RCF Acquisition (RCFA) - 2022 Q4 - Annual Report

Cautionary Note Regarding Forward-Looking Statements This section warns readers about the inherent uncertainties and risks associated with forward-looking statements in the report Summary of Risk Factors Investment in the company's securities involves high risk due to its blank check nature, lack of operating history, and potential inability to complete a business combination - The company is a blank check company with no operating history or revenues, posing a high degree of risk for investors[18] - Public shareholders may not have a vote on the initial business combination, or their redemption rights may be limited, potentially making the company unattractive to targets or reducing capital[18] - Failure to complete an initial business combination within 18 months would lead to liquidation, with warrants expiring worthless[18] Part I This section covers the company's business overview, risk factors, and other statutory disclosures Business Overview RCF Acquisition Corp. is a blank check company formed in June 2021, raising $230 million in its IPO, targeting businesses in the critical minerals value chain - RCF Acquisition Corp. was incorporated on June 9, 2021, as a blank check company to effect a business combination[22] Initial Public Offering and Private Placement Details | Event | Date | Units/Warrants | Price per Unit/Warrant | Gross Proceeds | Funds in Trust Account | | :-------------------- | :----------- | :--------------- | :--------------------- | :------------- | :----------------- | | Public Offering | Nov 15, 2021 | 23,000,000 Units | $10.00 per Unit | $230,000,000 | $234,600,000 | | Private Placement | Nov 15, 2021 | 11,700,000 Warrants | $1.00 per Warrant | $11,700,000 | | | Trust Account Balance | Dec 31, 2022 | | | | $238,041,214 | - The company intends to focus its search for an initial business combination on businesses of scale across the critical minerals value chain[30] Effecting Our Initial Business Combination The company targets critical minerals businesses, using Trust Account funds, with a May 15, 2023 deadline and limited shareholder redemption rights - The company will use cash from the Trust Account, equity, debt, or a combination for its initial business combination, focusing on businesses in the critical minerals value chain[28][30] - NYSE rules require the target business's fair market value to be at least 80% of the net assets in the Trust Account[31] - Public shareholders have redemption rights upon completion of a business combination, but these are limited to 15% of shares sold in the Public Offering if shareholder approval is sought without a tender offer[35][42] - The company must complete its initial business combination by May 15, 2023; otherwise, it will cease operations, redeem public shares, and liquidate, with warrants expiring worthless[43] Employees The company has two non-full-time officers; CEO Sunny S. Shah's employment agreement provides an annual salary of $50,000 and terminates by May 15, 2023 - The company has two officers, Sunny S. Shah (CEO) and Thomas Boehlert (CFO), and no full-time employees prior to a business combination[46] - CEO Sunny S. Shah's employment agreement, effective September 1, 2022, includes an annual salary of $50,000 and terminates by May 15, 2023, or upon business combination closing[47] CEO Compensation (as of Dec 31, 2022) | Officer | Compensation | | :------ | :----------- | | Sunny S. Shah | $16,667 | Risk Factors This section details significant risks, including the company's blank check status, inability to complete a business combination, and impact of external factors, shareholder rights, and competition - The company is a blank check company with no operating history or revenues, making it difficult to evaluate its ability to achieve its business objective[51] - Shareholders may not have an opportunity to vote on the initial business combination, and even if they do, initial shareholders' votes may ensure approval despite public shareholder dissent[52][55] - The ability of public shareholders to redeem shares for cash may make the company's financial condition unattractive to potential targets, potentially hindering business combination completion[56] - The COVID-19 pandemic and market conditions could materially adversely affect the search for and consummation of a business combination[60][61] - Failure to complete a business combination within 18 months (by May 15, 2023) will result in liquidation, with public shareholders receiving approximately $10.20 per share and warrants expiring worthless[65][66] Risks Related to Business Combination Search and Consummation Risks include the company's blank check nature, limited shareholder voting, redemption rights, intense competition, limited timeframe, and financial challenges like insufficient working capital - The company's blank check nature means no operating history or revenues, making it difficult to evaluate its