Semper Paratus Acquisition (LGST) - 2023 Q2 - Quarterly Report

Financial Information Financial Statements The unaudited condensed consolidated financial statements for the period ended June 30, 2023, show Semper Paratus Acquisition Corporation as a pre-business combination SPAC, with significant share redemptions reducing Trust Account assets from $356.9 million to $25.7 million, leading to a working capital deficit and going concern risk due to the December 15, 2023, deadline to complete a merger agreement with Tevogen Bio Inc Condensed Consolidated Balance Sheets As of June 30, 2023, total assets were $26.4 million, a sharp decrease from $357.1 million at year-end 2022, primarily due to a reduction in cash and marketable securities held in the Trust Account from $356.9 million to $25.7 million following significant shareholder redemptions, resulting in a working capital deficit of $821,285 and a total shareholders' deficit of $15.6 million | | June 30, 2023 (Unaudited, USD) | December 31, 2022 (USD) | | :--- | :--- | :--- | | Assets | | | | Cash | $556,010 | $129,186 | | Cash and marketable securities held in Trust Account | $25,675,938 | $356,864,000 | | Total Assets | $26,375,265 | $357,138,356 | | Liabilities & Shareholders' Deficit | | | | Total current liabilities | $1,520,612 | $350,454 | | Total liabilities | $16,249,612 | $15,057,704 | | Class A ordinary shares subject to possible redemption | $25,675,938 | $356,864,000 | | Total shareholders' deficit | ($15,550,285) | ($14,783,348) | | Total Liabilities, Redeemable Shares and Shareholders' Deficit | $26,375,265 | $357,138,356 | Condensed Consolidated Statements of Operations For the six months ended June 30, 2023, the company reported a net income of $1.04 million, compared to $181,010 for the same period in 2022, primarily driven by a $2.08 million unrealized gain on investments held in the Trust Account, which offset $1.02 million in general and administrative expenses, while the three months ended June 30, 2023, resulted in a net loss of $195,056 | | Three Months Ended June 30, 2023 (USD) | Six Months Ended June 30, 2023 (USD) | | :--- | :--- | :--- | | General and administrative expenses | $526,580 | $1,020,492 | | Unrealized gain on investments held in Trust Account | $302,524 | $2,082,586 | | Change in fair value of warrants | $29,000 | ($21,750) | | Net (Loss) Income | ($195,056) | $1,040,344 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2023, net cash used in operating activities was $474,176, with a significant cash inflow of $333.3 million from investing activities due to withdrawing cash from the Trust Account for redemptions, almost entirely offset by a cash outflow of $332.4 million for financing activities due to the redemption of ordinary shares, ending the period with $556,010 in cash | | For the Six Months Ended June 30, 2023 (USD) | | :--- | :--- | | Net cash used in operating activities | ($474,176) | | Net cash flows provided by investing activities | $333,270,649 | | Net cash flows used in financing activities | ($332,369,649) | | Net Change in Cash | $426,824 | | Cash, End of Period | $556,010 | Notes to Condensed Consolidated Financial Statements The notes detail the company's status as a SPAC with a business combination deadline of December 15, 2023, highlighting a charter amendment that led to redemptions of approximately 32.1 million shares and reduced the Trust Account to approximately $25 million, the acquisition of controlling stake by SSVK Associates, LLC in May 2023, and the merger agreement with Tevogen Bio signed on June 28, 2023, which raises substantial doubt about the company's going concern if not completed - On June 28, 2023, the Company entered into a merger agreement with Tevogen Bio Inc. The transaction values Tevogen Bio at $1.2 billion, with Tevogen Bio shareholders eligible for an additional 20 million earnout shares based on future stock performance[45][47] - In February 2023, shareholders approved extending the business combination deadline to December 15, 2023. In connection, shareholders redeemed 32,116,947 shares, causing approximately $332 million to be removed from the Trust Account, leaving a balance of about $25 million[37] - Management has determined that the mandatory liquidation if a business combination is not completed by December 15, 2023, raises substantial doubt about the Company's ability to continue as a going concern[56] - On May 4, 2023, SSVK Associates, LLC (the "Sponsor") entered an agreement to purchase a controlling stake from the original sponsor, including 7,988,889 Class A ordinary shares and 1,000,000 private placement units, for $1.00, payable upon the initial business combination[26][87] Management's Discussion and Analysis (MD&A) The MD&A section outlines the company's status as a SPAC, its financial condition, and results of operations, detailing the proposed business combination with Tevogen Bio announced on June 28, 2023, characterized by non-operating income from its Trust Account, with a key focus on liquidity, a working capital deficit, reliance on sponsor loans to fund operations until a business combination is completed, and a December 15, 2023, deadline for completing a transaction, after which the company will be forced to liquidate Overview and Proposed Business Combination The company is a SPAC formed to effect a business combination, with shareholders approving an extension of the combination deadline to December 15, 2023, in February 2023, leading to redemptions that reduced the Trust Account to approximately $25 million, and on June 28, 2023, the company entered into a definitive merger agreement with Tevogen Bio, involving a share exchange valuing Tevogen Bio at $1.2 billion, with additional earnout shares