shareholders' deficit, and $7.6 million net income as of December 31, 2023 Balance Sheet Highlights (as of December 31, 2023) | Account | Amount | | :--- | :--- | | Total Assets | $45,363,280 | | Investments held in Trust Account | $45,356,234 | | Total Liabilities | $186,820 | | Class A ordinary shares subject to possible redemption | $45,256,234 | | Total Shareholders' Deficit | $(79,774) | Statement of Operations Highlights (Year Ended Dec 31, 2023) | Account | Amount | | :--- | :--- | | Loss from operations | $(1,319,471) | | Other income (net) | $8,943,428 | | Net income | $7,623,957 | | Basic and diluted net income per share | $0.45 | Notes to Financial Statements The notes detail key events including share redemptions, the December 2023 change of control to Fulton AC, and related party loan terms - In May 2023, shareholders approved extending the business combination deadline, and in connection, holders of 18.85 million Class A shares redeemed them for approximately $197.9 million from the trust account781880 - On December 29, 2023, Fulton AC acquired control, all existing debt from the prior sponsor was terminated or converted, and a new up to $1.5 million convertible note facility was established with Fulton AC817820835 - The company accounts for its public and private warrants as derivative liabilities, which are re-measured to fair value at each reporting period. The fair value of public warrants is based on market price, while private warrants are valued based on the public warrant price867966 - Subsequent to year-end, in February 2024, shareholders approved a further extension of the combination deadline to November 15, 2024. In connection with this, 3.14 million shares were redeemed for approximately $34.5 million957771
Chain Bridge I(CBRG) - 2023 Q4 - Annual Report