ability to achieve its business objective[51] - Public shareholders may have limited or no voting rights on the proposed business combination, and initial shareholders' votes can sway the outcome[52][55] - High redemption rates by public shareholders could make the company's financial condition unattractive to potential targets or limit capital for the business combination[56][58] - The company faces significant competition from other SPACs and investors for attractive target businesses, potentially increasing acquisition costs or making it harder to find a suitable target[76][77][78] - Insufficient funds outside the Trust Account may limit the search for a target, requiring dependence on loans from the Sponsor, which are not guaranteed[80][81] - Changes in D&O liability insurance market (increased cost, decreased availability) could complicate and increase the expense of negotiating and completing a business combination[82][83][84] - Third-party claims against the company could reduce funds in the Trust Account, potentially leading to a per-share redemption amount less than $10.20[85][86][88] - The company's financial condition, with a working capital deficit of $331,676 as of December 31, 2022, raises substantial doubt about its ability to continue as a going concern[90] - Negative interest rates on Trust Account investments could reduce the per-share redemption amount below $10.20[91] - If the company is deemed an investment company under the Investment Company Act, it may be forced to liquidate, and holding funds in cash to mitigate this risk would result in minimal interest earnings[95][97][100] Risks Related to Foreign Acquisitions and Operations Acquiring and operating a foreign business introduces risks like cross-border complexities, currency fluctuations, and political instability, adversely affecting results - Pursuing a target company with operations outside the U.S. introduces risks such as cross-border transaction complexities, foreign regulatory approvals, and exchange rate fluctuations[155][156] - Operating in an international setting subjects the company to various risks, including managing cross-border operations, currency redemption rules, complex corporate taxes, and geopolitical instability[157] - Post-combination, if assets and revenue are primarily foreign, the company's results will be significantly subject to the economic, political, and legal conditions of that country[158] - Exchange rate fluctuations and currency policies in non-U.S. target regions could diminish a target business's success and adversely affect the company's financial condition[159] Risks Related to Management Team Management risks include lack of SPAC experience, conflicts of interest, personal financial interests influencing decisions, and potential loss of key personnel - None of the Sponsor, officers, or directors have prior experience with blank check companies, which could adversely affect the ability to consummate a business combination[161] - Officers and directors allocate time to other businesses, creating conflicts of interest that could negatively impact the ability to complete a business combination[166] - Personal and financial interests of directors and officers, particularly their Founder Shares and Private Placement Warrants, may influence their motivation in selecting a target business, potentially leading to a riskier acquisition[171][174][175] - The company may seek business combination opportunities outside management's expertise, potentially leading to inadequate risk assessment[165] - The loss of key personnel, either current or from the target business, could negatively impact the operations and profitability of the post-combination business[132][133][134] Risks Related to Securities Risks to securities include limited rights to Trust Account funds, potential NYSE delisting, warrant terms, future share dilution, and initial shareholder voting influence - Public shareholders have rights to Trust Account funds only under limited circumstances (business combination completion, certain charter amendments, or liquidation), forcing them to sell shares/warrants to liquidate investment, potentially at a loss[178] - NYSE delisting could limit investors' ability to transact in securities, reduce liquidity, and subject the company to additional trading restrictions[179][180] - The warrant agreement allows amendments with 50% public warrant holder approval, potentially adverse to holders (e.g., increased exercise price, shortened exercise period)[188][189] - Issuance of additional Class A ordinary shares or preferred shares for a business combination or employee incentive plan, or conversion of Founder Shares, could significantly dilute existing shareholders' interests[184][186] - Warrants are accounted for as a liability at fair value, with changes reported in earnings, which may adversely affect the market price of Class A ordinary shares and make business combinations more difficult[202] - Each