SK Growth Opportunities (SKGR) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed financial statements and management's discussion and analysis for the Company Item 1. Financial Statements This section presents the unaudited condensed financial statements, including balance sheets, statements of operations, changes in shareholders' deficit, and cash flows, along with detailed notes explaining accounting policies and specific financial items for the periods ended June 30, 2023, and December 31, 2022 Condensed Balance Sheets This section presents the Company's financial position, including assets, liabilities, and shareholders' deficit, as of specific dates Condensed Balance Sheet Highlights: | Metric | June 30, 2023 (Unaudited) | December 31, 2022 | | :-------------------------------- | :------------------------ | :------------------ | | Total Assets | $223,091,678 | $218,781,844 | | Investments held in Trust Account | $222,404,188 | $217,645,818 | | Total Liabilities | $12,979,493 | $12,878,812 | | Shareholders' Deficit | $(12,192,003) | $(11,642,786) | Unaudited Condensed Statements of Operations This section details the Company's revenues, expenses, and net income or loss over specific reporting periods Unaudited Condensed Statements of Operations Highlights: | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative expenses | $257,166 | $84,174 | $549,217 | $121,206 | | Loss from operations | $(257,166) | $(84,174) | $(549,217) | $(121,206) | | Income from investments held in Trust Account | $2,457,660 | $7,289 | $4,758,370 | $7,289 | | Net income (loss) | $2,200,494 | $(76,885) | $4,209,153 | $(113,917) | | Basic and diluted net income (loss) per share, Class A ordinary shares | $0.08 | $(0.01) | $0.16 | $(0.02) | Unaudited Condensed Statements of Changes in Shareholders' Deficit This section outlines the changes in the Company's shareholders' deficit, reflecting net income and other equity adjustments Changes in Shareholders' Deficit (June 30, 2023): | Item | Amount | | :------------------------------------------ | :------------- | | Balance — December 31, 2022 | $(11,642,786) | | Accretion for Class A ordinary shares to redemption amount (Q1 2023) | $(2,300,710) | | Net income (Q1 2023) | $2,008,659 | | Balance — March 31, 2023 | $(11,934,837) | | Accretion for Class A ordinary shares to redemption amount (Q2 2023) | $(2,457,660) | | Net income (Q2 2023) | $2,200,494 | | Balance — June 30, 2023 | $(12,192,003) | Unaudited Condensed Statements of Cash Flows This section reports the cash generated and used by the Company across operating, investing, and financing activities Unaudited Condensed Statements of Cash Flows Highlights (Six Months Ended June 30): | Cash Flow Activity | 2023 | 2022 | | :-------------------------------- | :----------- | :------------- | | Net cash used in operating activities | $(272,420) | $(97,241) | | Net cash used in investing activities | $0 | $(205,000,000) | | Net cash provided by financing activities | $0 | $207,363,013 | | Net change in cash | $(272,420) | $2,265,772 | | Cash—end of the period | $242,990 | $2,265,772 | Notes to Unaudited Condensed Financial Statements This section provides detailed explanations and disclosures supporting the unaudited condensed financial statements Note 1—Description of Organization, Business Operations, Liquidity and Basis of Presentation This note describes the Company's formation, business purpose, liquidity position, and the basis for financial statement presentation - SK Growth Opportunities Corporation is a blank check company (SPAC) incorporated in Cayman Islands on December 8, 2021, formed for the purpose of effecting a business combination[25] - The Company completed its Initial Public Offering (IPO) on June 28, 2022, raising $200.0 million, and a partial over-allotment exercise on July 20, 2022, raising an additional $9.6 million; simultaneously, private placements of warrants generated $6.6 million and $192,000[27][28] - The Sponsor provided $5.24 million Overfunding Loans to be deposited into the Trust Account[29] - Approximately $214.8 million of net proceeds from the IPO, over-allotment, Overfunding Loans, and private placements were placed in a Trust Account, invested in U.S. government securities or money market funds[30] - The Company has until December 28, 2023 (18 months from IPO, or 21 months if a definitive agreement is executed) to consummate an initial Business Combination, with potential extensions up to 24 months if the Sponsor deposits additional funds[37] - As of June 30, 2023, the Company had $242,990 in cash and a working capital deficit of approximately $5 million, raising substantial doubt about its ability to continue as a going concern if