contingent on post-merger stock performance - On February 3, 2023, shareholders approved extending the business combination deadline to December 15, 2023. This led to the redemption of approximately 32.1 million shares, with approximately $332 million removed from the Trust Account, leaving approximately $25 million[137] - The company entered into a merger agreement with Tevogen Bio on June 28, 2023. Tevogen Bio shareholders will receive shares equivalent to a $1.2 billion valuation, plus up to 20 million earnout shares[138][140] Results of Operations The company has not generated any operating revenue, reporting a net income of $1,040,344 for the six months ended June 30, 2023, primarily from a $2,082,586 unrealized gain on investments in the Trust Account, which more than offset $1,020,492 in general and administrative expenses, compared to a net income of $181,010 for the same period in 2022 | Period | Net (Loss) Income (USD) | Key Drivers | | :--- | :--- | :--- | | Three Months Ended June 30, 2023 | ($195,056) | $526,580 G&A expense, offset by $302,524 unrealized gain on trust investments | | Six Months Ended June 30, 2023 | $1,040,344 | $1,020,492 G&A expense, offset by $2,082,586 unrealized gain on trust investments | | Three Months Ended June 30, 2022 | $206,998 | $258,585 G&A expense, offset by $327,833 unrealized gain and $137,750 warrant value change | | Six Months Ended June 30, 2022 | $181,010 | $541,464 G&A expense, offset by $468,724 unrealized gain and $253,750 warrant value change | Liquidity and Capital Resources As of June 30, 2023, the company had $556,010 in cash and a working capital deficit of $821,285, with operations funded by Working Capital Loans from its Sponsor, as the company will not access the Trust Account until a business combination is complete, and management has expressed substantial doubt about the company's ability to continue as a going concern if a business combination is not consummated by the December 15, 2023, deadline - The company has a working capital deficit and relies on Working Capital Loans from its Sponsor or affiliates to finance transaction costs and operational expenses[53][54][149] - If a Business Combination is not completed by December 15, 2023, the company will be forced to cease operations and liquidate, which raises substantial doubt about its ability to continue as a going concern[56][136] Quantitative and Qualitative Disclosures about Market Risk The company states that it is not subject to any material market or interest rate risk, as funds held in the Trust Account are invested in short-term U.S. government treasury bills with maturities of 180 days or less or in money market funds, which minimizes exposure to interest rate fluctuations - The company's funds held in the Trust Account are invested in short-term U.S. government treasury obligations, leading to the belief that there is no material exposure to interest rate risk[167] Controls and Procedures As of June 30, 2023, the company's management, including the CEO and CFO, conducted an evaluation of its disclosure controls and procedures, concluding that these controls were effective, with no material changes in the company's internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[170] - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[171] Other Information Legal Proceedings The company reports that, to the knowledge of its management, there is no current or contemplated litigation against the company, its officers, or directors - There is no litigation currently pending or contemplated against the company or its officers and directors[174] Risk Factors This section highlights key risks facing the company, primarily the uncertainty surrounding the consummation of the announced business combination with Tevogen Bio, especially given the December 15, 2023, liquidation deadline, along with potential adverse effects from Proposed SEC rules targeting SPACs (the "2022 Proposed Rules") and the risk of being classified as an "investment company" under the Investment Company Act, which would impose restrictive and burdensome compliance requirements - There is no assurance that the proposed business combination with Tevogen Bio will be consummated. The company has until December 15, 2023, to complete a transaction or it will be forced to liquidate[176][179] - Proposed SEC rules from March 2022 regarding SPACs could adversely affect the company's ability to complete its business combination and may increase associated costs and time[182] - There is a risk of being deemed an investment company under the Investment Company Act, which would restrict activities and impose burdensome compliance requirements, potentially hindering the completion of a business combination[183][188] Other Information (Items 2, 3, 4, 5) The company reported no unregistered sales of equity securities, no defaults upon senior securities, no applicable mine safety disclosures, and no other information required to be disclosed under Item 5 for the reporting period - The company reported "None" for Unregistered Sales of Equity Securities and Use of Proceeds, Defaults Upon Senior Securities, and Other Information. Mine Safety Disclosures were "Not applicable"[189][190][191][192] Exhibits This section lists the Exhibits filed with the Form 10-Q, including the Business Combination Agreement with Tevogen Bio, a Purchase Agreement detailing the change in sponsorship, Subscription Agreements related to financing, a Fee Reduction Agreement with the underwriter, and officer certifications - Key exhibits filed with the report include the Business Combination Agreement with Tevogen Bio, the Purchase Agreement with the new sponsor, and a Fee Reduction Agreement with Cantor Fitzgerald & Co[195]