unit contains only one-half of one warrant, which may make the units worth less than those of other SPACs[203] General Risk Factors General risks include its emerging growth company status, corporate governance, difficulties enforcing legal rights due to Cayman Islands incorporation, cyber incidents, and changing regulations - As an "emerging growth company" and "smaller reporting company," the company benefits from reduced disclosure requirements, which might make its securities less attractive to some investors and complicate comparisons with other public companies[206][207][209] - Provisions in the company's amended and restated memorandum and articles of association, such as a staggered board and ability to issue preferred shares, may inhibit takeovers and entrench management[210] - Due to incorporation in the Cayman Islands, investors may face difficulties protecting their interests or enforcing U.S. federal securities laws against directors or officers[211][212][214] - Cyber incidents or attacks could lead to information theft, data corruption, operational disruption, and financial loss, and as an early-stage company, it may lack sufficient protection[216] - The company is subject to changing laws and regulations (e.g., SEC, corporate governance), increasing compliance costs and risks of non-compliance[217][218] - The company may be exposed to liabilities under the Foreign Corrupt Practices Act (FCPA), and violations could have a material adverse effect on its business[219] - The initial business combination may be subject to regulatory review and approval, including by CFIUS, which could delay or prevent the transaction, especially given the Sponsor's non-U.S. control[220][221][222] Unresolved Staff Comments There are no unresolved staff comments - The company has no unresolved staff comments[226] Properties The company maintains executive offices in Denver, Colorado, paying an affiliate of its Sponsor $10,000 per month for office space and administrative services - The company's executive offices are located at 1400 Wewatta Street, Suite 850, Denver, Colorado[227] Office and Administrative Fees | Service | Monthly Fee | Recipient | | :------ | :---------- | :-------- | | Office space & administrative services | $10,000 | Affiliate of Sponsor | Legal Proceedings As of December 31, 2022, no material litigation, arbitration, or governmental proceedings were pending against the company or its management - As of December 31, 2022, no material litigation, arbitration, or governmental proceedings were pending against the company or its management[228] Mine Safety Disclosures This item is not applicable to the company - Mine safety disclosures are not applicable to the company[229] Part II This section covers market information for equity securities, management's discussion and analysis, financial statements, and controls and procedures Market for Common Equity, Shareholder Matters, and Issuer Purchases The company's Units, Class A ordinary shares, and warrants are listed on NYSE, with limited record holders, and no cash dividends paid or intended prior to a business combination - The company's Units, Class A ordinary shares, and warrants are listed on NYSE under "RCFA.U", "RCFA", and "RCFA WS"[231] Holders of Record (as of Dec 31, 2022) | Security Type | Holders of Record | | :------------ | :---------------- | | Units | 1 | | Class A ordinary shares | 1 | | Warrants | 2 | - The company has not paid cash dividends and does not intend to prior to the completion of an initial business combination[233] - Unregistered sales of Founder Shares and Private Placement Warrants were exempt under Section 4(a)(2) of the Securities Act[235] Use of Proceeds from Public Offering and Private Placement | Item | Amount | | :------------------------------------------------ | :------------- | | Gross Proceeds from Public Offering | $230,000,000 | | Gross Proceeds from Private Placement | $11,700,000 | | Total Net Proceeds in Trust Account (as of Dec 31, 2022) | $234,600,000 | | Offering Costs (total) | $13,267,977 | | Underwriting Discounts (cash) | $4,600,000 | | Deferred Underwriting Commission | $8,050,000 | Reserved This item is reserved - This item is reserved[238] Management's Discussion and Analysis of Financial Condition and Results of Operations This section reviews the company's financial condition and results, highlighting its blank check status, liquidity challenges, and $13.8 million net income for 2022 - The company is a blank check company with no operating revenues, focused on a business combination in the critical minerals value chain[240] Financial Condition Highlights (as of Dec 31, 2022) | Item | Amount | | :-------------------------------- | :----------- | | Cash outside Trust Account | $41,276 | | Working Capital Deficit | ($331,676) | | Investment Held in Trust Account | $238,041,214 | Key Financial Results (Year Ended Dec 31, 2022 vs. Inception to Dec 31, 2021) | Metric | Year Ended Dec 