a Business Combination is not consummated by December 28, 2023[43][46][47] - Management is evaluating the impact of the COVID-19 pandemic and the Russia-Ukraine conflict, but the specific financial impact is not readily determinable[48][49] Note 2—Summary of Significant Accounting Policies This note outlines the key accounting principles and methods applied in preparing the financial statements - The unaudited condensed financial statements are prepared in accordance with GAAP and Article 8 of Regulation S-X, with certain disclosures condensed or omitted for interim reporting[50] - The Company is an "emerging growth company" and has elected to use the extended transition period for complying with new or revised financial accounting standards, which may affect comparability[53][54] - Trust Account investments are classified as trading securities or recognized at fair value if in money market funds; as of June 30, 2023, and December 31, 2022, assets were held in money market funds[59] Note 3—Initial Public Offering This note details the Company's Initial Public Offering, including proceeds, costs, and unit components - On June 28, 2022 IPO, the Company consummated its IPO of 20,000,000 Units at $10.00 per Unit, generating $200.0 million gross proceeds and incurring $12.0 million in offering costs, including $7.0 million in deferred underwriting commissions[81] - On July 20, 2022, an additional 960,000 Units were sold in a partial over-allotment exercise, generating $9.6 million gross proceeds and $336,000 in deferred underwriting commissions[82] - Each Unit consists of one Class A ordinary share and one-half of one redeemable Public Warrant, with each Public Warrant entitling the holder to purchase one Class A ordinary share at $11.50[83] Note 4—Related Party Transactions This note discloses transactions and arrangements between the Company and its related parties, including the Sponsor - The Sponsor purchased 8,625,000 Class B ordinary shares (Founder Shares) for $25,000; following the expiration of the over-allotment option, the Sponsor forfeited 510,000 Founder Shares on August 9, 2022[85] - The Sponsor purchased 6,600,000 Private Placement Warrants for $6.6 million and an additional 192,000 for $192,000; these warrants will expire worthless if a Business Combination is not completed[88][89][90] - The Sponsor provided $5.24 million non-interest bearing Overfunding Loans to the Trust Account, repayable upon Business Combination or convertible into Class A ordinary shares[94] - The Company pays an affiliate of the Sponsor $10,000 per month for administrative support services, incurring $30,000 for the three months and $60,000 for the six months ended June 30, 2023[98] Note 5—Commitments and Contingencies This note describes the Company's contractual obligations, potential liabilities, and other contingent matters - The underwriter is entitled to $7.0 million in deferred underwriting commissions, and Cohen & Company Capital Markets (CCM) is entitled to $700,000 in deferred advisory fees, both payable solely upon completion of a Business Combination[103][104] - An additional $336,000 in deferred underwriting and advisory commissions is payable in connection with the partial over-allotment exercise[105] Note 6—Class A Ordinary Shares Subject to Possible Redemption and Shareholders' Deficit This note explains the accounting treatment for redeemable Class A ordinary shares and the components of shareholders' deficit - As of June 30, 2023, and December 31, 2022, 20,960,000 Class A ordinary shares were issued and outstanding, all subject to redemption and classified as temporary equity[107] - As of June 30, 2023, and December 31, 2022, 5,240,000 Class B ordinary shares were issued and outstanding[108] - The Company has 10,480,000 Public Warrants and 6,792,000 Private Placement Warrants outstanding; Public Warrants become exercisable 30 days after a Business Combination at $11.50 per share, while Private Placement Warrants are non-redeemable and exercisable on a cashless basis[113][117] Note 7—Fair Value Measurements This note provides information on the fair value measurement of financial instruments, particularly trust account investments - Trust Account investments, consisting of Money Market Funds, are measured at fair value using Level 1 inputs (quoted prices in active markets)[119] Note 8—Subsequent Events This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - No subsequent events requiring adjustment or disclosure were identified up to the date the unaudited condensed financial statements were issued[122] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and operational results, reiterating its status as a blank check company seeking a business