31, 2022 | Inception to Dec 31, 2021 | | :-------------------------------------- | :---------------------- | :------------------------ | | Net Income | $13,843,499 | $8,727,522 | | Loss from Operations | ($2,291,464) | ($347,235) | | Change in Fair Value of Warrant Liability | $12,296,000 | $9,744,000 | | Change in Fair Value of Sponsor Convertible Note | $400,000 | — | | Interest Earned in Trust Account | $3,438,963 | $2,251 | - The company faces substantial doubt about its ability to continue as a going concern due to insufficient working capital and reliance on the Sponsor Convertible Note, which the Sponsor is not obligated to advance[255][256][392] Overview The company is a blank check company formed in June 2021, targeting critical minerals, raising $230 million in its IPO, with a May 15, 2023, business combination deadline - RCF Acquisition Corp. is a blank check company incorporated on June 9, 2021, aiming for a business combination in the critical minerals value chain[240] Public Offering and Private Placement Summary | Event | Date | Gross Proceeds | Funds in Trust Account | | :-------------------- | :----------- | :------------- | :----------------- | | Public Offering | Nov 15, 2021 | $230,000,000 | $234,600,000 | | Private Placement | Nov 15, 2021 | $11,700,000 | | - The company must complete its initial business combination within 18 months from the closing of the Public Offering (by May 15, 2023) or it will cease operations and liquidate[247] Results of Operations For 2022, the company reported a net income of $13.8 million, primarily from warrant liability fair value changes and Trust Account interest, offsetting operating losses Results of Operations (Year Ended Dec 31, 2022) | Metric | Amount | | :-------------------------------------- | :------------- | | Net Income | $13,843,499 | | Loss from Operations | ($2,291,464) | | Change in Fair Value of Warrant Liability | $12,296,000 | | Change in Fair Value of Sponsor Convertible Note | $400,000 | | Interest Earned in Trust Account | $3,438,963 | - The company's activities have been limited to organizational tasks and evaluating potential business combination candidates, generating no operating revenues[248] Liquidity and Capital Resources As of December 31, 2022, the company had $41,276 cash and a $331,676 working capital deficit, raising substantial doubt about its going concern ability due to insufficient cash until May 15, 2023 Liquidity and Capital Resources (as of Dec 31, 2022) | Item | Amount | | :-------------------------------- | :----------- | | Cash outside Trust Account | $41,276 | | Working Capital Deficit | ($331,676) | | Investment Held in Trust Account | $238,041,214 | | Sponsor Convertible Note (outstanding) | $500,000 | | Sponsor Convertible Note (fair value) | $100,000 | - The company expects its current cash outside the Trust Account to be insufficient to operate until May 15, 2023, the deadline for a business combination[255] - Substantial doubt exists about the company's ability to continue as a going concern due to the need for additional capital from the Sponsor, which is not obligated[256] - The company has no off-balance sheet arrangements, special purpose entities, or debt guarantees[257][258] - The COVID-19 pandemic's specific impact on the company's financial position and search for a target is not readily determinable[259] Related Party Transactions Related party transactions include Founder Shares, Private Placement Warrants, a Sponsor Convertible Note for up to $5 million, and $10,000 monthly administrative fees to an affiliate - The Sponsor purchased 5,750,000 Founder Shares for $25,000, with some transferred to directors/management[260] - Initial shareholders have agreed to transfer restrictions on Founder Shares and waive redemption rights for Founder Shares and public shares in certain scenarios[261] - The Sponsor purchased 11,700,000 Private Placement Warrants for $11,700,000, which are non-redeemable by the company while held by the Sponsor or permitted transferees[250][262] - The Sponsor Convertible Note allows borrowing up to $5,000,000 for expenses, is non-interest bearing, and has $500,000 outstanding with a fair value of $100,000 as of December 31, 2022[254][262][263] - The company pays an affiliate of the Sponsor $10,000 per month for office space and administrative support, totaling $137,000 as of December 31, 2022[266] Commitments and Contractual Obligations As of December 31, 2022, the company had no long-term debt or liabilities; key commitments include $8.05 million in deferred underwriting commissions and registration rights - As of December 31, 2022, the company had no long-term debt, capital lease, operating lease, or other long-term liabilities[265] Key Commitments | Commitment | Amount | Condition | | :-------------------------- | :----------- | :------------------------------------ | | Deferred Underwriting Commission | $8,050,000 | Payable upon initial business combination | - Holders of Founder Shares, Private Placement Warrants, and working capital loan warrants are entitled to registration rights[268] - The employment agreement with CEO Mr. Shah, effective September 1, 2022, includes an annual salary of $50,000 and post-termination non-compete covenants[269] Critical Accounting Policies and Estimates Critical accounting policies involve estimates for financial statements, including income per share, derivative liabilities (warrants), redeemable shares, and Trust Account investments - Financial statements require management estimates and assumptions, which could differ from actual results[271][396] - Income per ordinary share is calculated using a two-class method for redeemable Class A and Class B ordinary shares, with diluted EPS being the same as basic due to contingent warrant exercise[272][274][415] - Public and Private Placement Warrants are classified as derivative liabilities and measured at fair value, with changes recognized in the Statement of Operations[276][405] - Redeemable Class A ordinary shares are classified outside permanent equity at their redemption value, with changes reflected in retained earnings or additional paid-in capital[279][406][407] - Investments in the Trust Account (U.S. government treasury obligations or money market funds) are classified as trading securities and presented at fair value[280][398] - The company is an "emerging growth company" and has elected not to opt out of the extended transition period for new accounting standards, which may affect comparability[283][285] Quantitative and Qualitative Disclosures About Market Risk The company is not required to provide quantitative and qualitative disclosures about market risk as a smaller reporting company - The company is exempt from providing quantitative and qualitative disclosures about market risk as a smaller reporting company[286] Financial Statements and Supplementary Data This item refers to the audited financial statements and related notes, which are included from pages F-1 through F-20 - The audited financial statements and supplementary data are provided on pages F-1 through F-20[287] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with accountants on accounting and financial disclosure - There are no changes in or disagreements with accountants on accounting and financial disclosure[288] Controls and Procedures As of December 31, 2022, disclosure controls and internal control over financial reporting were effective, with the company exempt from auditor attestation - As of December 31, 2022, disclosure controls and procedures were evaluated as effective[289] - Management concluded that internal control over financial reporting was effective as of December 31, 2022, based on the COSO framework[293] - The company is exempt from the independent registered public accounting firm attestation requirement on internal control over financial reporting due to its "emerging growth company" status[294] Other Information This item contains no other information - This item contains no other information[295] Disclosure Regarding Foreign Jurisdictions That Prevent Inspections This item is not applicable to the company - This item is not applicable[296] Part III This section details the company's directors, executive officers, corporate governance, executive compensation, security ownership, and related party transactions Directors, Executive Officers and Corporate Governance This section lists the company's directors and executive officers, including James McClements (Chairman) and Sunny S. Shah (CEO), with a majority independent board and established committees Directors and Executive Officers | Name | Age | Position | | :---------------- | :-- | :-------------------------------- | | James McClements | 59 | Chairman and Director | | Sunny S. Shah | 40 | Chief Executive Officer and Director | | Thomas M. Boehlert | 63 | Chief Financial Officer and Director | | Hugo Dryland | 67 | Director | | Elodie Grant Goodey | 50 | Director | | Timothy Baker | 70 | Director | | Daniel Malchuk | 57 | Director | - The board of directors consists of seven members, divided into three classes, with terms expiring at different annual general meetings[306] - A majority of the board of directors (Hugo Dryland, Elodie Grant Goodey, Timothy Baker, and Daniel Malchuk) are independent directors as defined by NYSE listing standards and SEC rules[310] - The company has an audit committee, compensation committee, and nominating and corporate governance committee, all composed solely of independent directors[312] - Daniel Malchuk qualifies as an "audit committee financial expert"[314] - The company has adopted a Code of Business Conduct and Ethics applicable to directors, officers, and employees[323] Executive Compensation Executive officers and directors generally receive no compensation, except for Sunny Shah, who earned $16,667 in fiscal 2022 with an annual salary of $50,000 - Executive officers and directors