combination; it discusses liquidity, going concern considerations, and the financial performance for the three and six months ended June 30, 2023 and 2022, highlighting income from trust account investments and general and administrative expenses - The Company is a blank check company formed to effect a business combination, having completed its IPO and private placements in 2022, placing approximately $214.8 million in a Trust Account[125][126][128][131] - As of June 30, 2023, the Company had $243,000 in cash and a working capital deficit of approximately $5 million; management has until December 28, 2023, to consummate a business combination, and the uncertainty raises substantial doubt about its ability to continue as a going concern[136][138][139] - The Company generated no operating revenues, with activity focused on formation and business combination search[142] Results of Operations (Net Income): | Period | 2023 Net Income | 2022 Net Income (Loss) | | :----------------------------- | :---------------- | :--------------------- | | Three Months Ended June 30 | $2.2 million | $(77,000) | | Six Months Ended June 30 | $4.2 million | $(114,000) | * Income primarily from investments held in the Trust Account ($2.5 million for Q2 2023, $4.8 million for H1 2023) * Offset by general and administrative expenses ($257,000 for Q2 2023, $549,000 for H1 2023) - $7.0 million deferred underwriting commissions and $700,000 deferred advisory fees are payable upon completion of a Business Combination, plus an additional $240,000 in deferred commissions from the partial over-allotment exercise[148][149][150] - The Company pays an affiliate of the Sponsor $10,000 per month for administrative support services[151] - Key accounting estimates include derivative financial instruments (warrants classified as equity, over-allotment option as derivative liability) and Class A ordinary shares subject to redemption (classified as temporary equity)[154][157][158][159] - The Company qualifies as an "emerging growth company" under the JOBS Act and has elected to delay adoption of new accounting standards[165] Item 3. Quantitative and Qualitative Disclosures About Market Risk This item is not applicable as the Company is a smaller reporting company - This item is not applicable as the Company is a smaller reporting company[167] Item 4. Controls and Procedures The Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company's disclosure controls and procedures as of June 30, 2023, concluding they were effective; no material changes in internal control over financial reporting occurred during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures effective as of June 30, 2023[169] - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[170] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other disclosures Item 1. Legal Proceedings The Company reported no legal proceedings - The Company has no legal proceedings[171] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K filed on March 29, 2023, and Quarterly Report on Form 10-Q filed on May 12, 2023 - No material changes to risk factors disclosed in the Annual Report on Form 10-K (March 29, 2023) and Quarterly Report on Form 10-Q (May 12, 2023)[172] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company did not sell any unregistered equity securities during the quarter ended June 30, 2023; the net proceeds from the IPO, partial over-allotment, Overfunding Loans, and private placements, totaling approximately $214.8 million, were placed in the Trust Account, with no material change in their planned use - No unregistered sales of equity securities occurred during the quarter ended June 30, 2023[173] - Approximately $214.8 million in net proceeds from the IPO, partial over-allotment, Overfunding Loans, and private placements were placed in the Trust Account[175] - There has been no material change in planned use of proceeds[176] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities - The Company has no defaults upon senior securities[177] Item 4. Mine Safety Disclosures This item is not applicable to the Company - This item is not applicable[178] Item 5. Other Information The Company reported no other information - No other information to report[179] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including certifications and XBRL documents - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1*, 32.2*)[181][182] - Inline XBRL documents are also filed (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[181][182] SIGNATURES This section contains the official signatures certifying the accuracy of the financial report - The report was signed on August 10, 2023, by Richard Chin (CEO) and Derek Jensen (CFO)[185]