generally do not receive compensation for their services, except for Sunny Shah[325] Executive Compensation (Fiscal Year 2022) | Officer | Compensation | | :------ | :----------- | | Sunny S. Shah | $16,667 | - Sunny Shah's employment agreement, effective September 1, 2022, provides an annual salary of $50,000 and includes post-termination non-compete covenants[326] - No finder's or consulting fees will be paid to the Sponsor, officers, or directors prior to the completion of an initial business combination[329] Security Ownership of Certain Beneficial Owners and Management This section details beneficial ownership of ordinary shares as of March 7, 2023, with RCF VII Sponsor LLC holding 18.6% and all officers and directors as a group owning 19.9% Beneficial Ownership of Ordinary Shares (as of March 7, 2023) | Holder | Number of Shares Beneficially Owned | Percentage of Outstanding Ordinary Shares | | :------------------------------------------ | :---------------------------------- | :---------------------------------------- | | RCF VII Sponsor LLC | 5,347,500 | 18.6% | | Saba Capital Management, L.P. | 1,473,000 | 5.1% | | Adage Capital Partners, L.P. | 1,800,000 | 6.3% | | Calamos Market Neutral Income Fund | 1,500,000 | 5.2% | | Millennium Management LLC | 1,455,000 | 5.1% | | All officers and directors as a group (7 individuals) | 5,720,000 | 19.9% | - The table is based on 28,750,000 ordinary shares outstanding as of March 7, 2023, comprising 23,000,000 Class A and 5,750,000 Class B shares[335] - Founder Shares (Class B ordinary shares) automatically convert to Class A ordinary shares upon business combination[336] - RCF VII Sponsor LLC is controlled by Resource Capital Fund VII L.P., whose General Partner is RCFM GP L.L.C., managed by James McClements (an Australian citizen)[337] Certain Relationships and Related Transactions, and Director Independence This section details related party transactions, including Founder Shares, Private Placement Warrants, a Sponsor Convertible Note for up to $5 million, and $10,000 monthly administrative fees - The Sponsor purchased 5,750,000 Founder Shares for $25,000, which are subject to transfer restrictions and entitle holders to registration rights[338][342] - The Sponsor purchased 11,700,000 Private Placement Warrants for $11,700,000, which are non-redeemable by the company while held by the Sponsor or its permitted transferees and are exercisable on a cashless basis[339][340] - The Sponsor Convertible Note allows the company to borrow up to $5,000,000 from the Sponsor for expenses, is non-interest bearing, and has $500,000 outstanding at a fair value of $100,000 as of December 31, 2022[341][343][345] - The company pays an affiliate of the Sponsor $10,000 per month for office space and administrative support, totaling $137,000 from the Public Offering effective date through December 31, 2022[346] Principal Accounting Fees and Services This section outlines fees paid to Grant Thornton LLP for audit ($79,800) and tax ($6,420) services in 2022, all pre-approved by the audit committee Fees Paid to Grant Thornton LLP (Year Ended Dec 31, 2022) | Service Type | Amount | | :----------- | :------- | | Audit Fees | $79,800 | | Audit-Related Fees | $0 | | Tax Fees | $6,420 | | All Other Fees | $0 | - The audit committee pre-approves all auditing and permitted non-audit services[351] Exhibit and Financial Statement Schedules This section provides an index to the financial statements, including the auditor's report, balance sheets, statements of operations, changes in equity, cash flows, and notes Index to Financial Statements This section indexes the financial statements, comprising the auditor's report, balance sheets, statements of operations, changes in equity, cash flows, and notes - The financial statements include the Report of Independent Registered Public Accounting Firm, Balance Sheets, Statements of Operations, Statements of Changes in Redeemable Class A Ordinary Shares and Shareholders' Deficit, Statements of Cash Flows, and Notes to Financial Statements[353] Report of Independent Registered Public Accounting Firm Grant Thornton LLP issued an unqualified opinion on the financial statements, but raised a "going concern" issue due to lack of revenue and insufficient capital by May 15, 2023 - Grant Thornton LLP provided an unqualified opinion on the financial statements, stating they are presented fairly in all material respects[355] - The auditor's report raises substantial doubt about the company's ability to continue as a going concern due to no revenue, dependence on a business combination, and insufficient cash/working capital to operate until May 15, 2023[356] - The company is not required to have, nor was the auditor engaged to perform, an audit of its internal control over financial reporting[358] Balance Sheets The balance sheets present the company's financial position as of December 31, 2022 and 2021, with total assets of $238.4 million (2022) and a shareholders' deficit of ($6.6 million) Balance Sheet Highlights (as of December 31, 2022 and 2021) | Item | 2022 | 2021 | | :------------------------------------ | :----------- | :----------- | | Total Assets | $238,350,858 | $236,294,113 | | Cash | $41,276 | $700,293 | | Investment Held in Trust Account | $238,041,214 | $234,602,251 | | Total Liabilities | $10,315,320 | $22,102,074 | | Deferred Underwriting Commission | $8,050,000 | $8,050,000 | | Warrant Liability | $1,624,000 | $13,920,000 | | Redeemable Class A Ordinary Shares | $234,600,000 | $234,600,000 | | Total Shareholders' Deficit | ($6,564,462) | ($20,407,961) | Statements of Operations The statements of operations show a net income of $13.8 million for 2022, primarily from non-operating items like warrant liability fair value changes and Trust Account interest Statements of Operations (Year Ended Dec 31, 2022 vs. Inception to Dec 31, 2021) | Metric | Year Ended Dec 31, 2022 | Inception to Dec 31, 2021 | | :-------------------------------------- | :---------------------- | :------------------------ | | General and administrative expenses | $2,291,464 | $347,235 | | Loss from operations | ($2,291,464) | ($347,235) | | Change in fair value of warrant liability | $12,296,000 | $9,744,000 | | Change in fair value of sponsor convertible note | $400,000 | — | | Interest earned in Trust Account | $3,438,963 | $2,251 | | Net Income | $13,843,499 | $8,727,522 | | Basic and Diluted Net Income Per Share (Redeemable Class A) | $0.48 | $6.31 | | Basic and Diluted Net Income Per Share (Class B) | $0.48 | $0.79 | Statements of Changes in Redeemable Class A Ordinary Shares and Shareholders' Deficit This statement details changes in redeemable Class A ordinary shares and shareholders' deficit, which improved to ($6.6 million) in 2022 from ($20.4 million) in 2021 due to net income Shareholders' Deficit (as of December 31, 2022 and 2021) | Item | Dec 31, 2022 | Dec 31, 2021 | | :-------------------------- | :----------- | :----------- | | Total Shareholders' Deficit | ($6,564,462) | ($20,407,961) | | Accumulated Deficit | ($6,565,037) | ($20,408,536) | - Net income of $13,843,499 for 2022 contributed to reducing the accumulated deficit[367] - In 2021, a deemed dividend to Class A shareholders of $28,926,483 significantly impacted the accumulated deficit[369] Statements of Cash Flows The statements of cash flows show net cash used in operating activities of ($1.16 million) for 2022, with financing providing $500,000, resulting in an ending cash balance of $41,276 Cash Flow Summary (Year Ended Dec 31, 2022 vs. Inception to Dec 31, 2021) | Activity | Year Ended Dec 31, 2022 | Inception to Dec 31, 2021 | | :-------------------------------- | :---------------------- | :------------------------ | | Net cash flows used in operating activities | ($1,159,017) | ($1,206,730) | | Net cash flows used in investing activities | $0 | ($234,600,000) | | Net cash flows provided by financing activities | $500,000 | $236,507,023 | | Net Change in Cash | ($659,017) | $700,293 | | Cash, End of Period | $41,276 | $700,293 | - The primary source of cash in financing activities for 2022 was proceeds from the Sponsor Convertible Note ($500,000)[371] - Noncash activities include deferred underwriting commission of $8,050,000 and a deemed dividend to Class A shareholders of $28,926,483 in 2021[371] Notes to Financial Statements The notes detail the company's organization, operations, accounting policies, financial instruments, related party transactions, and commitments, highlighting going concern uncertainty and fair value measurements - The company is a blank check company formed on June 9, 2021, for a business combination, with its Public Offering closing on November 15, 2021[373][375] - $234,600,000 from the Public Offering and Private Placement was deposited into the Trust Account, to be invested in U.S. government treasury obligations or money market funds[378] - The company has 18 months from the Public Offering closing date to complete a business combination; otherwise, it will liquidate and redeem public shares[383] - As of December 31, 2022, the company had a working capital deficit of ($331,676) and anticipates insufficient cash to operate until May 15, 2023, raising substantial doubt about its going concern ability[388][390][392] - Public and Private Placement Warrants are classified as derivative liabilities and measured at fair value, with changes recognized in the Statements of Operations[405][440] - The Sponsor Convertible Note allows borrowing up to $5,000,000, with $500,000 outstanding at a fair value of $100,000 as of December 31, 2022[429] - The company has agreed to pay an affiliate of the Sponsor $10,000 per month for administrative services[433] - Deferred underwriting commission of $8,050,000 is payable upon completion of a business combination[465] - On January 6, 2023, the company borrowed an additional $1,250,000 from the Sponsor Convertible Note[468]